Rice Offers Free Tuition To Students From Low, And Moderate-Income Families

Many private universities with large endowments offer generous need-based financial aid, but they fail to communicate that to prospective students.

By Michael MarksSeptember 19, 2018 7:35 am| ,

College is expensive. These days, average in-state tuition and fees at a public university will run just under $10,000 per academic year; it goes up to $35,000 for private universities, according to data from the College Board.

In the face of these record tuition fees, Rice University in Houston recently announced it’s offering a solution: The university will foot the bill for students who aren’t able to pay otherwise. Starting in 2019, any admitted undergraduate whose family’s annual household income is $65,000 or less will receive a full scholarship for tuition, room and board. For students with annual family incomes between $65,000 and $130,000, the university will cover tuition only.

Sandy Baum, a senior fellow at the Income and Benefits Policy Center at the Urban Institute in Washington, D.C., and author of “Student Debt: Rhetoric and Realities of Higher Education Financing,” says the move by Rice is significant and also symbolic.

“It sends a very important message that people need to hear: that they can afford a Rice education even if they don’t come from affluent families,” Baum says. “However, it is symbolic in the sense that Rice already has a very generous financial aid program.”

Baum says Rice, and other highly-selective private universities with large endowments, already offer significant amounts of need-based financial aid for students from lower-income families. Baum says that comes from a high-tuition-high-aid policy that many of these institutions have. It means they set a high tuition price that they then discount for many students. She says a significant number of students still pay the full price, and that helps fund the financial aid for others.

“You have to charge different prices to different people if you want to continue to operate, and you also want low- and moderate-income students to be able to enroll,” Baum says.

Baum says Rice isn’t the first institution to do this. Harvard started a similar policy several years ago for students coming from households with an annual income of $180,000 or less. But problems can arise for students coming from families with incomes just over the threshold. She says one solution is to taper the aid, as opposed to a hard cutoff.

“They slope it … it’s gradual – the more income you have, the less aid you get,” Baum says. “I hope that Rice is doing something like that.”

But Baum reiterates that Rice isn’t the first to have such a tuition-aid policy, and that this announcement stands out mainly because Rice is doing a better job of communicating the new policy, compared to other schools with similar aid.

Baum says it’s important that wealthy institutions do as much as they can to make tuition affordable for students. She says it should be a multi-pronged approach that can include some contribution from parents, student employment and some student loans, and the rest of the money should come from the university.

“Every college should come as close as possible to doing that so students don’t need to borrow more than a few thousand dollars a year,” Baum says.

Baum says she doesn’t believe that the goal is zero debt for students; some borrowing is okay because she says it enables universities to give financial aid to more students.

“I think a lot of colleges do more than they get credit for in that direction. Communicating this to students is really important,” Baum says.

Written by Caroline Covington.