Changes Possible In Financial Aid

Harvard students receiving financial aid in the next decade may see marked changes in the way it is delivered, thanks to a new provost, new federal legislation and the upcoming Harvard capital campaign.

Provost Jerry R. Green has taken the lead on the issue, convening four working groups over the summer to look at different aspects of financial aid.

Green, an economist and the University administrator charged with fostering cooperation between Harvard's separate faculties, said recently that he has been looking at the problem with an eye toward "using the fact that we are one University to capture some economics."

The results of a new look at financial aid by Harvard and the nation are still unclear. But some ideas and trends being debated among Harvard administrators appear likely to be implemented in some form that would directly affect students. They include:

. Linking individual student loan repayment plans to post-graduation incomes

. Using Harvard's financial might to lower interest rates on student loans

. Decreasing the amount of debt students accumulate by raising more money for grants during the capital campaign

. Instituting more sophisticated means testing for financial aid applicants

. Increasing interfaculty cooperation on financial aid.

Nearly everyone agrees that the financial aid picture is changing. "For better or worse, it's a dynamic environment," said James S. Miller, director of financial aid for Harvard and Radcliffe colleges.

President Neil L. Rudenstine said in a recent interview that Harvard wants to help "analytically" as the nation examines the issue.

"I think it really is time to step back and give a really through rethinking to the way we finance college education," he said.

There's plenty of financial incentive for Harvard to examine this issue carefully. Financial aid is costly, and according to Rudenstine, will be at the top of the priority list in the upcoming University capital campaign. In addition to simply raising money, Harvard will look for ways to spend it more fairly and efficiently.

To be sure, plenty of national attention has been given recently to fi- nancing higher education. President elect BillClinton has put forth a plan where students canwork off their college loan debts by participatingin a domestic public service program, or pay offtheir debts based on a percentage of their annualincome.

And the federal Higher EducationReauthorization Act, which President Bush signedinto law over the summer, includes several newprovisions for financial aid.

Income-Related Programs

Some of the ideas being considered at Harvardare based on Clinton's proposals or on the newact.

For instance, Harvard administrators areinterested in the possibility of income-sensitiveor income-contingent loan repayments. These wouldmean that financial aid decisions, particularly atthe graduate and professional schools would bebased on how much a student can pay aftergraduation, rather than how much the student canpay at the time of enrollment.

A "Low Income Protection Program" is already inplace at Harvard Law School. Sally C. Donahue,director of financial aid at the Law School, saidshe believes that such programs, which tie loanrepayment to income and try to keep the loanpayments affordable, are "the wave of the future."

The problem with income contingent programs isthat students must keep paying off the loans forlong periods of time, and that the programrequires a great deal of administration.

Direct Lending

While much of the intellectual substance of theincome contingent programs comes from Clinton'syet-to-be implemented proposals, the idea ofdirect, federally subsidized lending fromuniversities to students has already beenincorporated into law.

The new federal law establishes a pilot programfor direct lending from Universities to students.This would allow students to get their loans fromHarvard, rather than the government. Harvard hasapplied to be one of the participants in the pilotprogram.

Also in the lending area, Green wants toexplore ways "to use Harvard's AAA credit ratingto lower [interest] rates on student loans."

Debt Levels

With federal financing shifting toward loans,Harvard officials are hoping to keep a close watchon student debt levels and to do everything theycan to keep them low.

"At least on the federal level, loans are goingto be the financial aid vehicle of the '90s,"Miller said. And while well-endowed privatecolleges such as Harvard are able to award moreundergraduate aid in the form of grants, theresult on the graduate level is that studentsarrive with large debts and leave with even largerones.

Donahue said an growing number of law studentsgraduates with debts of more than $75,000.

The capital campaign could decrease some of thedebt burden on students by raising more money forgrants. "I think the issue of indebtedness willcertainly be of concern as we go into the capitalcampaign," Miller said.

Another way to cut debt is to provide moreopportunities for students to work while inschool. The drawback to that is that working cantake away from the time students are able todevote to academic work and extracurricularactivities.

Means Testing

With tuition--and financial aidcosts--skyrocketing, increasing scrutiny may begiven to the true financial need of applicants.

"Some minor administrative wrinkles canactually mean a difference of several thousanddollars or more," Green said.

Harvard's objective is to move away from asnapshot approach to financial need, in whichfamily assets and income are measured at a singlemoment just before the student enrolls. Thesnapshot approach may unduly penalize parents whohave saved money for their children's education.

