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Can Need-Blind Survive?
Since the 1960s, Yale College has admitted students exclusively on the strength of their achievements, and without considering their ability to pay. Economic pressures have already forced several sister institutions to abandon “need-blind” admissions, and Yale is looking closely at ways to avoid a similar fate.
October 1993
by Marc Wortman
Until 30 years ago, the information sent to high school students applying to Yale College included a deceptively simple statement: “Demonstrated financial need combined with individual merit are the prerequisites for financial aid.” The message behind the official language was that a candidate’s grades and extracurricular talents might open the outer gates, but if he couldn’t afford to attend, his chances for a scholarship hung on how his qualifications compared with those of other needy applicants. And that ranking depended on a combined judgment by both the admissions office and the financial aid office.
All that changed in 1964, when the University decided that applicants who needed financial help should not be judged differently from those with bigger bank accounts. Family financial information was separated out from a candidate’s application for admission, and Yale pledged to admit talent first and find the financing later. “No needy student,” declared the authors of the revised application mailing, “will be denied the opportunity of attendance.”
Yale was not alone in adopting what came to be known as a “need-blind” admissions policy. All eight of the Ivy institutions and many other elite schools took a similar financial stance at about the same time, and, like Yale, agreed to provide needy students with a financial aid “package” to bridge the gap between what they could afford and what the school was charging. Each package is a combination of term-time bursary jobs, student loans, family and personal assets, outside scholarships, and direct grants from Yale. The financial aid office comes up with the package using formulas created by the College Board and the federal government for determining a family’s ability to pay. And the package is assembled only after the student has been accepted. “I don’t even know who’s applying for aid during the whole process,” says Richard Shaw Jr., Yale’s dean of admissions and financial aid.
Need-blind admissions quickly became a pillar of Yale’s commitment to educating a truly democratic leadership, and the impact was dramatic. Yale’s student body in less than a decade went from being mainly upper-crust, virtually all-white graduates of private, independent schools to one composed primarily of public school graduates with 35 percent of each class drawn from minority groups. (Calculation of minority enrollment this year for the first time includes Hispanics other than Mexican-Americans and Puerto Ricans, as well as foreign-born students who have applied for U.S. citizenship.)
But that pillar is beginning to show signs of stress. When need-blind admissions was established, only one-third of the freshman class required scholarship assistance to cover a term bill costing less than $3,000 a year. With around a half-million dollars, Yale could cover the financial aid program budget for an entire class. After a quick rise in the first years of the program, the portion of each new class requiring financial aid leveled off at about 35 percent. In recent years, however, the number of students qualifying for aid has jumped dramatically. Nearly two-thirds of this year’s freshmen applicants requested some level of support, and 45 percent qualified.
The Yale College grant-aid budget has increased accordingly, rising an average rate of 11 percent annually over the past six years. This year, it jumped by 13 percent to $25.6 million, making it by far the fastest-growing item in the University’s entire budget. To make matters worse, federal scholarship funding, which had been a major resource, has decreased dramatically compared with the rising demand.
Not surprisingly, the commitment to need-blind admissions is now coming under increasing scrutiny. Some prominent schools—such as Bowdoin, Brown, Smith, and Wesleyan—have already modified or abandoned their need-blind admissions policies. Several others—most notably Amherst, Columbia, and Cornell—have proposed changes in their need-blind practices, but have backed down under protests from students and faculty.
With an endowment of more than $3 billion, Yale is better off than all but a handful of its competitors in attempting to hold its ground. In one area, though, the limits of need-blind admissions have already been reached. Three years ago the College dropped the need-blind policy for non-Canadian foreign students, at least in part because of the surge in applicants from Eastern Europe and China. Only 20 of 650 foreign students who applied for admission and financial aid were accepted into this year’s freshman class, despite the sound qualifications of many who were rejected for lack of funds.
For more than a year, a special committee made up of admissions and financial aid officers, budget directors, and administrative leaders has been reviewing the status of the rest of the program. And according to one member of that group, University Director of Financial Aid Donald Routh, the committee has been considering at what point Yale might have to alter the policy further. “We didn’t try to define a breaking point,” Routh says. “But there are possible scenarios that would defy any school’s ability to maintain need-blind.”
Although need-blind admissions is relatively new, helping finance the education of needy students began almost with the founding of Yale. Even during the Colonial era, tuition costs at the College were deliberately kept low to allow a range of students to attend. Local clergy would also help worthy but impecunious young candidates pay their way.
In 1823, David C. deForest established Yale’s first formal scholarship. And in 1903, Chicago-area graduates created the first alumni scholarship fund. By the mid-1960s, individual and group endowments devoted specifically to aid for Yale undergraduates had grown to a point where, combined with such more general support as National Merit Scholarships, they seemed sufficient to cover the costs of launching a need-blind admissions policy. No less important, the federal government established a whole range of student loan and grant programs, opening up higher education to a vastly increased portion of the population with little added cost to the University.
