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New Approach for International Aid

October 30, 2007

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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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Comments on New Approach for International Aid

  • Financial need assessment for international students
  • Posted by Bridget Herrera , College Counselor at Escola Americana de Campinas on October 30, 2007 at 7:45am EDT
  • Perhaps the financial aid officials involved in this initiative could contact a few trusted college counselors in international/American schools from different countries and ask some questions about economics and the realities in their particular country. For example, in Brazil mortgaging a home is nearly impossible. Additionally, many people take out their retirement (like social security)--which is allowed by the government--to purchase a home (in cash). Thus, when you see the family with savings it is what the family plans to use for retirement.

    I am sure this assessment is difficult. Financial aid officers should feel free to ask counselors for help--we're all in this together!

  • Posted by Rich on October 30, 2007 at 8:30am EDT
  • Is it good stewardship of resources to offer financial aid to international undergraduates who are wealthy in their home countries, and who have access to high-quality undergraduate programs in their home countries? There are a very few institutions in the US for which this isn't an issue, because aid money is essentially infinite. But for most, this ought to be at the very bottom of funding priorities.

  • Posted by Wil Del Pilar on October 30, 2007 at 8:50am EDT
  • This is an interesting topic but seems to ignore the fact that we have thousands of undocumented students in the United States who are denied aid or who choose to forgo college as a result of an inability to pay. It seems financial aid officers should be meeting to find solutions to a domestic issues rather than international ones.

  • And for domestic students?
  • Posted by Jay on October 30, 2007 at 9:35pm EDT
  • I find it strange that we're even discussing financial aid for international students, when many domestic students are struggling to afford their education.

    That being said, I've often found that some international students are wealthier than they appear. I've certainly known a number of students who, on paper, would be considered poor by American standards. Yet these same students have lived much better than your average American college students - often living in houses, driving nice cars, supporting families, etc. It makes me question whether some of these students have income or assets for which they did not account.

  • Charity begins at home
  • Posted by Susan on November 19, 2007 at 5:25am EST
  • I thought that international students must prove ability to pay in order to study in this country. The requirement seems sound to me given that colleges in the US are not meeting the financial needs of domestic students. I refer to "need" by whatever measure, and ignore the often stated "fact" that many [domestic] students receive aid who "don't need it". It appears that those with family incomes of $80-$100K/year are considered affluent. Will they still be affluent after college wipes them out? Charity begins at home.

  • Financial Aid to International Students?
  • Posted by JJ on June 19, 2009 at 12:45pm EDT
  • I am perplexed. The United States citizens are paying for the college education of foreign students? Is that why not all the low income gifted students in the United States are able to receive aid because there is none left for them? This is a travesty to those who live in this country and should be receiving the needed aid. If we do not take care of our entire country and instead continue to focus on the elite few we will keep having the “haves and the have nots” on a global scale.