Joining a trend that reinforces the gap between the nation's wealthiest schools and those far short of multibillion-dollar endowments, Stanford University on Wednesday became the latest elite institution to announce a big boost in financial aid for undergraduates from the middle class.
Stanford is now among a small string of top-tier schools, including Harvard, Yale and Pomona College, that have taken steps in recent months to help middle-class families and, in some cases, households with incomes over $150,000.
Stanford will give free tuition to most undergraduates from families earning less than $100,000 a year.
Only about two dozen schools in the nation can afford to join the race to so dramatically boost financial aid, according to Terry W. Hartle, a senior vice president with the American Council on Education. "Most private colleges and universities simply don't have those resources," he said.
More relevant to most American college students and their parents, Hartle stressed, are current state budget deficits that are expected to lead to fee increases at many public universities, including the UC and Cal State systems.
It may be cheaper next year, Hartle said, for a student with a family income of $150,000 to attend Harvard than to pay fees, room, board and other expenses at UC Berkeley.
Experts say the newly enhanced aid at affluent private colleges may add even more public cachet to those campuses, some of which accept as little as 10% of their applicants. But they also stress that the schools are trying to keep up with one another, as well as fend off critics of their frequent tuition hikes.
The wealthiest universities are under congressional pressure to spend more of their huge endowments on scholarships. Harvard, the richest, had a $34.6-billion endowment as of June 30, and Stanford, ranked third after Yale, had $17.1 billion.
(Stanford raised the most in donations last year, with $832 million, besting second-place Harvard by $220 million, according to a new survey by the Council for Aid to Education.)
"There is a large gap between the haves and so called have-nots," said Tony Pals, a spokesman for the National Assn. of Independent Colleges and Universities. Still, he and other experts said many schools with relatively modest endowments are trying to sweeten financial aid and to hold down costs with, for example, initiatives that encourage students to graduate in three years instead of four.
USC Board of Trustees Chairman Stanley Gold said the school's $3.7-billion endowment amounts to $117,000 per student, compared with Harvard's $1.7 million per student. Although USC always looks at ways to bolster scholarships, the school needs a much larger endowment to compete with Harvard and Stanford, he said.
Jerry Lucido, USC's vice provost for enrollment policy and management, said that USC tuition rose about 65% over a decade but that aid grew about 80%.
Most USC students from families that earn less than $40,000 a year receive full tuition grants of more than $34,000 and use loans, jobs and family help to pay the other $15,000 in costs for a residential undergraduate, he said.
USC would offer the best package it could to a student also accepted at Stanford but would not engage in a bidding war, Lucido said. Instead, USC would stress, among other things, its commitment to undergraduate education and its Los Angeles location, he said.
At Santa Clara University, a $697-million endowment allows generous aid but not at the level of nearby Stanford, said Richard Toomey, associate vice provost for enrollment.
Santa Clara can't afford the additional $8 million a year it would cost to replace loans with grants for all students from families that earn under $60,000 -- steps taken recently by Caltech and Rice University in Houston. Pomona, Amherst and Williams colleges have eliminated all loans in aid packages.
Chris Munoz, Rice's vice president for enrollment, said the competition for top students could lead schools to offer more merit-based scholarships not linked to financial need.
Announcements like Stanford's, he said, are pressuring colleges "to rethink what they're doing."
Stanford's new plan will, on average, increase financial aid to students by about 16% and eliminate all loans for needy students, officials said.
For the 15% to 20% of its students from families earning less than $60,000, Stanford will cover the full $47,212 in tuition, room and board.
Except for those with very high assets, families earning $60,000 to $100,000 will have the $36,030 tuition waived next year. Some aid will also be available to wealthier families. (Details can be found at www.stanford.edu/dept/finaid/.)
Karen Cooper, Stanford's financial aid director, said the goal is that no high school senior rule out Stanford because of cost worries.
Princeton in 2001 was a pioneer in the movement by eliminating loans in all aid packages and offering more grants to families with incomes as high as $200,000. Yale and Harvard recently made education and living costs free to students from households earning less than $60,000 and adopted plans that would require upper-middle-income families -- up to $200,000 a year in Yale's case -- to pay only about 10% of their incomes.
Such announcements have not silenced congressional critics who want colleges to draw more from their tax-exempt endowments.
"Stanford is the latest big-name school to dip into the bank account and spend more on students," Sen. Charles E. Grassley of Iowa, the top Republican on the Senate's Finance Committee, said in a statement Wednesday. "I hope we're seeing a trend and a shift in thinking. Spending a little more on students won't break the bank for well-funded schools."
On average, colleges and universities earned 17.2% on their endowments in the fiscal year ending June 30.
But recent declines in the stock market and real estate values will probably make it harder for more schools to augment their financial aid, some officials said.
Even schools with medium-size endowments could expand aid if they were not so focused on building fancy dormitories or dangling premium salaries before star researchers, said Richard Vedder, director of the Center for College Affordability and Productivity, a Washington-based think tank.
"If most schools really wanted to make this the dominant consideration and put this ahead of all other priorities, I think they could go farther than they have," he said.