Paying the Price

At second-and third-tier private universities, though, the impact could be much more severe. "We do provide what we think are very generous financial aid packages for the middle class," says Colgate University's David Hale, vice president for finance and administration. But Colgate, with an endowment of $700 million, has less prestige and can't provide the kind of handouts that Harvard, with its $34 billion endowment, can. Colgate isn't changing its financial aid policy, says Hale, "but we do have to be aware of what's going on. Schools compete hard for those students."

Economist Ronald Ehrenberg, director of the Cornell Higher Education Research Institute, thinks he knows how the new policies will play out for schools like Colgate, and he's worried. "Each institution wants to maintain their place in the pecking order," says Ehrenberg. Top colleges have signaled their intention to use their considerable endowments to bid against each other "for the same small group of talented middle-class students." Second- and third-tier schools, which aren't sitting on the same kind of endowment war chest, "will have to sweeten the packages in order to lure top middle-class kids by taking money away from students who really need it: low-income students."

Of course, most low-income students are educated at public colleges and universities. But at a time when the United States is failing to keep pace with an increasingly educated global workforce, the notion of narrowing any portal of access to higher education for poor kids seems like a bad idea indeed.

© 2008