28 Colleges Develop Guidelines to Assign Aid by Student Need

Stanford, Pomona, Yale and more than two dozen of the nation’s other leading private colleges and universities announced Friday that they are adopting new guidelines to ensure that financial aid decisions are based primarily on need.

The new principles are an effort to counter a growing tendency by such schools to use financial aid to attract top students, athletes and underrepresented minorities, regardless of the students’ actual need. The trend has gradually reduced funds available for the neediest students, university officials said.

Cornell University President Hunter Rawlings III, who led the effort, said the guidelines should result in larger scholarships for many students, with individual increases ranging from a few hundred dollars to $1,500 per year.

Rawlings said the effort was aimed at creating consistency from college to college and reducing widespread confusion among students and their parents over complicated financial aid formulas.

“The whole area of financial aid has become so complex and variable that families were having an exceedingly difficult time understanding it,” he said. “We’ve tried to create clarity and consistency in our approach.”

The 28 colleges and universities that committed to the new policy are among the nation’s most selective, and expensive, private institutions. All admit their students without considering their ability to pay--known as need-blind admissions--and offer financial aid to allow them to attend.

The annual cost of attending many of the schools is more than $30,000, with Stanford fairly typical in charging about $35,000 a year for tuition, room and board.

But increasingly, in a process that began in the 1980s and has intensified in recent years, colleges have competed to offer hefty scholarships to the students they most want to attract, including talented athletes and top high school graduates, rather than those most in need.

The practice, known as merit aid, has made it more and more difficult for students from low- and even middle-income backgrounds to gain access to some of the nation’s most selective schools, said Williams College President Morton Owen Schapiro, one of the 28 signatories.

“There has been an increasing stratification in higher education, with rich schools getting richer and the merit-aid wars accelerating,” said Schapiro, a higher education economist and expert in financial aid. “This will lower the price for the students who are most needy. It’s a big step forward.”

The participating colleges wanted both to endorse need-based aid and to create a more standardized approach to determining that need, said Claremont McKenna College President Pamela Gann, another signatory.

“The effort is to get to the following outcome: that if a student applies to Stanford, Claremont McKenna and Cornell, gets accepted to all three and needs financial aid, that we would all come out with roughly the same figure for the family’s financial need,” Gann said.

The guidelines, which are expected to take most campuses at least a year or two to implement, include these principles:

* Home equity will be considered in financial aid assessments but will be capped at 2.4 times family income. Officials said this will help families, including many in the Bay Area, who have seen the value of their homes soar in recent years.

* Campuses will try to take into account the high cost of living in areas like San Francisco, New York and Washington, D.C.

* Colleges will make allowances for parents who are not covered in formal retirement plans.

* For children of divorced or separated families, campuses will attempt to learn more about the financial circumstances of parents and stepparents but include only two when determining a student’s ability to pay for college.

* Campuses will establish a formula that reduces the financial contributions for parents with more than one child in college.

Rawlings said many of the colleges that signed the new policy already use some of the guidelines but none uses all of them yet. “This represents a lot of compromise.”

The guidelines are expected to cost most of the universities more in financial aid, he said, with Cornell likely to spend an extra $1 million to $2 million a year over its current financial aid budget of about $18 million.

Two of the nation’s wealthiest institutions, Harvard and Princeton, are not participating because they have recently announced their own programs to substantially increase scholarships and financial aid.

Schools that agreed to the guidelines are: Amherst College, Boston College, Bowdoin College, Claremont McKenna College, Columbia University, Cornell University, Davidson College, Duke University, Emory University, Georgetown University, Haverford College, Macalester College, Massachusetts Institute of Technology, Middlebury College, Northwestern University, Pomona College, Rice University, Stanford University, Swarthmore College, University of Chicago, University of Notre Dame, University of Pennsylvania, Vanderbilt University, Wake Forest University, Wellesley College, Wesleyan University, Williams College and Yale University.