New Tactic in Aid Arms Race

Cornell and Dartmouth match all Ivy aid packages, resulting in some admitted applicants getting more money than others. Has Overlap Group philosophy returned, courtesy in part of athletics?
August 30, 2010

In an unusual way, some of the ideals of the Overlap Group may be returning -- but in a significantly different form from the meetings of elite private colleges that ended after the Justice Department started an antitrust investigation into its practices in 1989. At least part of the momentum for this approach is coming from concerns about athletic competitiveness in the Ivy League.

The ideal behind the Overlap Group was that students fortunate enough to be admitted to more than one Ivy League institution (or more than one elite liberal arts college) should be able to make their college choice based on non-financial criteria. This was accomplished by having aid officials of the various colleges meet each year, and review the aid offers they were preparing for commonly admitted students and to agree on a common analysis of financial need. The Justice Department viewed this as taking away students' right to have competing aid awards to consider -- and that perspective carried the day as several settlements in the early 1990s formally ended the practice.

In the years since then, especially in the 2007-8 academic year, students did start to see the competition that the Justice Department wanted to bring about. Aid policies and packages became much more generous -- across elite higher education but especially at institutions with mega-endowments: Harvard, Yale, Princeton and Stanford Universities. Loan requirements disappeared and families who in years earlier would never have been considered needy suddenly found themselves eligible for aid. At Harvard University, for instance, those from families with incomes under $60,000 pay nothing (and borrow nothing) and those with incomes up to $180,000 have to pay no more than 10 percent of family income -- again without any borrowing.

Among colleges that also want top students, but that award aid based only on need and so can't resort to merit scholarships, it has appeared that there was no way to match Harvard. Most of these institutions simply could not afford to be as generous as those at the top of the endowment pyramid.

But quietly -- without the big announcements that accompanied the aid shifts of 2007-8 -- there may be the beginnings of an effort to return to the Overlap Group approach.

Cornell University has an across-the-board aid policy that doesn't come close to Harvard's (just as its endowment doesn't come close). Loans aren't eliminated for everyone -- just those with family incomes up to $75,000. For other students, there are loans (although there are caps of $3,000 a year for those with family income up to $120,000). But for those admitted to enroll in the fall of 2011 who are also admitted to Harvard, Cornell will match the parental contribution and loan levels of Harvard. And it will do the same for all other Ivies (a few of which are similar to Harvard and a few of which have policies somewhere in between those of Cornell and Harvard). Cornell also says it will "strive" to do the same for those also admitted to Duke and Stanford Universities and to Massachusetts Institute of Technology.

'The Best Fit'

Cornell is not alone in adopting this philosophy. Dartmouth has done so too. And so once again for some students admitted to multiple Ivies, price may not have to be a key consideration in decision-making.

"What [this policy of] matching is trying to do is take the financial competitiveness out of the equation and have students make the decision about the best fit for themselves educationally and personally, and that was the underlying principle behind Overlap," said Susan H. Murphy, vice president for student and academic services at Cornell.

At the same time, she noted "absolutely fundamental differences" between what Cornell has started and Overlap. Cornell will change its aid awards only at an applicant's request, since the other Ivies no longer tell Cornell how much they are offering commonly admitted students. Further, the match can only benefit the applicant. Under Overlap, once those institutions that had common admitted applicants reviewed files, the aid offers could well have ended up in the middle of two calculations -- with a student never knowing, for example, that Yale University was going to offer more money than Harvard, but knocked a few thousand off the package so that it would match Harvard's.

Cornell "is so much bigger and poorer" than Harvard (both in terms of family income and endowment) that there is no way it could afford to match Harvard across the board, Murphy said. But the matching pledge -- less expensive, even though she said she couldn't predict its cost as she doesn't know how many students' choices it will influence -- restores aid equity for commonly admitted applicants in the Ivies.

While Murphy said she doesn't like the term "aid arms race," she acknowledged that the decisions of the wealthiest Ivies have changed the equation for defining need-based aid. "I think what they've done in the main is motivated by the right reasons," Murphy said. "They have resources they can spend. They think the middle income and upper income are getting squeezed and they are opening their doors as widely as they can financially, and I applaud them for using their wealth to do that."

At the same time, she said that "there's no question that the needs analysis that Harvard and Yale have brought to the table is fundamentally different from anything I knew" before those announcements. She said that limiting family contributions to 10 percent of income for someone in the high hundred thousands of family income was "fairly generous" and that she thought there was nothing wrong with reasonably sized loans for students -- as a means to stretch aid dollars further.

Murphy is under no illusion that Cornell is about to split the enrollments of those who are admitted to Cornell and also to Harvard, Yale or Princeton. Most "are going to go to Harvard anyway," so they won't even ask Cornell to match the aid offer. But she noted that even if Harvard, Yale and Princeton win the lion's share of that pool, the share Cornell gets "is not zero," and could go up if the aid differential disappears. She noted that the university's specialized academic programs and location (while not desirable for everyone) have long been factors to attract some students who are also admitted to what U.S. News & World Report and conventional wisdom would consider more prestigious institutions.

