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MIT announced on Friday that students whose families earn less than $75,000 per year — approximately 30 percent of the student body — will no longer pay tuition. To cover these and other new policies, MIT’s financial aid budget will rise to $74 million, a $7 million increase over last year’s budget.

MIT also increased its tuition by 4 percent, to $36,390.

Students whose families earn less than $75,000 a year will also have lower self-help expectations than last year: $2,850, down from $5,250 last year. The new figure will allow students to avoid taking out loans to pay for tuition, by working on an Undergraduate Research Opportunities Program or other on-campus job for two semesters. Students whose families earn more than $75,000 a year will now have an expected self-help contribution of $4,750.

Home equity will no longer be considered in determining financial aid packages for students whose families earn less than $100,000 a year. Families in this income range who rent their homes will have comparable increases in their financial aid. This measure will increase the value of these families’ financial aid packages by an average of $1,600.

Vice President for Institute Affairs and Secretary of the Corporation Kirk D. Kolenbrander said that funding for the financial aid budget increase will come from both endowed and un-endowed funds in the general Institute budget.

External and internal pressure

The announcement follows a string of decisions by peer universities to eliminate tuition for lowest-income students and to substantially increase financial aid for students in the middle-income segment.

In December, Harvard University, whose lowest-income students already attend tuition-free, announced that families with incomes between $60,000 and $120,000 would pay between zero and 10 percent of their income to tuition, and families with incomes between $120,000 and $180,000 would pay 10 percent. In January, Yale University eliminated tuition for families earning less than $60,000 a year, limited tuition costs for families making $60,000 to $200,000 a year to an average of 10% of their income, and decreased all student self-help contributions to $2,500. Stanford University announced in February that it would eliminate tuition for families with incomes under $100,000 a year and eliminate all educational expenses, including room and board, for families with incomes under $60,000 a year.

Stanford and Yale continue to factor home equity into financial aid assessments, while Harvard and Princeton do not.

Kolenbrander said that “our discussion about financial aid has been influenced by the recent announcements of other universities.” While no part of MIT’s new financial aid policies specifically addresses families in the $100,000 to $200,000 income range, Kolenbrander remarked on other schools’ changes, saying “This is the road we’re on … MIT is already serving the upper middle class, but we do feel a particular push to help families of greater need.”

MIT’s new plans also follow a recent increase in political pressure from the Senate for universities to pay out higher percentages of their endowments to increase financial aid. Over the past two months, Senate Finance Committee chairman Sen. Max S. Baucus (D) and ranking member Sen. Charles E. Grassley (R) conducted an investigation into the endowment spending and financial aid policies of the 136 richest universities in the country to inform their discussion about how universities ought to be handling their finances.

Undergraduate Association President Martin F. Holmes ’08 said that he thought MIT changed its financial aid policy because of political pressure from the Senate and the competitive pressure from peer institutions. “MIT is not acting entirely out of generosity — it is also acting because of political pressure,” said Holmes. “MIT must stay on the good side of the U.S. government and it must be seen as a friendly school in the eyes of families and students applying to college. MIT can’t have financial aid limit the quality of students it attracts,” said Holmes.

In a meeting discussing the announcement, Chancellor Phillip L. Clay PhD ’75 said Monday that “historically we’ve always won against the other peers, except when it’s Harvard versus MIT. We don’t want to be in a position where that dynamic changes.”

A stream of internal pressure from current students and their families complemented external pressures.

Holmes e-mailed the undergraduate student body on Feb. 24 asking for student opinions on a number of current Institute issues, hoping to discuss them with the administration. Holmes said he received dozens of responses concerning financial aid and tuition — many several pages long and detailing personal experiences — that urged the Institute to increase its generosity toward middle class students.

UA Vice President Ali S. Wyne ’08 said that he believes that these submissions and the months-long pressure from the student body contributed significantly to the revised aid policy. “The responses of the student body gradually developed into a groundswell of criticism of financial aid policies,” said Wyne. “This decision is a statement to what grassroots effort from students can do,” he said.

Change stronger than expected

Discussion about financial aid begins each year in the Committee on Undergraduate Admissions and Financial Aid, a faculty committee led by Professor Stephen L. Graves that also includes four students. They make recommendations to the Enrollment Management Group, led by Dean for Undergraduate Education Daniel E. Hastings PhD ’80, that passes on their recommendations to the Academic Council and MIT Corporation Executive Committee, both chaired by President Susan Hockfield. The decisions of the MIT Corporation Executive Committee are not finalized until the MIT Corporation votes to approve the plans, as it did this Friday.

The approved plan turned out to represent a much greater increase in financial aid than was originally recommended by CUAFA in December and even, according to Holmes, the plan that was in place just a few weeks ago.

Clay said during the Monday meeting that the final financial aid plans “went beyond” CUAFA’s recommendations. Although CUAFA did recommend relief based on home equity, the overall recommendations made by CUAFA were “insignificant” compared to the recent changes made at peer universities, according to Clay.

Monica Simo ’08, a member of CUAFA, said that reducing self-help and student contributions were also ideas that CUAFA had discussed. She said that the committee had developed recommendations with options that depended on the decided budget increase for the year, and that the final plan was “in many ways, more than we expected.”

Holmes said that his first reaction to the financial aid announcement was “shock … and then joy [because] … I had heard talks and gotten the picture that MIT was not going to make as drastic a move as it actually did.” He said, “It’s very clear that there were changes made late in the game because of competitive and Congressional pressure,” said Holmes. “They had to look at finances and figure out where more money could come from,” Holmes said.

MIT takes significant step

Kolenbrander said that announcement does not represent a change in MIT’s approach to financial aid but rather “a continuation of a long-standing commitment to make MIT’s doors open to students of all financial backgrounds, regardless of their need.”

It might not be a change in philosophy, but students and faculty agree that MIT has taken an important step to remain a competitive institution.

Holmes said that although MIT’s previous financial aid budgets had already been generous, the latest announcement will help to make people aware of that generosity. “Part of this is a public relations campaign,” Holmes said. “MIT must have a visible public image that it’s doing something. MIT finally got the public relations down.” He added, “This is a victory for students. It keeps MIT as competitive as it was before.”

Wyne agreed: “While MIT might not be increasing its financial aid budget substantially more than in previous years, this has a powerful symbolic impact.”