When Harvard College raises its tuition, it is usually to stay on pace with the inflation rate. But while the inflation rate for this past year is only 0.1 percent, and fear of deflation looms, Harvard is raising its tuition by 3.5 percent, responding to greater demand for financial aid in addition to compensating for the plummeting endowment.

But the tuition hike will not translate into an actual increase in the amount of spending money available for the Faculty of Arts and Sciences from tuition. Dean of the Faculty Michael D. Smith said that the FAS is trying to keep the net dollars raised from tuition flat, as financial need increases.

The projected amount spent on financial aid next year is set to increase by 18 percent—surpassing the Financial Aid Office’s expectations, according to Sally C. Donahue, director of the Financial Aid Office.

Seventy-eight percent of Harvard applicants this year applied for financial aid—a seven percent increase from last year. Almost 60 percent of the student population currently receives some need-based aid, according to William R. Fitzsimmons, who is Dean of Admissions and Financial Aid.

Fitzsimmons said that the projected increase in financial aid output is due not only to Harvard’s recent expansion of financial aid, but also to greater need from students whose families have been affected by the financial crisis.

Harvard’s recent recruitment efforts in lower-income areas across the country have also yielded a greater number of applicants who need financial aid. But Donahue said that the admissions office is now planning to cut back on these trips to slash costs.

Despite the current financial situation, Faculty Dean Smith and University President Drew G. Faust have pledged to maintain their commitment to financial aid.

Tuition, currently FAS’s second largest source of revenue, providing 20 percent of its income, will come to account for a greater percentage of a reduced budget, as the endowment and alumni donations plunge.

As a result, it is likely that unrestricted funds—of which tuition is a major component—will make up a larger percentage of FAS’s overall budget.

Smith will need to spend the new unrestricted funds making up the difference between a weaker endowment and heightened demand for financial aid.

According to Donahue, tuition will soon account for a larger share of funding for financial aid. Although 70 to 75 percent of financial aid funds are currently drawn from the endowment, that percentage is likely to decrease, Donahue said.

Financial aid officers at Harvard said that they are not concerned that the $1,653 increase in tuition may affect applicants’ decisions to come to Harvard.

“We make the basic assumption that education is right up there as a priority [for families],” Donahue said.

Harvard’s peer institutions are making similar plans to raise tuition fees, but as little as possible.

“There is a lot of concern about the rising cost of education, and especially at Yale, our goal this year was to keep the rise in tuition, room, and board as low as possible,” said Caesar T. Storlazzi, Yale’s Director of Financial Aid.

Storlazzi added that a relatively flat tuition would act like financial aid for all students at Yale.

Colleges like Stanford, Princeton, and Brown have maintained their tuition hike at around three percent, reluctant to raise tuition beyond that threshold,

Princeton, whose financial aid output is expected to increase by 13 percent, will raise its tuition by 2.9 percent next year.

“The reason we kept tuition so low is because we know even our families who don’t qualify for financial aid are experiencing the downturn, and we wanted to recognize that,” said Robin A. Moscato, Princeton’s Director of Undergraduate Financial Aid.

Although the tuition hike may seem daunting for some families, it is unlikely to deter eager applicants from coming to Harvard if accepted.

“My parents are enthusiastic about Harvard,” said Chi S. Song, a high school senior from Troy, Mich., who applied to Harvard. “I can’t imagine maybe $500 making a difference.”

—Staff writer Bonnie J. Kavoussi can be reached at kavoussi@fas.harvard.edu.
—Staff writer Jillian K. Kushner can be reached at kushner@fas.harvard.edu.