Harvard University announced yesterday it would sharply increase assistance for middle- and higher-income families, using an uncommonly simple formula designed to strip away confusion about financial aid and reduce the sticker shock over tuition.
Beginning next fall, families earning $120,000 to $180,000 a year will be required to pay, on average, no more than 10 percent of their income. Harvard will also eliminate loans in financial aid packages, replace them with grants, and remove home equity in determining a family's assets.
The changes propel a trend among some elite colleges, including Princeton University, Williams, and Amherst, to make college less expensive for middle- and higher-income families. Princeton, which does not have a set formula like Harvard's, said families who make $120,000 to $180,000 contribute 16 percent of their income, on average, toward the university's cost.
Three years ago, Harvard became one of the first major universities to waive all costs for families earning $40,000 or less, a benefit extended in 2006 to those making as much as $60,000. Under the new standard, the family contribution will decline steadily from 10 percent of income to zero.
Harvard officials say their goal is to simplify the information families receive about how much aid they can qualify for by using an income percentage as their guide. Most colleges advise families that aid decisions are based on a variety of factors.
"It's a completely new approach, as far as I'm aware of, in higher education," Harvard's president, Drew Faust, said in a telephone interview yesterday. "We were just thinking of how much of people's incomes were going toward paying college costs. It's one way of thinking about how financial aid might work, a logical and explainable policy."
With the changes, Harvard will spend $120 million on aid next year, up from the current $98 million. Harvard will pay for the initiative from its endowment, fund-raising, and existing funds.
During the past decade Harvard has been pouring more money into financial aid for increasingly higher income families. In September, the Globe reported that Harvard was bolstering aid packages for families earning as much as $180,000 a year.
Harvard is reducing the amount that middle- and higher-income families have to contribute by one-third to one-half. For example, a family making $180,000 now pays an average of $30,000 toward Harvard's annual cost; under the new initiative, the family would pay just $18,000. A family making $120,000 now contributes $19,000 on average, and will see its share drop to $12,000.
Harvard has no income cutoff for aid recipients and bases decisions on numerous elements, including the number of children in college and other debt. At Harvard, 100 families who earn more than $200,000 qualify for some aid because of special circumstances.
A little more than half of the 6,600 undergraduates now receive financial aid, and Harvard officials said they hope the new policy will attract more students who might not apply because they think they cannot afford the cost.
With the changes, Harvard is introducing a new way of describing aid, said Jim Kolesar, the assistant to the president at Williams College.
"It's absolutely a different way of thinking about it," Kolesar said. "One of the things that Harvard has done today is to make it easier for families to understand what they'd be expected to pay. I expect that to be powerful for families."
Kolesar was unsure whether Williams would follow Harvard's approach, but said Williams already is looking for more ways to help higher-income families.
Princeton, which in 2001 became the first college in the nation to offer a no-loan policy for all of its financial aid recipients, has been implementing changes similar to Harvard's since 1998, according Cass Cliatt, a Princeton spokeswoman.
Some college officials questioned whether it was practical to apply a uniform approach to financial aid, even as they praised Harvard's idea.
"You have to applaud Harvard for trying to do something that's simple and straightforward so people will consider private colleges," said Audrey Smith, dean of enrollment at Smith College. "For all of us, we appreciate and feel a family's need to say, 'Tell me what it's going to look like.' "
But Smith College, which focuses its aid primarily on lower-income families and does not plan to eliminate loans as a part of financial aid, does not believe it can use such a simple formula, she said.
"Every family's financial situation is so individualized," Smith said. "When you do [what Harvard is proposing], people tend to latch on to a figure, and say, 'but you said . . ."
On Harvard's campus yesterday, students cheered the news that the university was providing more financial aid, said Ryan Petersen, a senior and the undergraduate council's president. He sent an e-mail announcing the initiative to the student body government headlined, "Most Awesome News Ever," and ended it with the phrase "Drew Gilpin Faust = Best president ever."
"Many students have had to make sacrifices to come to Harvard, and those sacrifices, given Harvard's great resources, are not as necessary," Petersen said in an interview.
Linda Wertheimer can be reached at wertheimer@globe.com.
