ALWAYS EXPENSIVE, a Harvard education is becoming costlier each year. But a new Harvard program announced this year may make the burden easier to bear.
For a member of the Class of '72 entering Harvard in 1968, the cost of a year in the College was $3240. The tuition, room and board bill for a freshman in the entering Class of '76 will be $4745, an increase of $275 over this year's cost and a $1505 increase in just four years.
This boom in the price each student pays for his education has put an enormous burden on low- and middle-income families, a burden which scholarships and grants cannot completely alleviate without consuming the additional revenue and negating the purpose of the increase.
Many have warned that Harvard could become a college for the very rich who can afford the full cost and for the very needy who can qualify for full scholarships.
The Harvard Plan--proudly unveiled by the Administration last January the same day that it reluctantly unveiled yet another tuition increase--is a unique student loan program which could set the pattern for other universities seeking to make more bearable the burden of student education expenses.
Under the Harvard Plan, a student who qualifies for financial aid may borrow up to $1500 a year to meet expenses for college, graduate school or professional school so long as his total indebtedness does not exceed $7500. The College will attempt to limit loans to $1000 per year per student.
The Plan provides for the creation of a central loan office for the entire University. R. Jerrold Gibson '51, current director of Student Employment and chief architect of the Plan, will be director of the loan office.
"The $1000 limit is a normal precaution against undergraduates overextending their indebtedness, which could be waived in a special case if the case were very good," Gibson said last week. "But we don't want the undergraduate debt to get out of hand."
REPAYMENT OF THE loans need not begin until the student has completed college, graduate school, or service in the military, the Peace Corps or VISTA, A student may also take a 12-month leave of absence from school without beginning repayment.
In addition, those students who qualify for Federal interest subsidies--those whose families have an "adjusted family income" of less than $15,000 a year--will have their interest paid by the government until repayment of the principal begins. During the preliminary "grace" period, the only cost to those students is the one-quarter of one per cent Federal insurance charge subtracted from the face value of the loan at the time of disbursement.
Adjusted family income is defined on the Federal income tax form as 90 per cent of gross income minus a $675 deduction for each dependent, allowing some leeway for families with more than one child to support. For example, a family with an income of $19,000 and two children would qualify, as would a family with an income of $21,000 and four children.
The normal term of repayment is five to ten years, with interest over this period at 7 per cent per year. Students who do not qualify for interest subsidies may still receive loans, but must pay 7 per cent interest for the life of the loan with no preliminary "grace" period.
The chief innovation of the Harvard Plan over past student loan programs is its combination of Federal loan subsidies and guarantees with a University-administered income protection system allowing cancellation or deferment of outstanding debts for graduates in hardship situations. Because the government is willing to assume the risks for the loans, Harvard can afford to be flexible in protecting the future income of students.
THE GUARANTEED Insurance Loan Program (GILP)--established under Title IV of the Higher Education Act of 1965--was originally intended to induce banks and other private lenders to provide student loans. Under GILP, the Office of Education guarantees loans in full. It will cancel loans in case of death or total disability; provide interest subsidies for low-income students; and pay the lender an interest supplement intended to make student loans as attractive as alternative investments.
The Office of Education is also empowered to collect defaulted loans. If a regular payment is overdue by more than 180 days, the government repays the lender and undertakes to collect the full amount of principal and interest due.