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September 13, 2012 10:00 AM Financial Aid Is Funny…

By Daniel Luzer

Yesterday U.S. News & World Report released its famous best colleges list. This year the publication included supplementary “best buy” schools.

The best buy colleges, based on the percent of students receiving need-based financial aid, and the total reduction from the sticker price, were,

1) Harvard University
2) Yale University
3) Princeton University
4) Stanford University
5) Massachusetts Institute of Technology

The top five colleges in the U.S. News general ranking were

1) Harvard
2) Princeton
3) Yale
4) Columbia
5) University of Chicago

University of Chicago and Columbia ranked 11th and 6th, respectively, in the value list. What? Who knew “value” meant a Princeton education. It’s the Wal-Mart of colleges!

Not really. The problem with this value list is that it doesn’t really have much to do with affordability or accessibility, largely because there are so few poor people who attend such schools. As Lynn O’Shaughnessy explains over at CBS News:

Even though the cost of attendance at these elite schools is at or near $60,000 per year, many students are too wealthy to qualify for any need-based aid. At Princeton, for instance, 41 percent of students in a recent freshman class were too rich to obtain financial aid, according to federal figures. And that statistic is misleading because plenty of students who by ordinary standards would be considered wealthy qualify for need-based aid at the Ivy League school.

These schools do provide very good financial aid. This is because colleges with very large endowments, and a lot of rich students, can provide a lot of financial aid, even to reasonably affluent people who wouldn’t quality for financial aid at most institutions.

O’Shaughnessy did the math and found, using Princeton’s financial aid calculator, that a family with a gross annual income of $300,000 would get nearly $26,000 in Princeton grants a year.

That is generous, and it really does make Princeton a good value for that $300,000 a year family. The trouble is that value is irrelevant to most people anxious to find a cheap education. No one in the last 20 years has ever applied to Princeton or Columbia as an undergraduate because the school was a “good deal”; they applied because these were some of the most prestigious colleges in the United States.

If a school admits a tiny proportion of applicants, and most of those students are very rich, the fact that it also provides its marginally less rich students with a lot of financial aid money is nice, for sure, but it’s not doing the world much of a service.

The important point here, from a sense of equity and talent development, is not how much value colleges offer for the rich but how much, and how frequently, they offer good value to the poor and middle class. The reality is that at the schools such people really attend, state colleges and universities, the costs are getting higher and higher for students every year.

And yet Yale is a good value for someone from a family where both parents earn six figures. Wow, the rich really do win at everything, don’t they?

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer

Comments

  • AnnC on October 04, 2012 7:08 PM:

    You may scoff, but I'm a parent of a bright 12 year old and I've been eyeing these deeply endowed universities for a while now. My husband and I gross over $140,000 annually, but we're deeply in debt from the years when he was out of work and either or both of us could be laid off at any time. We're not likely to be able to afford much more than about 1k per month for her college. When I heard that Harvard had decided that no family should pay more than 10% of their income for college and that several other universities were taking similar steps, it was like a potential albeit statistically improbable miracle.

  • A on December 19, 2012 2:24 PM:

    Yeah, I don't think the tinge of cynicism here is really called for. As a lower-middle-class kid (whose parents sent him to a prestigious but then-cheaper school, Rice, on a combination of scholarships, savings, and loans...in that order, thankfully), I'm really impressed with the aggressive steps Princeton and Harvard have taken on this. The fact that not many poor students end up there still, well, that's a concern, but it's a function of socioeconomic factors that come into play long before college apps are filled out. Poor kids undoubtedly get the shaft from preschool on up, but that doesn't mean Ivies should bend their academic standards too too far. What they should do is ensure that anyone who's not rich goes for free. These schools don't need that tuition money, just look at their endowments. Meanwhile the poorer kids who make it there would otherwise be weighed down with crazy loans just as they were starting adult life, distorting their economic choices in terms of jobs, housing, etc. and further skewing the playing field.