At about the same time, affirmative-action and rural-recruitment programs began to attract members of minority groups and other candidates who might not normally have applied to Yale. As President Kingman Brewster wrote in this magazine in 1966, ”We are trying, deliberately, to make it clear to students everywhere that we hope there are no barriers—barriers of inheritance, barriers of race, barriers of pocketbook—to Yale admission for those deserving of the Yale privilege
… [Tuition] increases must be offset by a visible willingness to help all worthy students or else we will price Yale out of the market for national leadership … We are doing our part to keep alive and to make real the ancient promise of America not as a welfare state but as an opportunity state.” Diversity had become an official part of the Yale formula for excellence.
But funding such diversity has become increasingly expensive. Relative to the rest of a given class, a disproportionate number of minority students rely on financial aid. Indeed, more than half of all black and Hispanic students qualify for support. As Yale’s deputy provost, Charles Long, who helps administer the financial aid budget, says, “What you see demographically is that minorities are poorer and costs are high for an open, affirmative-action system.”
Those increases were manageable in the 1970s and ’80s when the nation’s economy was in high gear. Tuition fees rose at a rate relatively even with the growth in family income, and federal contributions kept pace with the rising costs of financial aid. As a result, need-blind admissions succeeded for nearly two decades as an educational, moral, and fiscal policy for Yale and many other institutions. More recently, however, recession and a host of other pressures—from labor agreements to high-tech scientific equipment—began to drive costs up at a double-digit rate, while the federal portion of the University’s financial aid budget shrank. And the rise in family incomes—especially for those who were not well-off to begin with and were thus most likely to qualify for scholarship assistance—slowed dramatically.
According to admissions officers, another factor should be added to the equation. Despite the highest admissions rate of any single bloc of candidates, fewer children of alumni now attend the College than in the past. Admissions officers attribute the fall-off to the fact that families tend to be smaller these days, and that parents are having children later in life than previous generations. But whatever the reason, there is a financial implication, because alumni children typically come from families with substantially higher incomes than the rest of the population.
The upward trend in students qualifying for aid is evidently not inevitable. This year’s freshman class has about the same percentage of students on financial aid as the previous one, leading University officials to hope that the increased demand for financial aid may have stabilized at the new, higher level. But, adds Routh, “We don’t have any reason to believe the percentage is going back down in this century.”
Most of the increased costs of aid now come directly out of Yale’s pocket. Under the Reagan administration, the federal contribution to grant aid began to plummet relative to the increase in demand, falling from a peak of 24 percent of the College’s total financial aid budget in 1979–80 to this year’s projected 6.2 percent. Partly as a result, Yale last year spent nearly $24 million of its own funds on grant-aid, a $10 million rise in just three years. That figure amounts to more than 26 percent of the $90.6 million in tuition income. Close to half of every dollar in increased tuition revenue during those years has gone to financial aid, creating an inflationary spiral. “The scholarship budget,” says Routh, “is the tail that’s wagging the dog right now.”
In past years, one solution was simply to increase tuition. But most analysts agree that elite private institutions are running the risk of pricing themselves out of the market. And the institutions are responding like any organizations with products to sell. While Yale’s term bill has continued to rise—5.9 percent from last year to this—the pace has slowed to its lowest rate in two decades, albeit still faster than the national inflation rate. “For ten years, one of the growing income streams we’ve relied on has obviously been tuition,” says Long. “A significant fraction of unrestricted income is used for financial aid. The strategy had been to increase tuition at a very high rate, but not to have self-help grow as much.”
In part to compensate for the restraint on tuition increases, the self-help portion of the total aid package has now begun to increase after all. “This year for the first time in many years the self-help level grew as much as the term bill,” says Long. (Freshmen must now come up with $4,700 from bursary work and loans, compared to last year’s $4,150; seniors must produce $6,500, compared to $6,100 last year.) The shift means that those students receiving financial aid must work significantly more hours during the school year to cover their costs—or borrow themselves into a very deep hole.
According to Routh, Yale was long among the most generous in keeping down its self-help levels (which remain below those at Harvard and Princeton). “There was a conscious effort,” he says, “not to put the monkey on the back of the student.” That may change. In future years, he says, “self-help will have to rise at or above the term-bill rate. I don’t want to predict runaway self-help, but it’s an area that can help us hold onto need-blind.”
No one is willing to say just when, or if, Yale might have to back off the commitment to covering the full financial needs of all U.S. and Canadian students admitted to the College. “This is just one of many pieces in the budget,” says Long. “You work as hard as you can to protect the highest priorities.”
To increase that protection, Yale is hoping to increase its own resources by a significant amount. One major source of new funds will be the University’s current five-year, $1.5 billion, capital fundraising drive. According to vice president for development and alumni affairs Terry Holcombe, “The overall goal is to add $500 million in endowment, with well over $100 million for scholarships of all sorts.”
