KSSG Passes Resolution to Increase International Student Aid
by Sayce Falk, News Asst. Editor on April 29, 2010 in HKS News, News
As MPP ’10 Jonathan Faull began school in the fall of 2008, there were only a few signs that the largest financial crisis since the Great Depression was about to erupt. Because he hadn’t received a great deal of aid from HKS, Faull had lined up other funding sources, including a private scholarship and a loan through a Kennedy School-associated program known as CitiAssist.
For most students entering the Kennedy School, the timing of the crisis could not have come at a more fortuitous moment – two years of intellectual stimulation within the ivory towers of the world’s most prestigious university as friends and colleagues were laid off in droves. The tuition costs would be high, but at least they were stable. Compared to those faced with unemployment and sudden decisions about how to care for children or pay the bills on a drastically lower budget, the anticipated safety of school was an inviting idea.
But Faull was coming from South Africa – an open economy with a floating currency – and the downturn in the global economy meant that his carefully laid financial plans now lay in ruins. From late August to November of 2008, the rand fell more than 31 percent, from 7.75 to the dollar to more than 10.
“The money we had put aside to come here,” said Anna York, an MPP’10 from Australia who faced a similar situation, “was, in some cases, worth up to a third less than it had been a day before.”
Making matters worse, the financial recession pulled the rug out from under CitiAssist, a six-year old joint venture between Citigroup and HKS. The program allowed Harvard University and Citigroup to jointly underwrite loans to Harvard graduate students; it also allowed international students to obtain a loan without an American co-signer, a key requirement of virtually all other American financial institutions.
After CitiAssist folded, HKS administrators stepped in with a new program run through the Harvard University Employees Credit Union, holding the maximum loanable amount to $10,000 for international students without a co-signer. In its session earlier this month, the KSSG passed a motion urging the HKS administration to double the maximum amount of the loan, to $20,000.
“We want credit union loans to cover at least 30% of [international students’] tuition,” said Dave Baumwoll, MPP ’10 and KSSG President. “We want to enhance the financial options for international students. If you’re here, the Kennedy School should be able to find ways to allow you to stay here.”
“Ideally I would have liked to take up more than double [the 10,000 maximum],” said Faull, “but I’ve had to essentially loan against my parents’ mortgage in South Africa to cover my tuition costs.”
Other graduate schools on campus allow international students to take out loans covering their entire tuition burden, while the current $10,000 limit only covers about 10-15% of HKS’ anticipated annual expense. In addition to the benefits of dollar-denominated debt and generally lower interest rates than private lenders offer, Credit Union loans also qualify as part of HKS’ Loan Repayment Assistance Program, which assists graduates who go into public service by defraying part of the costs of their student loans.
“It is definitely a consideration that HKS students have lower expected incomes than HBS or HLS,” said Stephanie Streletz, Associate Director of Student Financial Services. “The Harvard Credit Union’s loan program is a wonderful addition, but we deem it as gap funding, not a primary resource for students.” Administrators also expressed concerns over the inability of the school to collect on students who default on their loans, as well as the higher likelihood of international student default, given the exchange rates between the U.S. dollar and many developing country currencies.
“We may need to consider taking on additional risk,” said Chris Fortunato, the new Dean of Students, “[but] if we do cover it, where do we pull the funding away from?”
HKS administration is currently discussing the issue of student aid, though administrators refuse to discuss the level or growth of the HKS endowment. A number of current international students received increased financial aid for their second year, though the administration has not said whether that aid came as a result of student government pressure.
Though the short-term crisis has passed, the KSSG’s resolution is part of its effort to institutionalize some of the solutions that students and administrators used last spring. In the meantime, the consequences of the lack of funding linger on. “I am interviewing for some management consulting positions,” said Faull, “which I would have never considered doing before coming to the Kennedy School.”
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