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New Approach for International Aid

New Approach for International Aid
October 30, 2007

A $40,000 salary doesn’t make a family rich in the United States -- and such a family paying a private college tuition bill would feel anything but. In much of the developing world, however, a family with such income might be considered wealthy. A family with live-in servants in the United States would be considered well off – not a candidate for need-based aid for students in college. In other parts of the world, employing servants is common for plenty who consider themselves modestly middle class.

The desire to consider such realities fairly is prompting a small group of colleges to experiment with a new way of determining aid eligibility for international undergraduates. The “global consensus” approach was used this year to award aid at about 10 colleges, among them Amherst College, the Massachusetts Institute of Technology and Yale University. The system is based on applying a "global coefficient" to various cutoffs and figures used by colleges in awarding aid. That coefficient -- gross domestic product divided by the population, then compared to the figures for the United States -- is based on data produced annually by the Central Intelligence Agency to compare the relative wealth of nations.

"Currency conversion alone doesn’t speak to purchasing power,” said Daniel Barkowitz, director of student financial aid at MIT. So colleges need better tools.

In addition to using the coefficient, the effort also aims to ask common questions and to have common procedures for families and colleges to use, especially where cultural or economic differences may come into play. For example, school tuition for school-age siblings may be required in many countries without public school systems comparable to those in the United States. And procedures for dealing with necessary translations may also become more uniform. (The new system was used by colleges in the experiment for students from all countries outside the U.S., including Canada and Mexico.)

The effort to create such a system comes at a time that more colleges in the United States are talking about recruiting more international undergraduates, while discussion among some elite colleges grows about trying to meet their full need. (Only a relatively few colleges, even among those that meet full need for American undergraduates, extend that to students from other countries.)

Barkowitz and some of his colleagues in the effort presented information about the experiment at the College Board’s annual meeting last week. While they are not yet ready to expand the effort to other colleges, they hope to do so in the future.

Caesar Storlazzi, director of financial aid at Yale University, said that prior to this effort, systems used to measure the need of foreign students varied from college to college and in degree of precision. "This is about moving this away from ‘back of the envelope’" calculations, he said.

He said that many colleges have previously tried to evaluate students from the same country applying roughly the same standards, but that there was relatively little effort to quantify the degrees of poverty from country to country. Some colleges have simply applied their own methodologies for American students to students from other countries, while others have relied on asking families what they think they can contribute.

Generally, the officials involved in the effort said that they believed it worked well in its first year. “It’s not perfect, but I loved it,” said Kate Gentile, senior associate dean of financial aid at Amherst. She noted that Amherst and the other colleges using the new system simultaneously used whatever their previous system was as well, to flag any serious discrepancies. She also noted that in cases where something seemed off, aid officers could still make changes.

The system seemed to work the least well, Gentile and others said, for students who came from families that are relatively wealthy in very poor nations. Another concern noted (although this is a concern in the United States as well) was how to handle countries with wide gaps in wealth by region or social group.

The audience was packed, mostly from private colleges, and many said that they were attracted to the idea of having a uniform and fair way to deal with the issue. Some quibbled about some of the choices. One aid officer noted for example, that home equity is a common way for families in the United States to finance many of their needs, but that this tradition is not the same in many countries.

The colleges that developed the new system are all members of the 568 Group, which is a small group of colleges that admit students regardless of financial need and that have a federal exemption from antitrust issues to discuss issues related to awarding need-based aid. The college in the group are generally among the wealthiest in the United States, many of them with significant ambitions in educating foreign students.

Asked if the system would work for colleges without as much money or without similar ambitions, Barkowitz said that it could. “There’s no presumption that you are meeting full need,” he said. But with whatever system a college is using to determine need, it is “much more reasonable” to have common standards for dealing with economic variation in the world that “pointing darts at the wall.”

 

 

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