Yale is hardly alone in facing pressures to reduce costs and increase revenues. In fact, Harvard and Princeton, with significantly higher per capita endowments (Harvard has $5.3 billion, the much smaller Princeton has $3.35 billion), are believed to be the only Ivy League schools still admitting foreign students regardless of their ability to pay. At $455 million, Brown has the lowest endowment among the Ivies, which is one reason it abandoned need-blind admissions three years ago. The admissions office there now ranks the desirability of applicants who are also applying for financial aid and admits them until its financial aid budget has been exhausted, wait-listing or rejecting the rest. Other non-Ivy schools not committed to full funding of student financial aid needs admit students, calculate their financial need, and then award them only a specified percentage of that amount, effectively challenging them to come up with the remainder.
Such an approach assumes that applicants who can pay their way will matriculate. But as the financial aid competition has become more intense, another option has emerged with disturbing force. It is the merit scholarship, based on a student’s special qualities—whether academic or extracurricular—and awarded without regard for a family’s resources. They are now being used widely as marketing tools by schools that want to level the playing field with the Ivy institutions. Among the private schools that have long used such awards to lure students are Brandeis, the University of Chicago, Duke, Emory, Georgetown, and Swarthmore. Typically, they will offer “discounts” of $5,000 or more on tuition for the most attractive prospects. At some state schools, including the University of Connecticut, the award for a highly select few can cover tuition, books, travel, and a guarantee of summer jobs for all four years. Even a family that can afford a Yale education for its son or daughter is likely to look twice at such blandishments now that the total Yale bill has gone above $100,000 for four years.
Merit scholarships may not be limited to non-Ivy schools for long. Two years ago, the eight Ivy League institutions signed a consent decree to forestall a Justice Department antitrust suit. The terms of the agreement ended a 30-year practice of sharing financial aid and other price-setting information, a system developed in part to avoid “price wars” and allow students to make choices based on the school rather than the price. (MIT, which had been a part of the consortium, refused to sign the decree, was found guilty of price-fixing, and appealed the case. Last month, it was granted a new trial.) Under the old system, financial aid officers from 23 elite, Northeastern private colleges, known as the Overlap Group, would meet each March to set financial aid packages for all students accepted at more than one of the schools. (These days, when the officers meet, lawyers must also be present to make sure that the terms of the consent decree are not violated.)
As a result, the officers are now officially ignorant of what the competition is offering—and under no obligation to make their own bids conform. According to Jim Tilton, Yale’s director of undergraduate financial aid, recent differences between financial aid offers to students accepted at Yale and at other Ivy schools suggest that the price wars the old system was designed to avoid may already be at hand. “Some of the packages I’ve seen weren’t based on need but on merit,” he says flatly. “Things have changed in the Ivy group.” Shaw adds that his office has heard from students who had been admitted to Yale that other Ivies were providing as much as $7,000 more in gift aid than Yale felt it could offer using the College Board guidelines. “When we can’t determine why there is such a differential given the information we might have,” he says, “we have to conclude that it is, for all practical purposes, a merit scholarship. It has raised eyebrows in the League. It has to. We’ve felt it. If you get $7,000 more from another Ivy school, it’s pretty likely you’ll be drawn away.” At present, such cases appear to be the exception. But, says Shaw, “We’ve lost students.”
Shaw can’t establish the cause for the difference in awards he saw last year because, he says, “I can’t ask.” Concedes Long, “It’s always possible there is a difference in professional judgment of assets, or just mistakes.”
Yale has deliberately not entered into bidding wars for students. “We’re concerned more with internal equity than with external competition,” says Routh. “We don’t want roommates from similar backgrounds finding themselves holding different scholarships.” There is a very practical reason. “If you maintain need-based aid and throw in merit,” Shaw explains, “that’s a very expensive proposition. Very few places can play that game, and it sets a dangerous precedent. If you carry it out, then you may as well be an athletic-scholarship school.” He also points out that the resource pie can only be cut so many ways. “Somebody is going to lose out,” he says. “You shouldn’t throw money at a family that has the ability to pay. That’s taking money away from somebody else.”
Of course, some critics of the present need-blind system see no problem with that possibility. At Brown, where the debate over financial aid has raged for several years, a prominent economics professor, Herschel I. Grossman, wrote to the university’s alumni magazine to declare: “The elite non-Ivy universities that award merit scholarships do not engage in ‘bidding wars.’ Rather, they make prudent use of merit scholarships to help in the recruiting of talented students … With financial aid based on merit, financial aid will not be a reward for being poor, as it is now at the Ivy universities. On the contrary, financial aid will be a prize available to any applicant, rich or poor, who, on the basis of ability, industry, and any other relevant characteristics, ranks at the top of the applicant pool.”
Shaw has a quick response to that argument. Under such circumstances, “Kids who are super kids but not superstars will have less choice,” he says. “And for the neediest kids, the playing field will cease to be level.”
So far, it appears that merit scholarships (other than athletic scholarships, with which the Ivies rarely can compete) have not proven to be a major factor in Yale’s yield of top candidates. Should that begin to happen, however, Yale may be forced to reassess its position. Says Long: “Would we say we won’t have an academic program that can compete? Probably not.”
It is a scenario Long and his colleagues would prefer not to dwell on. For the moment, they are still trying to figure out how to keep paying for need-blind, and at that they seem to be succeeding. No one is calculating the possible costs of merit scholarships on top of that. At least, not yet.  |
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