The numbers of common admits with Dartmouth College and Columbia University are relatively small, she said, because both of their institutions' classes are much smaller than Cornell's. But she said that there are always healthy numbers of common admits as well with Brown University and the University of Pennsylvania, where the policy would also apply.

The Athletic Factor

There is another group of commonly admitted applicants to Cornell and other Ivies that could well be swayed by price equality -- athletes.

In 2008, Cornell adopted a similar policy of enhanced aid packages, but it was only for selected groups of applicants, including athletes. The Ivy League said that the policy effectively amounted to athletic scholarships, banned by the league. Cornell disputed that view because the larger awards went only to those with financial need, but nonetheless had to abandon the policy because of the league's analysis.

Robin Harris, executive director of the Ivy League, said that Cornell's new policy "is fine" because it is "for everyone" and athletes and non-athletes benefit equally.

Murphy said that "there's no question that had we not been told by the Ivies" that Cornell couldn't keep the policy adopted in 2008, "we may not have gone in this direction as quickly." She stressed that the motivation for the policy shift was "to be able to get our fair share" of the best students -- athletes and non-athletes alike.

Still, she said that athletics is a key issue here. Because the Ivy League bars athletic scholarships or merit scholarships, recruited athletes are theoretically not factoring finances into their choices, but there has been a huge impact on the gaps among the Ivies since some members have so increased their aid packages. Murphy noted that, without Cornell's shift in policy, some students could be looking at a $100,000 gap over four years in the relative costs of Cornell and a competitor. Cornell "may be in an odd position" to raise the issue now, given its recent athletic successes (Sweet 16 for men's basketball, and No. 2 spot nationally in men's wrestling and women's ice hockey), but she said the issue is very real. "We have had a grave concern about competitive equity within the league," she said.

Experts on academically talented athletes say that Cornell's new aid policy may well have a greater impact on the decisions of athletes than of non-athletes -- even if all will benefit. Matt Baker is a private counselor in Illinois who specializes in helping students who are recruited by Ivy League institutions and top liberal arts colleges and who have the potential to play intercollegiate athletics at those colleges.

While he said that the prestige factor still favors Harvard, and that many athletes most motivated by scholarship dollars may bypass the Ivies altogether so they can win athletic scholarships, he said there is a significant other group of athletes. Once they have decided to go the Ivy route, they want to go where they particularly like the coaches or are excited about their particular likely fit on a given team. In this competition, he said, "I have students who look at Harvard and want to go to Cornell, because of the coaches." And the same is true, he said, for various other Ivies, where the theoretically more prestigious institution doesn't sway an athlete -- as long as price isn't a factor.

While some Ivy-bound athletes aren't price sensitive, Baker said, for those who are, Cornell's shift "absolutely" will change its ability to attract talent.

Quiet Competition and Some Criticism

Some normally talkative admissions and aid experts don't want to talk on the record about this particular competition. Privately, some are critical of Cornell, saying that its primary motivation is about athletics, or that Cornell is moving toward unofficial merit aid since those at the top of its applicant pool (those getting into other Ivies) can get better aid packages than those for whom Cornell was a stretch and who didn't get in to other Ivies.

Others, however, credit Cornell with finding a way to compete with Harvard and for providing more aid money to more students. Aid officials elsewhere -- including some who don't actually support Cornell's move -- credit the university for being forthright about it. The university has briefed its competitors and, while not shouting about its new policy the way colleges did with big financial aid announcements a few years ago, it is clearly visible on the university's financial aid website.

"We've tried to be transparent about what we are doing," Murphy said.

Many aid experts believe others are also matching. For many colleges that have no qualms about merit aid, they just offer more merit aid to those who are also admitted and receive generous aid packages from selected Ivies. But the issue is delicate for those that want to match without awarding merit aid.

One of those institutions is Dartmouth -- and athletics may again be a driver. Last year, the acting athletics director sent a letter to football supporters (a group generally not thrilled with the team's recent performance) outlining various ways the college was trying to be more competitive. The letter stated that "in any instance where a recruit receives a more favorable projection from an Ivy competitor, our financial aid colleagues have responded swiftly and competitively to eliminate the differential."

Harris, the Ivy League executive director, said she was familiar with the letter. Asked whether Dartmouth had faced scrutiny over publicly stating that football players' aid packages were always being adjusted to match those offered by other Ivies, Harris said that Dartmouth officials had assured the league that football players weren't getting special treatment and that the college was treating all accepted applicants the same. She said Dartmouth's policy was actually "very similar to what Cornell is doing now," even if the public knowledge of it may relate to a letter about football recruits.

A spokeswoman for Dartmouth confirmed that the college "does match need-based financial aid offers for all students we accept who also receive offers at other Ivy League schools."

Murphy, the Cornell vice president, said she believed a number of colleges were engaged in matching. She declined to name names, but said "I am sure there is some matching going on across my peers," even if she said she wasn't sure "whether they are being as direct about it."


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