What do Northwestern and Harvard have in common? Both schools have very large endowments. As in, billions of dollars.
What does Harvard have that Northwestern doesn’t have? Students who don’t dread receiving their financial aid statements.
Last December, Harvard announced an initiative to relieve much of the stress of financing a private college education. Specifically, the school tapped into its $34 billion endowment fund to offer very significant aid packages for students with family incomes of up to $180,000. The idea is to ease the burden on middle-class students, who have typically suffered the greatest financial woes when it comes to the cost of college (too “rich” for tons of need-based aid, but not rich enough to actually pay the expected family contribution out-of-pocket without turning to private lenders). Other Ivies, like Princeton and Yale, have been taking significant steps to lower the cost of their diplomas as early as 2005.
So when Northwestern announced last spring that they too would be hopping on the increased-aid bandwagon, there was much rejoicing in Evanston. When the actual plan was unveiled, however, the cheering stopped.
Northwestern, meet the No-Loan Pledge
Northwestern dubbed its new initiative the No-Loan Pledge, a name that made students’ hearts flutter. No loans? Could it be? No more loans would mean graduating free of debt (or at least less debt for those who had already borrowed). And pledge — a pledge is like a promise on steroids, right? There are definitely no “take backs” on a pledge.
Unfortunately, the No-Loan Pledge doesn’t quite live up to its name. The Pledge, unlike its Ivy League cousins, only helps the neediest of the needy at Northwestern and does very little for students from middle-class families.
In order to qualify for No-Loan, a student must be eligible to receive Pell Grants (meaning a maximum family income of $50,000, although most recipients come from families making less that $20,000 annually) and have institutionally determined need (that is, determined by Northwestern) that accounts for at least 80 percent of the cost of tuition. To make the pool of eligible students even shallower, students are given only one chance to qualify for the program — as entering freshmen for the class of 2012 and beyond, or during the 2008-09 school year for returning students. In other words, year-to-year changes in financial situations will never be taken into account.
Don’t believe me? Take it from Northwestern’s official statement, which doesn’t exactly inspire warm fuzzies:
Students that do not qualify with this initial award will not be considered in subsequent years. We recognize that families may not always agree with how need is determined. Requiring the completion of the financial aid applications and applying standardized formulas provides the most fair and equitable evaluation of need. The Committee has been designated by the University to review No-Loan Pledge eligibility, and this decision is considered to be final.
Pledge? More like a pinkie swear
But let’s say that you are one of the few that make the cut, and you are offered the No-Loan Pledge. Surely the aid offered to the students who are eligible will be so fabulous, so generous, that we should all shut up and congratulate Northwestern for helping our peers in need.
Or not. Let’s do a little math. In order to receive No-Loan aid, students must be Pell-eligible and have unmet need of at least 80 percent. The university quotes the cost of attendance for the 2008-09 school year as $51,565. This means that eligible students will have at least $41,252 of unmet need and a family contribution of $10,313 or less.
What Northwestern is promising to do is to ensure that the aid package for our hypothetical student, which will total $41,252, does not include any loans. Remember though, that families of Pell-eligible students can make no more than $50,000 and usually less than $20,000 a year. Even if our student comes from a family with a generous Pell-eligible income of $50,000 a year (our student probably has a lot of siblings), actually contributing $10,313 a year to said student’s education would put that family out more than one-fifth of their annual income. This would leave them to live for a year on approximately as much as the cost of nine months of a Northwestern education.
What does this mean, you ask? It means that the aforementioned student will, in all likelihood, still graduate swimming in as much as $40,000 of student-loan debt. Loan debt. Despite being protected under the illustrious No-Loan Pledge, which appears to protect mostly against low-interest, government aid package loans. Unless of course No-Loan students appeal for more aid… at which point all loans become fair game.
Northwestern’s Office of Undergraduate Financial Aid was unavailable for comment in regard to the No-Loan Pledge.
So… what about us?
The No-Loan Pledge isn’t the fabulous overhaul to financial aid that NU touted it to be last spring. Sure, it’s something, but in comparison to the aid packages being offered at other universities with similar price tags, it just doesn’t compare. To be fair though, Northwestern is pulling from a much smaller (if still huge) endowment fund of seven billion dollars.
Though she is not a No-Loan recipient herself, Communication senior Lindsey Schott said she wouldn’t particularly want to be.
“The federal loans are usually the best deal,” she said. “They’re better in terms of interest and you can defer payment. [The No-Loan Pledge] seems really silly to me and not helpful at all.”
Medill junior Amy Anderson said she wished Northwestern would follow the lead of other top schools and introduce a program that would ease the strain on a majority of the student body.
“It is difficult not receiving more general grants or scholarships and having to rely on loans and minimal work study funds, especially as tuition continues to go up each year,” she said. “It seems that with the money the school has, it could follow Dartmouth’s lead and do a tuition freeze for a period of time.”
Dartmouth’s endowment is less than $4 billion, roughly half of Northwestern’s.
A tuition freeze would be a great reform for financial aid here at Northwestern — whereas Northwestern’s actual newfangled plan offers much less widespread financial assistance to the student body as a whole.
So what could the powers that be in Financial Aid do to really help struggling NU students? Stop increasing tuition faster than the rate of inflation. This year, tuition increased 4.8 percent, an increase the university justified by the 11 percent increase in aid, most of which is funding the most unhelpful No-Loan.
Come on, Financial Aid. Stop being stingy bastards… or at least stop robbing us blind.
Please?