COLUMN: Luring the best and the brightest

From Marisa Katz's, "Ineluctable Modality of the Visible," Fall '98 From Marisa Katz's, "Ineluctable Modality of the Visible," Fall '98Until now, the claim has always been "we don't need to pay bright students to come here." The scholars program provides grants -- which unlike loans, need not be repaid -- to 50 top students from the financial-aid eligible applicant pool. In other words, it allows Penn to lure students with merit-based aid -- a seeming contradiction to Ivy League policy. Why aren't the rest of the Ivies in an uproar? Well, it's been a season of change for aid policies at our peer institutions, and the rules are changing fast. Nobody knows exactly what constitutes crossing the line anymore. It all started in January when Princeton University announced an overhaul of its financial aid policy, highlighted by a conversion of loans to grants for middle-income families. Princeton officials said they acted because the number of students qualifying for scholarships dropped from 43 percent of the student body in the early 1990s to 38 percent now. Most of the decline was in middle-income families, who are often asked to pay more than they can afford from their annual income because their assets inflate their net worth. Yale University followed Princeton's lead with a decision to exempt $150,000 of a family's net worth when calculating aid eligibility. And soon after, Stanford University followed suit, announcing that it would consider property value only up to three times a family's annual income. Penn, with a much more limited endowment -- $2.89 billion compared to Princeton's $4.94 billion and Yale's $5.74 billion -- and a larger proportion of students, couldn't make large-scale changes to its financial aid policies. But still administrators and Trustees felt pressure to stay in the increasingly competitive recruitment game. So grants for 50 students and a long-term commitment to increasing the University's endowment were the best they could come up with. For decades, the Ivies have both charged similar tuitions and offered similar financial aid packages. Why are they now competing like airlines? In part, the heightened competition is a delayed result of the dissolution of the Ivy Overlap Group, a coalition of the eight Ivies and the Massachusetts Institute of Technology that fixed the amount of aid offered to students accepted at multiple institutions. The group's goal was to avoid bidding wars over prized students. According to the Manual of the Council of Ivy League Presidents, by sharing information, the institutions hoped to neutralize the effect of financial aid so a student may choose among Ivy Group institutions for non-financial reasons. But in 1991, the Justice Department argued that this price-fixing -- even for non-profit institutions -- violated federal antitrust laws. And with that ruling, the benefits the overlap system provided both the participating institutions and their prospective students came to an end. Beyond the lamentable end of the Overlap Group, however, the more overarching problem contributing to the current climate of competition is that administrators don't seem willing to admit that the price of higher education has become absolutely ludicrous. Tuition, room and board will top $30,000 at all eight Ivy League institutions for the first time this year. Although it still costs less to go to Penn than most of the other Ivies, the University's 3.9 percent increase in total undergraduate charges next year was the second-highest in the league. And while next year's 4.5 percent tuition increase represents the smallest jump in 30 years, an additional $1,004 is still not a negligible amount. When the Ivy presidents convene for their annual meeting in June, the issues of financial aid and cost containment must top their agenda. They need to set definitive rules for what is now allowed and what isn't as far as financial aid packages. And they should consider reevaluating previous policies. For instance, the strongest argument against offering merit-based aid is that once schools begin giving merit scholarships, they will have less money to spare for needier students who are also fully qualified. But maybe limiting merit scholarships to those eligible for financial aid -- as Penn has done with its Trustee Scholars program -- isn't such a bad idea. Additionally, all the presidents must reaffirm their commitment to cost containment. At the very least, tuition should rise with the rate of inflation. Perhaps the equilibrium permitted during the days of Overlap can never again be achieved. But the Ivies must now regroup to make sure that their policies are serving the needs of prospective students, as well as the institutions themselves.