Stanford Joins Yale and Harvard in offering Free College

SFGate is reporting that Stanford’s president will announce major changes tomorrow regarding school financial aid policies. The provost John Etchemendy is saying that the school’s multi-billion dollar endowment will be used to provide free college to students with annual family incomes under $60,000. Students in families earning up to $100,000 will be able to get free housing, and even students with higher family incomes will see increases in financial aid packages.

Stanford’s expected announcement comes not long after Harvard and Yale introduced similar financial aid reforms, and it is expected that other elite colleges are likely to follow the trend.

There are three major factors causing ivy-league schools to increase financial aid:

1. Economic pressure: Rapidly rising tuition costs reduce the number of applicants unless tuition assistance keeps pace
2. Political pressure: Facing continual budget deficits, and looking for ways to pay for the upcoming fiscal stimulus package, some politicians have put increasing pressure on schools that are holding multi-billion dollar investment accounts while remaining tax free. If its a choice between paying taxes and investing in their students, it seems they would rather spend the money themselves.
3. Competition from other colleges: All these schools want to get the best students so they can continue to justify their higher tuition rates. Better students creates more successful graduates, more endowment donations, and more cash on hand to attract good students and build the school’s academic capability. The business model is extremely profitable for both the administrators and the students, but only so long as they can get the best students.