To the four years of academic toil invested in a Harvard diploma, many financial aid recipients add long hours working a job and a hefty debt as they dwell anonymously in a frighteningly wealthy student body. From the standpoint of most aid recipients at other private colleges, though, Harvard's aid outlays are generous, propped up by an $8.6 billion endowment. According to the battered financial aid offices outside of Cambridge and Princeton, even the current blend of meager need-based grants and loans will probably not withstand the strain from shrinking government aid and rising tuition; already a majority of private schools have at least partially abandoned a need-focused system, opting instead for more "cost-effective" ways of spreading depleted aid dollars.
Financial aid, which only evolved into its present form about 25 years ago, has traditionally focused on a family's ability to pay. A handful of universities (mostly in the Ivy League) actually made a formal commitment to disregard a family's financial status in admissions decisions, charging their financial aid offices with the task of offering "reasonable" aid packages to bridge the gap between soaring tuitions and the average family's resources. Though most private colleges have never formally adopted such need-blind policies, almost all mete out funds largely on the basis of need.
The nation's private colleges and their aid programs have always relied precariously on heavy federal loan programs and inadequate sources of funding, and now, two factors have combined to undermine the already tattered system: tuition costs have skyrocketed, preventing all but the most wealthy students from footing four-year bills that approach $120,000; and the government's commitment to higher education has eroded as federal coffers have funded a steadily declining share of the overall aid budget. Over the last 14 years, reports the New York Times, tuition hikes have outpaced inflation by three to one. As tuition soared, government aid failed to adjust to the increases; while Washington funded 36 percent of the total grants awarded in 1979, budget austerity and skewed priorities caused that proportion to fall to 18 percent by 1995. Although colleges responded to these twin pressures by dramatically increasing their own spending to $3.3 billion from $1.4 billion a decade earlier, financial aid budgets began to consume ever larger chunks of overall costs. Predictably, many colleges are no longer able or willing to spend more and are scrambling to find ways to stretch existing funds; in many cases, the need-based foundation of financial aid is itself threatened. Susan H. Murphy, dean of admissions and financial aid at Cornell, notes: "There's not a private university in the country that's not having these discussions."
Cash-strapped schools, including prestigious liberal-arts colleges, are coming up with a variety of schemes, some clever, others less so, to avoid public relations nightmares while abandoning equal access to education. Wesleyan College, for instance, has adopted a budget cap that limits financial aid to 17.5 percent of tuition revenue even if that figure leaves many admitted students under-funded and unable to attend. G. Richard Wynn, vice-president for finance and administration at Haverford College, concedes that his admission staff has gone "selectively to the wait list" based on financial factors. Bowdoin College also admits that it has been forced to deny admission to some students because it could not meet their aid needs and is currently deciding whether to drop its stated commitment to need-blind admissions.
Some colleges, reports the New York Times, are sorting high schoolers' SAT scores purchased from the College Board according to zip code and then aiming their marketing bombardments at wealthier suburbs. The result is a richer applicant pool, enabling colleges to technically retain a need-blind admissions policy with its apparent fairness while still reducing financial aid outlays.
Even bloated Ivy League endowments have faltered before the enormous expense of financial aid; Brown publicly discarded its need-blind policy and now concedes that, after admitting 95 percent of its class without regard to finances, it scrutinizes the remaining applicants with a family's ability to pay in mind. Although Cornell remains need-blind, its trustees vote each year to decide whether or not to renew the policy, and their decision depends on whether the university can still afford it.
These efforts to limit financial aid budgets, recruit wealthier applicants, and select students based on their ability to pay are alarming because they abandon an already imperfect commitment to prevent socioeconomic background from functioning as an obstacle to education. These attempts to deal with the cash shortage don't, however, explicitly challenge the principle that financial aid funds should be distributed according to need. Instead of committing PR suicide, many other colleges are opting for a particularly insidious alternative way to deal with aid shortfalls that radically challenges the premise of a need-based system--and it is this option to which I turn.
