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Record Assignment Desk

Instead of criticizing next week’s Record article on the elimination of loans after it appears, let’s be proactive and tell the Record editors what sorts of questions they should answer in that article. EphBlog: Always here to help!

1) What is the breakdown by source of the $1.8 million in loans that Williams is forcing students to take out this year? (I assume that the $1.8 million in Morty’s letter is an annual cost estimate and that it approximates the amount being borrowed this year.) I have a vague sense that most (all?) of this comes from Stafford loans since the annual maximum for any student is so low. But don’t Stafford loans have income limits? Are there also special Williams-only loan programs?

2) Just for the historical record, what are the details behind this. “But other financial aid students had been expected, depending on income, to borrow cumulatively over their four years $3,800, $7,800, or 13,800.” Loans had already been eliminated (when was that exactly?) for “low-income” families. So, the income levels for the cut-offs above were probably fairly high. What were they? The more details of the history of student borrowing at Williams that the Record can provide, the better the article will be. Some relevant EphBlog links are here.

3) What is the breakdown by family income? This is the most interesting question. Again, I am not looking for the Record to judge the policy, I just want the facts. How much of that $1.8 million comes from students whose families with incomes higher than $150,000? Higher than $100,000? The College has been bragging for several years that the income of families receiving aid has risen, as if giving breaks to families making $200,000 or more was a sign of moral seriousness. Also, loans were eliminated for families below some threshold (was it 60k?). So, much of the $1.8 million windfall goes to families well above middle-income. Details, please.

4) Please pin Morty down on this claim.

This move also comes at a time when the College has succeeded in increasing the socio-economic diversity of entering classes. In fact, the Class of 2011 is the first in history to have more than half its members qualify for Williams-based aid. Even more have won scholarships outside the College.

Really? I have my doubts. But, first, let’s have the facts. As Lindsay Taylor’s ’05 thesis documents, the admissions office has two “tags” for socio-economic diversity: Socio-Ec 1 and Socio-Ec 2. (Those names could be off and the Record should tell us the exact details.) Has the number of such tags among enrolled, not just accepted, students increased in the last few years? If so, has this had a meaningful impact on the actual diversity of the class? To be concrete, what is the 10th, 25th and 50th percentile of family income among the class of 2011 relative to the class of 2001? I bet that family wealth has gone up much more than GDP growth in the past decade across these percentiles rather than down, as Morty’s comment implies. It is an empirical question.

Moreover, one way for the College to increase the number of students on financial aid is give more money to rich families, rather than to actually let in more poor families. Note my previous comments about this amazing table from Taylor’s thesis with data from the classes of 2005 and 2007.

Note the dramatic increase in the number of applicants (and awards) in the highest income grouping. Among families with greater than $125,000 in income, the number applying/awarded went from 103/51 to 212/90 in just 2 years! What better indication could there be that the College is giving out merit aid in all but name?

This isn’t to say that a family making, say, $150,000, couldn’t use some help, even if they have been making this much for years and years, even if they fully expect to make this much for years to come, even if they have (wisely!) followed EphBlog’s advice and used their savings to pay off the mortgage rather than putting it in the child’s name. Money is always tight, no matter how much you have.

The point is that, as recently as two (much less twenty) years prior, Williams had claimed to be need blind, to take care of the demonstrated financial need of every student. The College was either lying about this policy before or it has expanded the definition of need since. I’ll bet on the latter. Moreover, I predict that we will be seeing much more of this in the future. Excellent students are an input to the production of an elite education. If Williams wants to keep attracting them, it will need to pay for them.

Why not hand every student a $100 check on the first day of classes in September? Presto! Every Eph is on financial aid! We have maximum socio-economic diversity! (Although perhaps the trend from 2005 to 2007 has not continued. See the latest data from the bottom of this page.)

Again, I am not sure how much fudging the College is doing here, but it would be fun for the Record to find out. Related screeds here and here. If you are the Record reporter assigned to this story, drop me a line. I know where the bodies are buried on this one (read: Overlap) and I give good quote.

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#1 Comment By Anonymous On November 3, 2007 @ 1:00 pm

Endowment aprox. $1,800,000,000 (Wikipedia says 1.9 as of June 2007) cost to eliminate loans $1,800,000…$1,800,000,000 divided by $1,800,000 equals .001…not exactly a big issue is it? Kind of a rounding error to the institution, a very generous gift to the students, good pr, and keeping up with the Princetons et all. Cheap at half the price.

