Wednesday, January 23, 2008

Public and private Universities in the US and financial aid

Α very interesting article by Robert J. Birgeneau, Chancellor of the University of California-Berkeley.

Harvard University focused the discussion on college costs with its bold announcement that it is extending financial aid to families earning from $120,000 to $180,000 a year. Costs for tuition, fees and room and board will be capped at about 10% of family income. Following Harvard's lead, Yale and other elite private universities are responding with various measures to extend financial aid to more students. The vast majority of Americans, however, are educated in public universities that cannot provide the financial aid packages of private universities with large endowments. Ironically, it could become more expensive for a student from a family of low or moderate means to attend a public university than for a student from a well-to-do family to attend a private college. The solution to this dilemma lies in new public-private partnerships to create endowments that will ensure access for all students, regardless of family income, to attend public universities. The situation at the University of California, Berkeley, where I am chancellor, is illustrative. The total cost of attending Berkeley is about $25,000 per year. That cost is much lower than the $45,000 typical of Harvard and similar institutions. Because many more Berkeley students need aid, and because sources are more limited, the price for our students can be significant. Harvard's new cutoff point for aid is a family income of $180,000 a year; Berkeley's is about $90,000. Consequently, a family with an income of $180,000 will pay $18,000 to attend Harvard, while one with an income of $90,000 pays about $25,000 to attend Berkeley. Ivy League institutions educate less than 1% of the U.S. college population, compared with 75% for public colleges and universities. Public universities have been the nation's single most powerful engine for prosperity for millions of students from middle- and low-income families. Yet, the costs of public education are growing rapidly. At Berkeley, a third of our students come from families with incomes less than $40,000 a year. These students qualify for federal Pell Grants to assist their education. The comparable percentage of Pell Grant students in wealthy elite private schools such as Harvard, Princeton and Yale is about 10%, and the absolute numbers are very small. For students from the poorest families, we provide a $17,000 grant, lowering the cost to $8,000 a year. But based on sources of aid, we project that in 10 years these students will have to contribute $16,000 or more. What are our options? Many politicians want to freeze or roll back tuition and fees. But this is the worst option for poor families. Tuition and fee increases generate additional funding for aid that insulates poor families and can help them cover other cost increases. In California, as in many states, if tuition and fees are frozen, then so is the amount of money available for financial aid. Public universities need a new model for financial aid. A public-private partnership in which state governments match private donations to endowments for needs-based financial aid would be most effective. As an extreme example, if each of Berkeley's 420,000 living alumni were to give a one-time donation of $1,000, and if that donation were matched by the state, an endowment could be created at Berkeley that would ensure access for the indefinite future for students from the poorest families as well as those from the middle class. Public education and universal access for our brightest students, irrespective of their ability to pay, has been one of the most important social concepts that has made America great. Financial aid for low- and middle-income students is one of the best investments we can make in our country's future.

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