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A year or so ago, a host of wealthy private institutions looked deep into their endowments and offered to share more of the wealth with their students. They beefed up financial aid, including replacing loans with grants for students who qualify and expanding aid to families with higher incomes.
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Now, with the economy reeling, colleges across the board face shrinking bank balances and the same out-of-sight costs for utilities, construction and staff benefits that have helped keep tuition increases outpacing inflation for the past decade. Not surprisingly, schools with the biggest endowments are among the hardest hit.
Will those circumstances affect your ability to cover the college bills? If you expect to receive significant financial aid, probably not, says David Warren, president of the National Association of Independent Colleges and Universities. Colleges with minimal endowments-the vast majority-continue to offer aid through a mix of loans, work-study and grants funded by gifts. Billion-dollar-plus institutions have enough left in their coffers to make good on last year's promises.
Parents who pay most or all of the sticker price, however, will continue to feel the pain. The average cost of a year at a private school runs $34,132, up 5.6% over 2007-08, according to the College Board. Next year's price could reflect a jump of 6% or more. Confronted by high costs and tight credit, more families will likely turn to their state universities, where the average cost comes in at $14,333. Says Warren, "The decision goes to the rudimentary question: What will your out-of-pocket expenses be?"
Meanwhile, colleges both rich and not-so-rich are cutting outlays to keep operations running and financial aid flowing to families hit by the economic downturn. You can expect many schools to freeze construction projects, leave staff vacancies open and hit up donors to help families cover the higher costs, says Warren. "Nobody pretends it's easy, but it is the way to make more money available for student aid and protect the core of the institution, which is academics."
To find colleges that deliver the goods during tough times, look to Kiplinger's 100 best values in private colleges and universities for 2008-09. These institutions, led by Pomona College among liberal-arts colleges and the California Institute of Technology among universities, provide a top-quality education at an affordable price-usually with generous financial aid.
If you earn too much to qualify for need-based aid (and remember, that's a good thing), you can still find great deals within our rankings. Many of the institutions on our list offer hefty scholarships to a few outstanding students or smaller merit awards to a bigger pool. Emory, ranked number nine among universities, provides a full ride, including room and board, to 86 students and covers from two-thirds to full tuition for another 131 students, out of a total enrollment of 6,700. Davidson (ranked number four among liberal-arts colleges) bestows $2,000 toward the cost of attendance on 20% of each incoming class.
POSTED BY: Jane Clark (January 19, 2009 10:26 AM)
Hi, Bill,
Thanks for your comment. It's hard to define what constitutes "wealth"y when it comes to financial aid because aid depends on the college as well as your financial circumstances. For instance, Yale offers significant need-based aid to families earning as much as $200,000; Harvard also offers aid to families earning well into six figures, and other Ivy League colleges have also expanded their aid to higher-income families in the last year or so. (To get an idea of those programs, you might want to take a look at Princeton's Web site, which has a video on its home page explaining its financial aid policy.) Other colleges offer merit-based aid to students with strong academic records or talents the school is looking for regardless of your finances(check our rankings for colleges that offer a high percentage of non-need based aid). The point is, there are a lot of variables that go into financial aid, including the number of students you have in college. You can, however, get a glimpse of your chances by using one of the several calculators available for figuring out your expected family contribution at Finaid.org. Some schools, including Princeton and Lafayette, offer their own calculators, so be sure to check their Web sites. By the way, it's a good idea to apply for federal financial aid even if you don't anticipate getting need-based aid because the application gives your student access to federal student loans, which are the best--and in soe cases the only--student loans available.
POSTED BY: sagehen (February 09, 2009 03:19 PM)
As a Pomona alum, married to a Pomona alum, I can testify to the greatness of the college. I especially applaud the need-based financial aid program. I attended as an "independent" student- no help from family. However, for President Oxtoby to state they look for "diamonds in the rough" is a joke. Look at the makeup of the current student body: top of their classes; top scores; tons of extracurriculars...actually a very plain vanilla group of over-achievers. Diversity is the new catch phrase. Pomona is so selective, it now only looks for diamonds of color. I told Oxtoby "you don't have diverstiy, you have M & M's. All different on the outside, all the same underneath." Many mavericks like me & some of my former classmates would never get in now- too risky, too waspy.
POSTED BY: JoAnn (March 20, 2009 08:58 PM)
Bill, short answer to your query is "yes," you will likely pay through the nose -- unless you have an outstanding student AND the college explicitly states they offer merit-based aid or scholarships (aka "discounting" in the higher ed business, provided to attract desired students to round out the college's incoming class profile).
Don't hesitate to call the financial aid office early on (even before your student decided to apply; this could well factor into decisions about which are worth applying to, and it's tough to be in a spot later of having to say "no" to a student who got into a highly selective, unaffordable school with no aid. Ask the tough and explicit Q's of the college early on:
e.g.,1) Do you give merit-based aid or scholarships or activities-based scholarships to anyone? Under what circumstances?;
2) How do you factor home equity into the FA formula? (often, it counts as "funds available for college costs"); 3) How do you factor parents' retirement savings into the formula (while that may not weigh as heavily into the FAFSA, the CSS and independent college forms are another story)?
4) How do you use financial aid to adjust your student class profile?
Bottom line at most institutions (big names like Harvard and Yale possibly excepted with these initiatives, only due to the heat they were taking a few short years ago about their then soaring endowments while they were being miserly with financial aid) is that, even for a stellar, well-qualified student who has no trouble getting accepted, you might expect need-based aid if your family income is below $40-60k, if you have little home equity, limited retirement savings, practically no non-retirement assets (including savings in the student's name).
Get ready to pony-up the grand total of $200,000-$250,000 total costs (tuition, room & board, books, travel, other expenses) of four years at a prestigious, highly selective institution.
Oh but don't worry! As the likes of Wellesley, Haverford, Barnard, and Reed will market to your student, "no one will graduate with more than $12,000 in loans." They fail to mention that that $12k comes AFTER you have anti-ed up the $50-80k/year they calculate you can afford!
And...how their formulas penalize middle-income parents who have saved reasonably responsibly for college and retirement but cannot reasonably afford the outrageous sticker prices.
So, when you do those FAFSA and college calculators, believe it when they tell you that you CAN afford $50-$80k per year...and again, don't worry, they'll be happy to let you borrow about $30,000 total over four years in unsubsidized Stafford loans at 6.8% No problem!
This is a big business game, the colleges hold all the cards, and you & I are pawns in their game.
Go where they value your student enough to offer merit aid for your student's strengths and talents. And don't dignify the shenanigans of the highly selectives with an application.
The quality of education does NOT correlate with snob factor!
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