#2 Comment By Vermando On November 3, 2007 @ 6:57 pm

I would also be curious to see some more details here.

I wonder how much fudging there was before, though – there are many, many non-wealthy students who graduate with far more debt than the numbers the college gives there. I believe that we have those official numbers as part of our advertising (if we’re thinking in business terms here). However, I wonder what the reality behind the numbers is, i.e., how much debt students actually graduate with and how that number is changing / expected to change over the coming years.

One anecdote from my time on campus – I found that students who hailed from certain elite cities in the Northeast and West Coast (speaking broadly) were far more likely to take on loans that were students from those areas, even when incomes were similar.

Why? Families from outside of that area have far less of a ‘college culture’ (broadly define). When Pops has made it good after going to State U, he often does not see why he needs to fork out 1/4 – 1/3 of his after tax income to send his kid to an “elite” school. Given that the college, all things being equal, would like to attract students based on their academic / extracurricular excellence and not on their parents’ willingness to pay, I support the granting of aid to comparatively higher income students as a means of furthering this goal.

#3 Comment By Anonymous On November 3, 2007 @ 9:10 pm

A lot of the information about the size and nature of the aid package relative to parental income is readily available – at least if you have a child who is a senior in high school. The mailing with the college prospectus includes a financial aid fact brochure (it isn’t entirely up to date, though, as it still discusses loans – they need to print up and send out a new one!). Here is some of the information that David asked about, for the admitted class of 2010 and the 2006-7 academic year. The same brochure lists the toal fees for a year at Williams as $45,140 (tuition 35,438; room 4,810; board 4,660; fees 232). Aid packages often exceed the listed cost of a year at Williams because the cost of books and semesters abroad (and perhaps other items as well) are included in the package. The most aid offered last year was $49,647.

Parents’ income: 0-25,000
No. admitted requesting aid: 44
No. admitted & awarded aid: 43
Average aid package offered: 44,523
Aid in the form of grants: 43,099

Parents’ income: 25,000-50,000
No. admitted requesting aid: 103
No. admitted & awarded aid: 100
Average aid package offered: 42,314
Aid in the form of grants: 40,576

Parents’ income: 50,000-75,000
No. admitted requesting aid: 79
No. admitted & awarded aid: 76
Average aid package offered: 47,435
Aid in the form of grants: 35,199

Parents’ income: 75,000-100,000
No. admitted requesting aid: 70
No. admitted & awarded aid: 65
Average aid package offered: 29,145
Aid in the form of grants: 25,833

Parents’ income: 100,000-125,000
No. admitted requesting aid: 76
No. admitted & awarded aid: 70
Average aid package offered: 23,182
Aid in the form of grants: 20,120

Parents’ income: 125,000+
No. admitted requesting aid: 218
No. admitted & awarded aid: 84
Average aid package offered: 17,519
Aid in the form of grants: 14,365

(Why doesn’t the blogging software allow proportional spacing and tables?)
Note: parent income alone doesn’t determine aid awarded – equity in a house is another big factor. Some additional information and instructive examples are given in the brochure.

This information doesn’t tell us how of those admitted in each parental income category enrolled at Williams, nor does it tell us how many applicants who did not apply for aid were admitted. But it does let us know that only a small proportion of aid packages came in the form of loans (no more than $3,600 per year, mostly in the form of Stafford or Perkins loans), and that the bigger the financial aid package, the smaller the amount that came in the form of loans.

The same brochure lists the actual cost of a year at Williams as $80,000, which means that every student at Williams last year had at least $34,000 of the cost of their year at Williams underwritten by the endowment. Until a current student or their family has donated a total of $125,000 to the college, that student is effectively benefiting from financial aid. So there aren’t very many students at Williams who do not receive some form of financial aid!

Paying off student loans has never been a big problem for those who go into investment banking or other high-salaried jobs. From my point of view, the important thing about eliminating loans is that Williams graduates who choose careers with low pay but what I consider to be high “value” (for example, working towards social justice) no longer suffer under the burden of paying off their loans from a miserly salary.

