2008 Best Values in Private Colleges

For kids heading off to Yale, Harvard or one of the nation's other elite institutions, the news couldn't be better. Not only will they get a great education with first-class bragging rights, but they also stand a good chance of paying less than they would have paid in-state at a public university.

You read that right. Institutions including the Ivies, Caltech, Williams and Swarthmore have lately announced major changes in their financial-aid policies. Among the changes: replacing loans with grants, offering full rides to families at higher income levels and bestowing discounts on families earning well into six figures. At Harvard and Yale, parents earning as much as $180,000 can be almost assured of getting a hefty break on the bill in the next academic year.

All of which brings us to the $64,000 (or more) question: What about the 99.5% of families whose kids won't be at the peak of the academic mountain? That's no small issue as colleges and universities try to decide whether to allocate all of their money to meeting the needs of students who qualify for financial aid or to use some of their funds to attract good students and a diverse student body. Whereas schools with hefty endowments have the luxury -- and the incentive, owing to pressure from Congress -- to dig deep and spread wide, less wealthy schools "face the prospect of borrowing from Peter to pay Paul," says Don Crewell, financial-aid director at Caltech.

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Meanwhile, pity the families who pay full price for a private education. The cost of a year at a four-year private college rose almost 6% in 2007-08, to an average of $32,307, and topped out at a staggering $50,000-plus. Many parents and students pay every penny, according to the College Board, including those who miss out "because they are unaware of the sources and amounts of student aid available."

That's where Kiplinger's 2008 rankings of private colleges and universities come in. Topped by Caltech among universities and Swarthmore among liberal arts colleges, our exclusive rankings showcase a range of schools with strong academics, generous financial-aid policies and, in some cases, a decent price to begin with.

The rankings also show how your student matches up with incoming freshmen at the schools in our top 100. And we go behind the scenes at two other schools: Princeton, a venerable institution with a groundbreaking financial-aid policy, and Lafayette College, in Easton, Pa., a school that aims high and takes some of its cues -- but not all of them -- from the Ivies.

Tip of the top

If your child excels in math or science and craves close contact with professors, look no further than Caltech, at the top of our university rankings for the second year in a row. This tiny research institution, on a jewel-like campus in Pasadena, offers a three-to-one student-faculty ratio, the lowest among all major universities. Caltech students work side-by-side with Nobel laureates and enjoy occasional lectures by physicist Stephen Hawking, who until recently wintered in a rose-covered cottage on campus.

And students, who number fewer than 1,000, learn from one another, says president Jean-Lou Chameau. "Simply because of our size, Caltech gives a unique opportunity to be among people who are all extremely gifted." How gifted? Start with this year's freshman class, all of whom scored above 700 on the math SAT.

Like many of its counterparts, Caltech recently announced that it will replace loans with grants, piggybacking on an already-generous financial-aid policy that has kept average student debt at graduation to $5,156, about one-fourth of the national average. Starting in fall 2008, students whose families earn $60,000 or less a year will receive grants and work-study to meet their financial need.

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Caltech departs from other top institutions by awarding a significant number of merit scholarships. The school is considering phasing out most of those awards, says Crewell, to free up money for other uses, such as replacing loans with grants for more students and capping the contribution families are expected to make. "We'd like to have as much flexibility as we possibly can to be as competitive as we possibly can," says Crewell.

Among liberal arts colleges, Swarthmore, near Philadelphia, also tops our rankings for the second time running. Swarthmore attracts academic stars with a bent for social justice. "Students have a commitment to placing the analytical skills they've developed and the knowledge they've acquired at the service of a better world," says president Al Bloom.

Swarthmore, too, will replace loans with grants in its financial-aid awards. "For years we have tried to make it easier for a student to engage in the Swarthmore experience and move beyond it with as little debt as possible," says Bloom. "This, in a sense, is the next step." The school will spend an additional $1.7 million out of its $1.4-billion endowment to accommodate the latest change.

Although Swarthmore makes a point of allocating virtually all of its aid to families with need, a few endowed scholarships awarded on the basis of merit give it a razor-thin advantage in our rankings over Williams College, in Williamstown, Mass. That highly competitive institution, surrounded by the Taconic, Hoosac and Berkshire mountains, defines New England excellence. It, too, will replace loans with grants for students with need in 2008Ð09.

Setting the pace

Wander the Princeton campus and witness a pleasant sight: young people enjoying privilege. Students lounge against the burnished bronze tigers flanking Nassau Hall, pray for A's in the cathedral-like chapel, eyeball the Gauguins and van Goghs at the university art museum and head for dinner at the sprawling dining clubs lining Prospect Avenue.

