In a “high-octane” drive to widen access for more middle- and low-income students, USC will eliminate tuition for families earning $80,000 or less annually and will no longer consider home equity in financial aid calculations.
The new policies, announced Thursday by USC President Carol Folt, will place the private campus on par with the public University of California, long known as a national leader in generous financial aid policies and high numbers of low-income students.
And while other elite private universities, such as Harvard and Stanford, provide tuition-free educations to families earning as much as $150,000 annually, their endowments are far larger. Harvard’s endowment is $40.9 billion and Stanford’s is $27.7 billion, compared with USC’s $5.7 billion.
“We really want this to be an institution where great students can attend regardless of their financial background,” Folt said in an interview. “Education should be the great bridge across income that really is the equalizer and makes our talented, hardworking students able to make real contributions.”
Eliminating home equity as a factor in financial aid calculations, which Stanford also removed for the current academic year, would make a significant difference for many Californians whose home values have skyrocketed over time but whose incomes have not increased at the same pace. Folt said she was concerned about access to USC for such families.
She said families work hard to own a home and then find out in the financial aid process that their “home might be the piece inhibiting their ability to put their kids through school.”
“That just felt wrong,” she said.
The new policies will be phased in with first-year students enrolling in fall 2020 and spring 2021. USC estimates that about one-third of each entering class of about 3,000 students will benefit from increased annual aid of about $30 million overall and up to $45,000 for each eligible recipient over the course of their undergraduate studies. Transfer students are not eligible for the new initiative, but may still receive financial aid under previous policies.
The cost of a private college education has reached staggering heights for many families. At USC, the total cost of attendance for 2019-20, including housing, food, books and materials, is $77,459, with tuition alone at $57,256. By comparison, annual costs at the University of California total about $36,100, with resident tuition at $12,570.
USC’s action comes amid a general slowdown of efforts by some other universities across the nation to widen access for low-income students. The American Talent Initiative, launched in December 2016 to enroll 50,000 additional low- and moderate-income students at high-performing institutions, made brisk progress in the first two years but stagnated in 2018-19, a recent report found.
Richard Kahlenberg, a senior associate at the Century Foundation, a nonpartisan think tank, said many universities rushed to expand their economic diversity in the last few decades. But some have hit the “reality” that financial aid for low-income students is expensive, he said, and doesn’t necessarily result in higher college rankings by such organizations as U.S. News & World Report.
“There’s a lot of promising rhetoric about increasing access for low-income students and making college more affordable,” Kahlenberg said. “But in terms of actual access ... progress has been very, very slow.”
Folt said USC is committed to doubling down on efforts begun in the last decade to increase financial aid and widen access for students of modest means.
“We’re really putting that on high-octane,” she said of those efforts.
USC performs well against its peers when it comes to enrolling students of modest means. The campus ranked 10th among 65 elite universities in the proportion of students in the bottom 20% of family income, according to research on the class of 2013 by Stanford University professor Raj Chetty and others. The campus ranked 47th among 65 campuses in the proportion of students in the top quintile.
Over the last decade, USC has increased its share of low-income students to 21% — lower than UCLA’s 30%, but higher than Harvard’s 16%. And the university has expanded need-based grant funding by more than 60% since 2010, raising $635 million for additional financial aid as part of its $7 billion fundraising campaign, which concluded in 2018.
But Folt said she aims to do even more. She said she would like to raise another $1 billion in financial aid over the next several years to support even more generous policies.
One possible goal, she said, would be loan-free financial aid packages, which only a handful of elite universities with large endowments currently offer. She said she also wants to increase support for several USC programs, such as the Neighborhood Academic Initiative, which help students in surrounding low-income communities gain the skills and know-how to attend college.
Aiming to increase “experiential equity,” USC is also funding more summer internships, study abroad programs and student travel so lower-income students can benefit from the same kinds of enriching experiences routinely enjoyed by their more affluent peers.
Trenton Stone, USC student body president, said college affordability is the top issue of concern for many students who are struggling with rising tuition and growing student debt. The new financial aid policies would be a godsend to students like him, he said.
Stone, who is from Colorado, said his family earns less than $80,000 annually, and the cost of living in Los Angeles is three times as high as that of his hometown of Grand Junction. Here, he said, he is paying $1,000 a month to share a room, while his friends back home pay between $300 and $400.
“It’s pretty shocking,” he said.
Although Stone, a junior majoring in international relations, global business and philosophy, would have qualified for the new tuition-free access if he were entering USC this fall, his education is being financed by a full-ride scholarship from a regional nonprofit.
“The University of Southern California is seen as a private institution with a lot of money,” he said, “but this opens up the possibility for so many students that come from lower-income backgrounds to see USC as a place that might be a possibility for them.”
Folt said USC chose the tuition-free threshold of $80,000 to bring it to parity with UC campuses and to align with California’s median household income, which was $71,000 in 2017. About 20% of USC undergraduates meet that threshold, compared to 57% for UC schools.
USC will offer the new financial aid benefits to both California residents and students from other states but not from other countries. The UC system eliminated need-based financial aid for out-of-state students four years ago to help fund an expansion of California students.
Currently, USC calculates financial aid packages on a case-by-case basis. About 32% of new first-year students receive need-based grants averaging $39,500, and 24% receive merit-based awards averaging $20,000.
“A great education should not be limited by the ability to pay,” Folt said.