The Ivy League Just Keeps Getting Greener

But not the trendy, Al Gore kind of green—the old-fashioned, John D. Rockefeller kind of green.

I received an email this morning from Stanford University announcing that it (like Harvard, Princeton, etc.) will be expanding its financial aid program. Now a family with an income of less than $100,000 will not need to pay tuition, and a family with less than $60,000 will not pay tuition or room and board fees. It’s great that wealthy institutions like Stanford are starting to one-up each other on generous financial aid packages, but it also points to some troubling issues.

Stanford’s aid will provide free tuition to households with incomes in the top 20 percent of incomes in the United States, and the offer of free tuition and free room and board will go to households with incomes in the top 40 percent. Something seems wrong when a college’s tuition—even an elite private school—is beyond the financial capacity of those defined by the New York Times to be “upper class” and “upper middle class”. Suddenly, there is a lot of aid money going to students who, when looking at the income distribution in the United States, shouldn’t need it.

And this aid money is not distributed evenly across colleges—most institutions don’t have the financial resources to offer these generous aid packages. The Council for Aid to Education released today its “Voluntary Support of Education” report, which tracks private donations to colleges. These donations have increased for the 4^th year in a row, totaling $29.8 billion in 2007. But even more interesting is that the top 20 institutions, representing 2 percent of responding institutions, raised over a quarter of all the money going to higher education. Topping this list? Stanford University with $832 million last year.

The Brookings Institution, meanwhile, released a report today indicating that—while a college degree is still a powerful ticket to upward economic mobility—the growing gap in college attainment between the rich and poor in the United States threatens the ability of those from low-income families to climb the income ladder. And our most recent Chart You Can Trust shows that if you’re from a low-income family, it’s still much harder to get into the most elite institutions, even if you have high test scores, than someone from the “upper middle class”.

So while students that attend an elite institution can increasingly be assured that college will be affordable, this assurance does not extend to the vast majority of students who attend less wealthy or open-access institutions. And since low-income students are much less likely to attend an elite institution like Stanford, they might end up paying a higher tuition bill than someone who can attend--even if that person is from the top quintile of household incomes.