Two-tier self-help system eliminated

Tuition & FinAid budget rise

In the 2012-2013 academic year, MIT’s tuition and fees will increase by 3.25 percent to $42,050, while its financial aid budget is set to increase by 4.7 percent to $95.6 million, according to a release from MIT News Office. Though unmentioned in the release, self-help level has risen for students with family income of $75,000 or less from $4,400 to $6,000, but remains unchanged for other financial aid recipients who had to contribute $6,000 since last year, according to the MIT Student Financial Service website.

Even though this is the 13th consecutive year that MIT’s financial aid budget has increased at a higher percentage than tuition, it’s also the first time in recent years that rate of increase in financial aid budget per recipients drops significantly below tuition increase rate.

“Self-help” refers to the loans and work-study that MIT expects its financial aid recipients to contribute as part of their financial aid package. In 2009, the self-help level was $2,850 for students from families making under $75,000, and $4,750 for others. Self-help isn’t part of MIT’s financial aid budget, which only includes the gift-aid “MIT Scholarship” that 62 percent of undergraduates currently receive.

Elizabeth Hicks, Executive Director of Student Financial Services, pointed out that MIT is “the only private university that lets a student who’s a U.S. citizens use their Pell Grant to replace self-help.” Hicks said that the Federal Pell Grant, the maximum of which is $5,550, offsets almost all of that $6,000. Approximately 20 percent of undergraduates received Pell Grants this academic year, and the average per recipient is $4,191, according to statistics given by Hicks.

When explaining the move from the two-tier to the one-tier self-help system, Daniel Hastings, Dean of Undergraduate Education, said that they didn’t want to raise the higher tier to more than $6,000. “I guess the decision was just to make it simpler. We actually know that from survey data when we talk to parents: having a simpler system to explain actually does help,” said Hastings.

Hicks said this two-tier system came into place only recently in 2006. Self-help level was a lot higher before that, based on the expectation that people going into science and engineering careers can afford to borrow more, but it had been decreasing since 1998. Amidst the economic downturn in 2008, however, this steady decrease was considered unsustainable, and a decision was made in 2009 to move back towards an one-tier system.

“MIT made conscious efforts to bring self-help down and in particular tried to, in response to some of our peers, create a two-tier system, so we can have a very low self-help for the lower tier with the hope that maybe you can get the self-help lower for all tiers,” said Hicks. “It became clear that not only could we not lower self-help for everyone, which our peers have done, but we’d also have to reverse the decision about the two tiers. But in reversing that decision, we left into place another enhancement we had put in, and that is to use the Pell Grant as a mitigating factor.”

According to Hastings, the self-help level was around $8,000 in 2000. “$6,000 is a self-help level that we feel students in general can accomplish through a combination of work and loans. It’s not, we feel, an excessive self-help,” said Hastings.

“They decided it was appropriate to ask students to do more. And again, it wasn’t done lightly; it was done in concert with the Committee on Undergraduate Admission and Financial Aid, with input from students, faculty and administrators, and the senior leaders of the institute, and finally the Corporation. And the Corporation includes members of MIT who went to MIT years ago when they were asking students to do far more,” said Hicks.

Stuart Schmill, Dean of Undergraduate Education, does not think the increase in self-help level will have a huge impact on student choices of whether or not to go to MIT.

“There’s a very small handful of schools that have lower self-help level, such as Yale, Harvard, and Princeton. So will students choose where they want to go based on [self-help]? Well I hope they will choose a college based on where they think a better fit for them is, with the understanding that, yeah, maybe there’s a small difference in the self-help level now, which I can appreciate being a burden, but that once they graduate and move on will not make a difference,” said Schmill.

“In comparative studies we engaged in with peers, the average income of our financial aid recipients is slightly lower than other schools, such as Harvard, Princeton, Stanford, and Yale,” said Hicks.

Despite the stemmed growth in financial aid budget and an increase in self-help level last year, the percentage of admits who eventually chose to go to MIT — i.e. MIT’s yield — went up from 63.8 to 64.6 percent last year, according to Schmill.