Finally, why is there this pervasive and cynical bias which always assumes the worst about the motives of Morty and the other denizens of Hopkins Hall? For all we know, Morty has been pushing for years to get rid of loans and make financial aid entirely in the form of grants, and it is the trustees that have been resisting this move. I would find it easier to believe that it is the trustees (in other words, the alumni and not the administration) who are the ones who are holding up progressive changes until Amherst takes the lead.

#4 Comment By David On November 3, 2007 @ 10:09 pm

1) Thanks to anonymous for the details! Very helpful.

2) Why am I (sometimes) “cynical?” Experience, my friend! Note that the College has a history of reporting data for admitted rather then enrolled students when it wants to be misleading. Latest example is reporting data on average SAT score for legacies who were admitted while refusing to give us that data for legacies who enrolled. You think it is just an accident that the College tells you about accepted rather than enrolled students? Think again.

3) Want another reason for cynicism? The only reason that the College has gotten rid of loans is competition. If it were not for the action of Amherst et al, Morty and friends would still be requiring students to go into 6-figure debt. Back in the day, Williams administrators like Morty made my classmates go into tens of thousands of dollars of debt because they colluded with other colleges. Read about Overlap and tell me why a bit of cynicism isn’t a wise default position.

4) Only in a fantasy world would it be true that “Morty has been pushing for years to get rid of loans and make financial aid entirely in the form of grants.” Morty is an expert on college financing and has published widely. He has never made his opinions a secret. If he had been “pushing” this position for years, we would know about it.

5) Want another example of cynicism? OK. Why does Williams take equity in the family home into account when deciding on the family contribution? Harvard does not do that. Does Williams want families to sell their homes and rent in order to send Johnny to Williams? Does Williams want families to take out a second morgage? How nice!

The reason that Williams posts this lovely link is because they want your money, even if you are far away from rich.

Today, with interest rates relatively low, the most frequently used college financing plan is a home equity loan, by which a homeowner borrows for college costs using the equity in his home. The principal advantage is that the interest paid on a home equity loan can be deducted from taxable federal income, which is not always possible with other education loans.

I predict that this is the next major policy change that we will see, that schools like Williams will follow Harvard’s (and Princeton’s and Stanford’s) lead and not count home equity in calculating family contribution. Why doesn’t Williams do that now? Because it doesn’t have to! Because almost all its major competitors don’t do it.

Don’t count for Morty’s generous heart to avoid that second mortgage. Count on competition. Previous discussion here.

#5 Comment By David On November 3, 2007 @ 10:21 pm

Let me help out the Record reporter. Using the table for Taylor’s thesis, the link to the Admissions page and the data from a reader above, here are total number of admitted students with family incomes below $100,000 who were awarded aid for different classes.

2005: 305
2007: 268
2009: 325
2010: 284

Corrections on my math are welcome.

Seems like a clear trend! Now, again, without knowing how many students in each category enrolled, it is tough to make sense of this. And, things like other family assets, more international students and economic conditions should affect the analysis. But, big picture, there is just not that much going on. There is no good public evidence that there “socio-economic diversity” of Williams has increased in a meaningful over the last decade, if not longer. Want to prove “cynical” me wrong? Show me the data.

#6 Comment By fluctuating income On November 4, 2007 @ 1:58 am

Having just manuevered through the application process I can tell you that there wasn’t one school that our student considered, that didn’t include our assets (in our case, our home equity) as a major determining factor in whether we qualified for any aid. And even though we make a living in the Arts, (fun, but highly undependable and wildly fluctuating!) that asset, combined with our immediate income, meant we didn’t really qual;ify.
However, to Williams credit, they were open to discussion and seemed genuinely interested and willing to help, regardless of the set criteria.
Ultimately,we decided to pay the full tuition, (because we can afford it…now) but not without hearing from the financial aid dept. that they would like a call from us if we encountered difficulty at some point in the 4 years. We were left with the feeling that the loan criteria wasn’t written in stone and they genuinely wanted to do what worked best for us.
That said, the whole financial aid thing can be very misleading. Supposedly, Harvard gives aid to somewhere around 85% of its students. But who knows how much that is….like someone pointed out earlier, it could be $100.00 and could still be counted as aid. So, specific data could be very telling.

