Dept. of Nuts and Bolts

Financial Aid: 13 Questions

Helping families pay for a Reed education

By Chris Lydgate ’90

Fifty-seven thousand, seven hundred and eighty dollars.

That’s the price tag for a year of tuition, room, and board at Reed today. Multiply by four years, throw in books and airfare, and you’re looking at a quarter of a million dollars for a Reed education.

Financial Aid : Infographics

Who Gets It

How Much They Get

Where It Comes From

Catching Up: Financial Aid vs Tuition

Reed Students on Financial Aid by Year

But only about half of Reed students pay full tuition. The other half receive financial aid—some of it through government grants and loans, but most of it from Reed itself.

Were it not for the generosity of donors who have supported Reed over the years—and the college’s long-term commitment to accessibility—roughly half of us could never have afforded to come to Reed. In other words, if it weren’t for financial aid, Reed simply would not be what it is.

“Reed is committed to providing educational opportunity,” says Leslie Limper, the college’s director of financial aid.

Reed’s approach to financial aid rests on four central ideas:

• Meet the full need of every student we admit for eight semesters.

• No aid unless a student needs it.

• Keep loans and work as low as possible.

• Make Reed accessible to outstanding students, regardless of their financial wherewithal, as far we can prudently afford to.

Has Reed always offered aid?

Yes. The 1920 college catalog notes scholarships as well as loans awarded to “worthy” students back when tuition, room and board totaled $400 a year. 

By the mid-1950s, Reed instituted need-based aid. The 1953 catalog states that “the scholarship program is designed to assist students of outstanding promise who are not able to afford the advantages of a Reed education. All financial aid is for the exclusive purpose of contributing to an equalization of educational opportunity . . . In no instance should a student expect to receive a scholarship grant as a prize or as a reward for outstanding achievement unless the evidence of need is both clear and demonstrable.”

How much does Reed spend in aid? 

More than $21 million a year. The college’s aid budget has grown substantially since 1985, outpacing the rise in tuition several times over.

Must a student be “poor” to qualify?

Absolutely not. 

The median family income of a student on aid is $74,000—actually a bit higher than the median family income ($62,527 in 2012, according to the U.S. Census).

And that’s just the median. In some cases, the family income may be considerably higher. For example, a family earning $270,000 with a second child in a private college could still be eligible for $10,000 in aid from Reed.

Do all colleges follow the same policies on financial aid?

No. Different colleges calculate need in different ways. Some offer merit awards that aren’t tied to need. And not all colleges meet 100% of students’ need. In fact, the practice of deliberately leaving students with a gap in their financing is so common in higher education that it has its own jargon—“gapping.”

Does Reed practice “gapping”?

No. Since 2004, the college has met the full demonstrated financial need of all the students it admits for eight semesters—which need not be consecutive.

What’s the average award?

Last year, the average package, including grants, loans, and part-time work, totaled more than $40,000, broken down as follows: $33,314 in Reed grants; $4,370 in federal grants and loans; and $5,086 in student self-help (which most students satisfy by working campus jobs).

How much debt do students take on?

Reed strives to limit student debt. For their freshman year, the recommended loan amount is $2,500, rising to $5,500 for their senior year. The average debt of aid students at graduation stands at about $20,000—lower than the $24,000 average for Oregon’s public universities and the $27,000 national average.

National news stories have reported huge student debts, particularly among graduates of colleges that practice gapping. These are typically incurred by families who opt to take on debt in addition to their federal loans. Some families may choose to do this out of necessity, others because they find it a useful tool for financial management.

What happens if Mom or Dad get laid off while the student is going to Reed?

Reed is committed to supporting its students through unforeseen loss of income. If a parent loses a job, is stricken by a disabling illness, or otherwise suffers loss of income, Reed will give the family more aid.

There’s a flip side to this, however. If a family enjoys better financial circumstances—if a sibling graduates from college, for example—Reed may revise its package downwards in subsequent years.

How does financial aid affect admissions?

For the strongest applicants, the answer is not at all. But because Reed eschews gapping, we have to limit the number of students who need aid. The admissions office aims to fill about half of the entering class with students whose families can afford full tuition. The corollary is that Reed also enrolls more low-income students—roughly 20%—than many of its peer schools. (This figure is based on the number of students who qualify for Pell grants.)

Was Reed ever need-blind?

Depends on how you define it. In years past, Reed was far less selective than it is today. Some needy students were given aid; others were given no aid but told that they could “come anyway.” In some cases, students were told that if they could scrape together tuition for their freshman year, the college would give them aid after that.

While this could be construed as a form of need-blindness, it was also confusing and unpredictable. It saddled come-anyway students with high levels of debt and favored those with wealthy grandparents, whose income is not reported to col-
leges. In 2004, President Colin Diver and the board of trustees decided to end this form of gapping and meet the full need of every student Reed admits. Since then, applications have soared. Reed now admits a smaller percentage of applicants and spends more on financial aid.

It’s great that Reed spends so much on aid, but isn’t that offset by tuition hikes?

No. Since 1992, the cost of tuition, room, and board has grown (in real terms) by 47%. But Reed’s budget for financial aid has grown (again, real terms) by 85%. In other words, financial aid is growing almost twice as fast as tuition.

Why doesn’t Reed spend more on aid instead of the Performing Arts Building?

The PAB cost $28 million. Half that amount, $14 million, was contributed by donors for the express purpose of supporting the performing arts. The other half was financed by tax-exempt bonds, which are not available for financial aid. Even so, if you spread the building’s cost over its projected life, it re-
presents a tiny fraction of what Reed spends on aid.

How can I get involved in discussions about the future of financial aid at Reed? 

We thought you’d never ask. Reed has launched a strategic planning initiative to tackle these sorts of questions. Visit Giving to Reed to support financial aid directly.

GO FURTHER

Undermining Pell. How Colleges Compete for Wealthy Students and Leave the Low-Income Behind. New America Foundation, May 2013.