The University will cover the cost of tuition for most current and future students from families earning under $125,000 a year by removing home equity — which essentially describes the current market value of a property — from Brown’s calculations of family contribution and financial aid scholarships, President Christina Paxson P’19 announced in a Monday press release that also included a broader suite of investments in financial aid and access to the University.
Other initiatives announced include moving to need-blind admissions for international students over the next four years and developing a program to prepare PPSD students for selective four year institutions.
The changes, once fully implemented, will add nearly $25 million to the annual undergraduate financial aid budget, pulling from the endowment and the BrownTogether fundraising campaign. The financial aid budget currently stands at $153.7 million.
Paxson said in an interview with The Herald that the investments, which come on the heels of the news that the University endowment grew by 51.5% to $6.9 billion, had been in the works since late summer. She added that the increased aid and new initiatives will help improve financial diversity on campus, moving the University toward fulfilling a number of longer-standing goals.
By removing home equity from aid calculations, the University will grant “thousands of additional dollars” for aid packages, the release said. The investments in financial aid also mean that summer earnings expectations for students with no parent contribution will drop to $1,700 for first-year students and $1,900 for other students, meaning that the University will cover all expenses, including tuition, books, room and board, for that cohort, according to the release.
Eliminating home equity in calculations, Paxson said, will likely have its greatest impact on moderate-income students — which Dean of Admission Logan Powell previously defined as students who, with the consideration of home equity and other assets, currently have an expected parental contribution, but also receive financial aid. Earlier this month, The Herald reported that the University attracts, accepts and enrolls fewer students from middle- and moderate- income brackets than any other income bracket.
But the impact of eliminating home equity from calculating a family’s assets, Paxson added, will likely impact a number of families across the income spectrum that already receive aid. And it may also open up aid to families currently not receiving it.
“It will increase income diversity on campus, and it will increase the fraction of students who receive financial aid,” Paxson said. The proportion of students who end up receiving financial aid after the new investments — 44% of the class of 2025 receives aid — won’t be clear until next year’s packages are calculated.
“I would like to see it at over 50%. But when you do need-blind admissions, you find out when you find out,” she said.
The families who will benefit the most from the elimination of home equity in aid calculations, Paxson said, will be those who have relatively low incomes but whose assets are concentrated in their homes.
Paxson added that the University’s financial aid packages currently match most of its Ivy League peers, but fall short of others. The average net price for students receiving aid in 2021-22 at Brown is roughly $28,000. At Yale, the median net price for students receiving aid is roughly $13,000.
Bringing in more middle- and moderate-income students, Powell and Provost Richard Locke P’18 told The Herald last month, also requires improved recruitment among those families in addition to increased financial aid.
With home equity no longer factoring into aid packages, the simplicity of the calculation for most families earning under $125,000, Paxson said, will likely help the admissions office improve recruitment. And she added that “students who aren’t even applying to Brown now” will likely realize that they can afford to go — a possibility that she called “exciting.”
“It’s really useful to have very clear messages when we talk to applicants (about financial aid), so we’re not saying, ‘Go to the website, put in tons of information and see what pops out,’” Paxson said. “When you can say … ‘if your family income is under $125,000 and you have assets that are typical for that income level, tuition is free at Brown’ — that’s a crisp statement.”
Income diversity, Paxson said, is critical for ensuring that the University pulls from the “full talent of the entire country and globe.”
“When you’re missing a chunk of the population, it means you’re missing incredibly talented students who could have come to Brown and contributed to the community,” she said. And “community cohesion” will also improve with a “less bimodal income distribution,” she noted.