Carol T. Christ, Smith Alumnae Quarterly, Spring 2008
Harvard University's decision to eliminate loans and dramatically expand its financial aid offerings has intensified media and public scrutiny of the cost of college and of financial aid policies at all institutions. Traditionally, a college education has served as the gateway to social mobility and professional success. College access and affordability are rightly a concern not only for students and parents but for the country as a whole. While Harvard's approach might be new, Smith's leadership role in this national conversation is not.
Smith has a very generous financial aid policy. Indeed, we are nationally recognized for serving students in need, and we lead our peers in the percentage of the student body who receive Pell grants (a federal program for the most needy families). In 2006–07, 23 percent of Smith students (and 38 percent of aided students) were awarded Pell grants. Among our peer colleges, the median is 11 percent of all students and 24 percent of aided students. While many of our so-called elite peers have only recently focused on enrolling a socioeconomically diverse student body, Smith has a long and proud history in this area.
In 2006–07 Smith provided need-based institutional aid (aid that comes from the college's own funds) to 1,698 students or 60 percent of the student body, a figure higher than at most colleges in our peer group. Of the total $43.2 million in aid we awarded, $39.4 million—or 91 percent—was Smith institutional aid; the remaining 9 percent came from federal and state sources. Smith's average grant-aid per student in 2006–07 was $26,413—once again, a figure notably higher than the median in our peer group. Of the amount we used to provide this undergraduate grant aid, 39 percent comes from Smith's endowed funds that are restricted for financial aid purposes; the remaining 61 percent comes from our operating budget.
Among our peers, there are institutions with more funds given to them exclusively for financial aid. Many of these institutions have fewer students on aid and a less needy aided population. It is this depth of existing, available funds for financial aid that allows some colleges to eliminate loans from their aid packages without seriously compromising other priorities. Because Smith, by outreach and intention, has a higher percentage of students on aid, replacing loans with grants becomes more expensive. The additional funds would need to come from the operating budget, leaving less money to continue to provide the transformational educational program that is our heritage and our mission.
Many people ask why college costs so much. Higher education is a people-intensive business, and liberal arts colleges, by design, are the most people-intensive form of higher education. Sixty-three percent of Smith's budget is spent on compensation, reflecting the lower student-faculty and student-staff ratios than those of state colleges and universities. One way to make this figure vivid is to divide the compensation of our faculty and staff by the number of our students—in which case each student pays $12,600 toward faculty salaries and $17,900 toward staff salaries, a total of $30,500 for compensation alone. Tuition pays for people. We believe that the small size of a liberal arts college creates its unique value. Classes are small, and they are taught by faculty members. Each student has access to a level of resources unavailable in institutions that operate with higher student/faculty and staff ratios.
All colleges face difficult questions in deciding how to use their aid dollars. Some analysts are predicting that because the initiatives announced by Harvard, Yale, and other institutions expand aid to middle- and upper-income families, they may have the unintended effect of reducing access for those of truly limited means. Smith's mission, reaffirmed in our recent strategic plan, is to educate women of promise for lives of distinction. A vital part of that mission is supporting talented young women who would otherwise struggle the most to pay for college.
Smith meets the full demonstrated need of every admitted student. In determining aid awards, we follow a widely endorsed needs-analysis system used by more than 600 leading institutions. It provides a comprehensive and equitable evaluation of a family's ability to pay. We follow the federal limits for student loans. For nearly all of our aided students, the maximum we expect them to borrow over the course of four years is $19,000. Students in a range of income brackets are recipients of Smith grants and loans. It's important to note that, because of the generosity of generations of Smith alumnae, every Smith student, regardless of her financial situation, receives a significant subsidy from Smith resources toward the real cost of her education. While the cost to educate and house a Smith student is $56,000, the charge for tuition, room, and board is $45,606. Nonetheless, the price is beyond what most American families can afford to pay. It is only about $3,000 less than the 2006 U.S. median family income. We estimate that the families who themselves pay the full comprehensive fee come from the top 10 percent of American income distribution. To put this figure another way, 90 percent of households in the United States cannot afford the cost of a Smith education without financial aid.
That fact makes funding for financial aid an urgent public priority and an urgent philanthropic priority. We are currently engaged in an intensive review of the college's loan and grant policies, to ensure they continue to make Smith a compelling—and accessible—choice for top students. Whether with public fanfare or quiet resolve, we will continue to demonstrate our commitment to women of promise from all walks of life. Smith has played a proud role in extending access to higher education for women from a broad range of social and economic backgrounds. Our power to do this comes from the generosity of generations of alumnae. For this, we thank you.