In a process known as financial aid leveraging, aid offices increasingly use complex econometric models that assess the "price sensitivity" of admits, reports The Wall Street Journal. By measuring a variety of factors, aid officials determine a given student's eagerness to attend and consequently her willingness to pay. The sophisticated computer models then suggest offering either more or less than a student's demonstrated need; if the measured factors suggest that the student clearly wants to attend, aid is slashed and offered instead to a student with a lower "willingness to pay." An applicant who showed up for a Johns Hopkins interview, for instance, would have her aid cut, even though the school "strongly recommends" attendance at this interview. The models also show that students who interview are more likely to enroll, so the "inducement" of extra aid is unnecessary and can be better spent elsewhere. Other factors used to measure eagerness include the applicant's home state, ethnic background, area of study, and whether or not she applied early. The use of these "yield management" techniques isn't limited to a handful of impoverished colleges; the Dean of Admissions and Financial Aid at Lawrence University estimates that about 60 percent of the nation's 1,500 private, four year colleges use financial aid leveraging "in some form." The models do minimize costs: Thomas Williams, president of the National Center for Enrollment Management, estimates that his clients last year saw an average net tuition-revenue gain of $474,000.
Carnegie Mellon, a pioneer in these techniques, uses an econometric model for its coveted computer science admissions that suggests that top admits should be offered cash grants four times any demonstrated need less than $4000 . For those top-ranked admits with a demonstrated need over $20,000, however, the model recommends offering only 75 percent in grants. The news is even worse for the 142 students ranked at the bottom: these admits--60 percent of the accepted students--should receive no grants according to the model, regardless of need.
Costs were also minimized at St. Bonaventure University: the school offered its wealthier top-ranked admits three times their need in grants, but could only muster about half of its poorer prospects' needs. The results were predictable; only one in 11 of the less affluent students decided to enroll, while three-fourths of the richer students chose to.
Jon Boeckenstedt, St. Bonaventure's dean of "enrollment management," concedes, "There are some inequities certainly operating." Walter C. Cathie, who left a financial aid post at Carnegie Mellon partly due to ethical concerns, concurs: "This is an ugly, ugly business."
Hidden beneath the barrage of fancy business school euphemisms lurks a transformation of the underlying values used to disburse aid. The point of these models is to enroll a class at the least possible cost . Whereas need-based aid aims at helping the poorer applicants gain access to college, financial aid leveraging in its pure form merely seeks to minimize costs, regardless of the distributional results. "Maximizing revenue is the buzzword of educational administrators these days," notes Boeckenstedt. The use of these techniques, then, represents a fundamental shift from a system based on an applicant's ability to pay--a system intended to correct for societal inequities--to a system which shirks any such responsibility and instead aims merely to fill a class at the lowest cost. The model's widespread use marks an abandonment of any moral commitment to equal access and replaces it with enrollment managers and revenue maximizers inspired by the cold lexicon of the well-heeled and well-groomed business school campus across the Charles.
The Wall Street Journal quotes one consultant who offers ready advice to market-savvy students, in an apt commercial metaphor: "If you go into the showroom and say you want to have that red Corvette, they're not going to cut the price much."
The invasion of business jargon into college admissions and the values this language implies are only a part of the broader colonization of non-commercial spheres of American life by a relentless business ethos. It is a cold, emotionless, cutthroat vocabulary that can express itself only in terms of self-interest and contractual agreement. Its spread is reflected in the commodification of the sex "market" and in common refrains like, "We should run this country like a business."
When a panel of judges recently ruled that MIT and other elite schools that shared information on financial aid were "price-fixing" under antitrust laws, the standard they applied was telling; such collusion, the judges argued, could only be legally permissible if the action "increased economic efficiency or enhanced business cooperation" in the "educational services market".
Eugene D. Gulland, a lawyer, and Sheldon E. Steinbach, vice-president of the American Council of Education, respond: "MIT could fill its classes with students who could afford to pay the full tuition and dispense altogether with financial assistance. But that `revenue maximizing' behavior would be inconsistent with MIT's non-business, non-commercial objectives of attracting a diverse student body and affording educational opportunity to talented students from all social and economic backgrounds."
Gore Vidal once observed that "as societies grow decadent, the language grows decadent, too. Words are used to disguise, not to illuminate action." When `yield management,' `revenue maximization,' and `educational services market' are the common parlance in the financial aid office, decadence can't be too far removed.