#7 Comment By frank uible On November 4, 2007 @ 5:18 am

Why does the general tone of this board tend to treat many (perhaps most) students’ (students’ parents’) desire to lay their hot little hands on the College’s money as a fair and equitable (and perhaps desirable) aspiration while at the same time the College’s attempts to lay its hot little hands on as much of the money of certain (possibly most) of the parents are treated as stingy and cupiditous?

#8 Comment By Anonymous On November 4, 2007 @ 10:43 am

Of interest on the home equity topic. Williams although a member of the 568 group does not utilize the same standard as other members in determining the value of home equity relative to the EFC. If you run scenarios with high home equity on the Amherst web site financial aid calculator and the Williams web site calculator you will find than Williams does not cap home equity at the new standard of 1.6 x income or even the old standard of 2.4 x.

#9 Comment By Anonymous On November 4, 2007 @ 9:27 pm

You desire for numerical statistics to buttress your emotional positions is admirable. As a receipient of aid, I am deeply indebted to this institution for its care, concern and commitment to educating our nation’s citizens. While you agitate over calculator numbers conerning your rant remember this: with all my breath that I leave here, I work to better humanity through my efforts here and over there. I shall leave this place a better place than I found it.

Your free loader student

#10 Comment By Anonymous On November 5, 2007 @ 8:09 am

Williams is also extremely generous to alumni who choose to work in service-oriented jobs. They are paying off my Perkins loans, 25% a year, while I work as a teacher in a low income area. By the end of 5 years, my entire debt to Williams (about 10,000 dollars) will be paid off. My Stafford loans (which are paid directly to the federal government) are a slightly different story, but the government also helps pay down those loans for people in public service jobs.

I have to say I have nothing for respect for the financial aid office at Williams, which sat down with my family and me several times over the course of my four years to make sure Williams stayed financially feasible for us.

#11 Comment By Anonymous On November 5, 2007 @ 8:52 am

I tried the loan calculator as one poster suggested and Williams does not cap home equity at all. Strange, since Morty has written on the topic. I guess this covered before on Ephblog. “February 26, 2007
Millionaires on Paper”
But that implied that Williams follows at least the 568 standard, which they seemingly do not.

#12 Comment By Vermando On November 5, 2007 @ 6:50 pm

Wait! Anonymous guy or gal who is having his/her loans paid off because you work as a teacher – are you serious? What are the protocols for this? Is this a special program or something that is open to all teachers in low-income areas?

I ask out of personal interest – my wife is such a teacher. Many thanks if you read this.

#13 Comment By ce On November 5, 2007 @ 8:13 pm

I generally admire David’s almost obsessive adherence to numbers, but in this case I think the numbers (particularly those pumped out by the finaid calculator) can be misleading. Williams is–even by the flexible standards of its peer institutions–incredibly willing to “talk things over” when it comes to aid. I know that a high percentage of students on finaid are actually on more aid (many by fairly significant sums) than what they were formally offered by the school.

That said, on a slightly different topic, I found David’s link to the number of students with I generally admire David’s almost obsessive adherence to numbers, but in this case I think the numbers (particularly those pumped out by the finaid calculator) can be misleading. Williams is–even by the flexible standards of its peer institutions–incredibly willing to “talk things over” when it comes to aid. I know that a high percentage of students on finaid are actually on more aid (many by fairly significant sums) than what they were formally offered by the school.

That said, on a slightly different topic, I found David’s link to the number of students with <50k income per-year fascinating. Correct me if I'm wrong, but isn't 2005 pre-Questbridge...? If so, wouldn't your data suggest that Questbridge isn't really bringing the sort of economic diversity that the College claims it is?

#14 Comment By Anonymous On November 5, 2007 @ 8:48 pm

If there is a policy that the 568 group agrees to regarding capping home equity then Williams should abide by it. Why should one have to negotiate on a case by case basis. What factors do you take into account regarding treating one home equity value as opposed to another. That was kind of the point with doing away with the overlap process and clearly the point of the group policy capping home equity at a lower value given the run up in home prices. Equal treatment in the clear light of day. Why would you have a fin aid calulator that “pumps out” misleading numbers? If a potential student runs the Amherst calulator or any other 568 group and then the Williams they will never apply to Williams it is that vastly different.

#15 Pingback By Stop The Presses » EphBlog On March 3, 2008 @ 10:11 pm

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