Princeton, number three in our rankings, has led the way in conferring such privilege on students of every economic background. In 1998, it replaced loans with grants for its neediest students; in 2001, it replaced loans with grants for all students with need. "We set the ball rolling," says Robin Moscato, director of financial aid. "Our students were facing the probability of being $20,000 in debt at graduation. We felt it was important, especially for lower-income students, to provide relief."

Thanks to gangbuster returns on its endowment, which now approaches $16 billion, "we were in a privileged place to make that decision," says university president Shirley Tilghman. "It was about creating access and opportunity." Before the 2001 policy change, the average scholarship covered 73% of tuition. This past academic year, it covered 95%. Says Tilghman, "We are making it possible for extraordinary students to say yes when we say yes."

For Rei Thompson of Ithaca, N.Y., the no-loan policy provided a compelling reason to choose Princeton over Cornell, Dartmouth, New York University and Wellesley. "All the packages were relatively the same. The major difference with Princeton was the no-loan package. If I wanted to go to grad school or straight to work, I didn't want to have to worry about loans." Thompson, a junior, covers college costs with grants, family contributions and work-study.

Princeton was also one of the first Ivies to tweak its financial-aid formula to benefit higher-income families. "We and other institutions have been concerned that under the standard formulas, parental contributions are rising at a rate that is too much for families to handle," says Moscato.

As a result, the school removed home equity from the financial-aid equation and asks its students to contribute 5% of their savings rather than the 20% assessed by the federal formula. For the class of 2011, students with family incomes between $100,000 and $150,000 who applied for aid received annual awards averaging $22,700 to $27,700.

Curious to know what your own aid package and expected contribution might be? Princeton provides an online calculator that poses 20 or so questions and then spits out a rough estimate. "We made it as simple as possible," says Moscato. If you don't qualify for aid or want to exchange your student's work-study for a loan, investigate Princeton's parent lending program, which recently offered a no-fee loan at a fixed rate of 5.7%.

Moving on up

Perched on a hill so high you can practically see Princeton 55 miles to the east, Lafayette College (number 16 in our rankings) has yet to pierce the rarefied air of the Ivies. Still, its strengths include five engineering degrees, including a bachelor of arts. "Our students understand not only the technical aspects of a problem but the human aspects as well," says Wendy Hill, the provost. Lafayette students travel to Honduras to work with Engineers Without Borders, where they help create water-distribution systems and nurture coffee production.

Lafayette's small size -- some 2,400 students -- and intimate atmosphere create its own fertile ground for learning, says senior Debra Perrone, who knows her professors and their kids. "I have friends at big schools who have to put their IDs on the table so their teachers know who they are," says Perrone. President Daniel Weiss plans to build on Lafayette's assets, and boost its academic standing, by adding 35 faculty members. "Strong interaction between students and faculty is why people come to places like Lafayette," says Weiss.

With an endowment of $734 million, Lafayette ranks 98th among the nation's 100 wealthiest colleges and universities, according to the National Association of College and University Business Officers. Those deep pockets allow it to guarantee that at least 75% of students' need is met with grants and to keep the average debt at graduation to a relatively reasonable $18,000. Lafayette also bestows merit scholarships, ranging from $8,000 to $43,010, on 14% of its student body.

Like many schools that are trying to move up the academic slope, Lafayette feels pressure from the Ivies and near-Ivies to offer more and better financial aid. "Harvard and others have upped the ante," says Arlina DeNardo, Lafayette's financial-aid director. "Those schools are not a direct overlap, but the move from loans to grants clearly ripples through the rest of higher ed. People look at what they're doing and say to us, What about this?"

Accordingly, Lafayette hopes eventually to reduce the average debt at graduation to about $10,000. But it doesn't intend to eliminate loans altogether. "We don't have the resources, and I'm not sure we would proceed in that way even if we did," says Weiss. Students benefit from having a stake in the process, says DeNardo. "It's a joint effort. If they could graduate with half the national student-debt level, at $10,000, that's pretty good."

Lafayette tracks its neighbor to the east by giving parents access to a loan program with attractive terms that compare favorably with the federal Parent PLUS program. These loans carry an interest rate pegged to the prime rate plus two percentage points. The college picks up the interest while a student is enrolled; repayment begins once the student graduates.

What all of these efforts demonstrate is that "even colleges that don't have the same resources or endowments as the Ivies still do a good job of helping families put together the pieces to pay for college," says Moscato. "One of the great things about higher

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