Interschool Cooperation

Cooperation between the separate faculties onfinancial aid issues may increase, with thepossible naming of a University-wide committee tofurther study these issues.

Right now, graduate students who serve asteaching fellows at different schools are paiddifferent salaries depending on the school. Also,students applying to two different graduateprograms at Harvard may get different financialaid awards. These differences, Green said, canaffect students' career choices.

Virtually every administrator questioned thewisdom of centralizing financial aid, citing theimportance of individual contact between studentsand financial aid officers with specific knowledgeof their needs.

But Joel C. Monell, the administrative dean ofthe Education School who was involved in reviewinginterfaculty financial aid issues over the summer,said it might make sense for administrators,faculty and financial aid officers from all overthe University to take an intense look at theseissues together.

In some sense, Monell said, financial aid is anatural area for cooperation. "We all havefinancial aid programs. We all have students whohave financial need," he said

And the federal Higher EducationReauthorization Act, which President Bush signedinto law over the summer, includes several newprovisions for financial aid.

Income-Related Programs

Some of the ideas being considered at Harvardare based on Clinton's proposals or on the newact.

For instance, Harvard administrators areinterested in the possibility of income-sensitiveor income-contingent loan repayments. These wouldmean that financial aid decisions, particularly atthe graduate and professional schools would bebased on how much a student can pay aftergraduation, rather than how much the student canpay at the time of enrollment.

A "Low Income Protection Program" is already inplace at Harvard Law School. Sally C. Donahue,director of financial aid at the Law School, saidshe believes that such programs, which tie loanrepayment to income and try to keep the loanpayments affordable, are "the wave of the future."

The problem with income contingent programs isthat students must keep paying off the loans forlong periods of time, and that the programrequires a great deal of administration.

Direct Lending

While much of the intellectual substance of theincome contingent programs comes from Clinton'syet-to-be implemented proposals, the idea ofdirect, federally subsidized lending fromuniversities to students has already beenincorporated into law.

The new federal law establishes a pilot programfor direct lending from Universities to students.This would allow students to get their loans fromHarvard, rather than the government. Harvard hasapplied to be one of the participants in the pilotprogram.

Also in the lending area, Green wants toexplore ways "to use Harvard's AAA credit ratingto lower [interest] rates on student loans."

Debt Levels

With federal financing shifting toward loans,Harvard officials are hoping to keep a close watchon student debt levels and to do everything theycan to keep them low.

"At least on the federal level, loans are goingto be the financial aid vehicle of the '90s,"Miller said. And while well-endowed privatecolleges such as Harvard are able to award moreundergraduate aid in the form of grants, theresult on the graduate level is that studentsarrive with large debts and leave with even largerones.

Donahue said an growing number of law studentsgraduates with debts of more than $75,000.

The capital campaign could decrease some of thedebt burden on students by raising more money forgrants. "I think the issue of indebtedness willcertainly be of concern as we go into the capitalcampaign," Miller said.

Another way to cut debt is to provide moreopportunities for students to work while inschool. The drawback to that is that working cantake away from the time students are able todevote to academic work and extracurricularactivities.

Means Testing

With tuition--and financial aidcosts--skyrocketing, increasing scrutiny may begiven to the true financial need of applicants.

"Some minor administrative wrinkles canactually mean a difference of several thousanddollars or more," Green said.

Harvard's objective is to move away from asnapshot approach to financial need, in whichfamily assets and income are measured at a singlemoment just before the student enrolls. Thesnapshot approach may unduly penalize parents whohave saved money for their children's education.

Interschool Cooperation

Cooperation between the separate faculties onfinancial aid issues may increase, with thepossible naming of a University-wide committee tofurther study these issues.

Right now, graduate students who serve asteaching fellows at different schools are paiddifferent salaries depending on the school. Also,students applying to two different graduateprograms at Harvard may get different financialaid awards. These differences, Green said, canaffect students' career choices.

Virtually every administrator questioned thewisdom of centralizing financial aid, citing theimportance of individual contact between studentsand financial aid officers with specific knowledgeof their needs.

But Joel C. Monell, the administrative dean ofthe Education School who was involved in reviewinginterfaculty financial aid issues over the summer,said it might make sense for administrators,faculty and financial aid officers from all overthe University to take an intense look at theseissues together.

In some sense, Monell said, financial aid is anatural area for cooperation. "We all havefinancial aid programs. We all have students whohave financial need," he said