Families earning less than $60,000 a year will no longer be expected to pay for their children to attend Harvard, school officials announced yesterday.

The newly expanded financial aid program, which will also reduce the contributions of families with annual incomes between $60,000 and $80,000, is expected to cover more than 1,500 students—nearly a quarter of the College—in the next academic year, Dean of Admissions and Financial Aid William R. Fitzsimmons ’67 and Director of Financial Aid Sally C. Donahue said in a joint interview this evening.

With the announcement, Harvard jumps to the head of a pack of top universities that are expanding financial aid for undergraduates from low-income and middle-class families.

In 2004, University officials unveiled the Harvard Financial Aid Initiative (HFAI) and pledged that families earning less than $40,000 a year would no longer have to contribute to the cost of their children’s tuition, room, and board. In addition, parents with annual incomes between $40,000 and $60,000 would see substantial cuts in their contributions to tuition. But undergraduates still had to foot a fraction of their tuition costs through paid work or student loans.

The school’s policy on student contributions is now set to change.

Under Harvard’s old guidelines, students on financial aid had to fulfill a “self-help” obligation—“the amount of money that the financial aid office believes you should be able to contribute during the term,” according to an HFAI guidebook. That typically amounted to $3,650 and could be covered through paid work or student loans, according to a fact sheet from the Financial Aid Office.

The old guidelines also required students to make another contribution that was “expected to be earned during the summer,” according to the HFAI guidebook. Under the old guidelines, outside scholarships could serve to offset the self-help expectation but could not be used to replace summer income.

The plan unveiled yesterday will allow students to use outside scholarships “to eliminate their summer savings obligations,” according to a statement from the University.

The self-help expectation rises by $100, to $3,750, under the new guidelines, and the summer-savings obligation now stands at $1,500 for freshmen and averages around $2,100 for upperclassmen, Fitzsimmons and Donahue said. They noted that while the two requirements increased slightly, both were roughly in line with inflation over the past two years.

Yesterday’s move could allow some low-income students with large scholarships to completely pay their tuition obligations without taking term-time or summer jobs.

A LEAGUE OF ITS OWN

Since the launch of HFAI in 2004, several selective schools in the Ivy League and beyond have made moves to one-up Harvard’s financial aid pledge. Yale announced last March that families earning under $45,000 would no longer have to contribute to their children’s tuition and fees. This month, Stanford matched Yale’s offer for families earning less than $45,000. And just last week, the University of Pennsylvania announced that families earning less than $50,000 would no longer have to take out loans to send their children to the school. The University of Pennsylvania’s initiative eases loan burdens on students, but does not eliminate parents’ financial contributions entirely, as Harvard’s, Yale’s, and Stanford’s programs all do.

Fitzsimmons said yesterday that recent financial aid initiatives at other schools did not play a role in Harvard’s decision to expand its program.

“The Yale and the Stanford announcements really had no effect on us,” he said. “We had always talked before, when we announced the original parameters in 2004, about building with inflation.”

“We really felt that there was no better to way to reflect the great success of the HFAI program, to make certain that we could build success on success,” he added, noting that “it would be a huge loss for America if places like Harvard don’t do their share in educating these students.”

HELP FROM ABOVE

For the next three years, the University’s central administration is slated to fund the new initiative, which will add $2.4 million to the annual cost of Harvard’s current financial aid programs, Fitzsimmons said.

“In the meantime, we’ll be trying to raise incremental financial aid money so that we can pay for this. If we’re not successful in that, Mass. Hall has agreed to pay for an additional three years,” he said.

The Faculty of Arts and Sciences (FAS) will not pay for the initiative during that period, Fitzsimmons added. FAS faces structural budget deficits in the coming years that may exceed $100 million by 2010, according to a report released in January.

Fitzsimmons said that expanding HFAI’s scope will not detract from the admissions office’s endeavor to increase the number of students from families with annual incomes below $40,000, the group most directly targeted by the original program.

In fact, he said, “we’re in the process of redoubling our efforts to make sure that families making under $40,000 will increase in numbers…. I think that, with this new announcement, it will help us not only get more of those underrepresented students from $60,000 to $80,000, but it will also help encourage from $40,000 to $60,000.”

Fitzsimmons noted that Freed Professor of Economics Caroline M. Hoxby ’88 and Larsen Professor of Public Policy Christopher N. Avery ’88 have developed a system that will help the admissions office “reach out to particularly hard-to-contact students from $40,000 and below and $60,000 and below.”

“Many are scattered across schools that almost never send students to so-called national institutions,” Fitzsimmons explained. “We’ll send our search parameters out” to Hoxby and Avery, he said, and “they’ll be able to identify the particularly hard-to-reach students.”

Hoxby and Avery did not return requests for comment.

Fitzsimmons said in an interview last spring that the admissions office would discuss ways to address the concerns of what he called the “middle-income group”—that is, students whose families earn between $110,000 and $200,000 a year.

Although the new initiative does not cover those families, Donahue said that many families in that income bracket will see their need-based grant increase next year.

According to Fitzsimmons, close to 1,200 families of the students admitted to the Class of 2010 earn $100,000 a year, and 448 of those families have annual incomes over $150,000.

Harvard’s financial aid budget for the 2006-07 academic year is projected to exceed $90 million, marking a 6.2 percent increase over this year’s budget and a 65 percent increase over the budget six years ago, according to the press release.

Two out of every three Harvard students receive financial aid, with grants averaging around $33,000, the press release also said.

College officials announced on March 24 that tuition is set to increase by 4.75 percent to $43,655 next year.

Fitzsimmons noted that while the admissions office cannot control tuition, it can address tuition hikes through its financial aid programs.

“What we can do in the admissions office, when tuition goes up, is to at least make it possible to make it easier for these families to think about coming here,” he said.

Median family income in the United States was $54,061 in 2004, the most recent year for which data are available, according to the Census Bureau.

-Staff writer Daniel J.T. Schuker can be reached at dschuker@fas.harvard.edu.