This is the story of two talented, hardworking Harvard Law School 1Ls: Amy and Kara. Both Amy and Kara are going to be working for ten weeks this summer at a large firm in New York City. Both will earn roughly $30,000. For Amy, all her summer post-tax earnings accrue to her as financial gain, while Kara will only keep about $9,000.
The reason for this disparity is because Amy’s parents pay for her tuition and she is not eligible for Harvard Law’s need-based financial aid grants. As such, all of her earnings go to her bank account, and none will be used to offset any financial aid.
However, Kara, who comes from a modest financial background, was eligible for about $30,000 in need-based aid her 1L year, and most of her earnings will be used to offset that financial aid in her 2L year. At first it may seem strange or even counter-intuitive that Amy’s family wealth and Kara’s relative need leads to that outcome.
Here’s how it happens:
Based on her earnings as a financial aid recipient, Kara will have roughly $14,000 of her summer income assessed by Student Financial Services as her summer earnings “student contribution.” This assessment will result in an equivalent $14,000 decrease in her need-based grant aid from Harvard Law School for her 2L year. In order to make up for this loss, Kara will end up paying $14,000 more in tuition during her 2L year than she did in her 1L year. Her means of paying this additional cost are out-of-pocket payment or loans. Thus, the funding for this $14,000 gap will come almost certainly from Kara’s summer earnings. Meanwhile Amy, who was assessed by the Student Financial Services as not requiring any need-based assistance is not expected to provide any summer work student contribution.
This differential treatment will occur again during Amy and Kara’s 2L summers. Both will return to New York City and make roughly $36,000 as rising 3Ls working at firms. Kara will have a “summer living allowance” of $7,800 and will retain only 10% of what she makes beyond that and her taxes, leaving her with about $9,800 to live on over the summer. As a result, due to high cost of living in New York City, Kara will live in one of the cheaper boroughs and will lose almost two-thirds of her original 1L financial aid amount for her 3L year because her expected summer contribution will be almost $18,000. Meanwhile, Amy, because of her retained summer earnings, will be able to live in a nicer place closer to word, afford a vacation to Europe at the end of the summer, and even stash away some money so that she can study for the bar in Spain after graduation.
While Amy and Kara are fictitious, this divide is real. Every year there are some of us who are Amys, some of us who are Karas and many of us who fall somewhere in between. The numbers in this fictitious scenario were generated using the HLS Estimated Student Contribution from Summer Income Calculator.
What these facts show is that while some students have the privilege of choosing to make a substantial profit over the summer by working for a firm or another high-paying employer, in most cases, students receiving a significant amount of financial aid are unable to choose summer work that will result in a net gain over the course of the year of more than $10,000. This system seems unfair on its face.
Distributing aid in an equitable and fair fashion is not an easy task, Student Financial Services acknowledges the importance of fairness by appealing to fairness in a number of places while explaining their policies on their “Student Contribution from Summer Income” page. It’s clear that Student Financial Services has sought to adopt policies that respect the value of fairness. For example, Student Financial Services “imputes a student income” which results in a penalty (although they don’t call it that) levied against those who don’t work a minimum of eight weeks in the summer. There is a sensible, fairness-based rationale underlying this policy.
We can see how this rationale plays out if we add a third character, Liza, who is also receiving $30,000 in need-based aid per year and who decides not to work over the summer. Because Liza does not work over the summer, she will experience a reduction in aid equivalent to what would have been the case had she worked. This policy of Student Financial Services prevents the unfair outcome of Liza ending up being as well off as Kara who has been working the whole summer. Thus, this policy increases fairness (at least to the extent that a correlation between work and material gain is an aspect of fairness, which quite plausibly it is).
But currently the way that unfair outcome is avoided by taking money from Liza for choosing not to work. However, there is another way to address this potential unfairness — namely, by allowing Kara to keep more of her money by assessing less of her earnings as a summer contribution. A “stick” could be exchanged for a “carrot”.
In addition to being a negative-incentive model, the current policy suffers from the weakness of only making things fairer when comparing Kara to Liza, a fellow need-based aid recipient. It does not address making things fairer when comparing Kara to Amy, who is having her education paid for by her parents.
This is not to say that Student Financial Services doesn’t have any policies that address fairness between Kara and Amy. They do. The existence of need-based grant aid to begin with is one such policy. However, what the story of Amy and Kara shows is that the current policies are unfair for both the “Kara”s (and “Liza”s) of Harvard Law.
One might think that the fairest way to address this would be to abolish the summer student contribution assessment entirely, and to make one’s financial aid assessment based on one’s assets coming into law school. (Aid adjustment for atypical windfalls that may occur during one’s time in law school — e.g. someone wins the lottery or gets a large inheritance — could still be allowed for.) However, if that is seen as too drastic a change, there are more modest proposals that could still go a long way in moving towards leveling the playing field between Amy and Kara.
Currently, Student Financial Services requires at least eight weeks of summer work to avoid the penalty, but continues to assess a student contribution for up to twelve weeks of work per summer. Equalizing the two criteria would help Kara significantly.
For Kara, under the current assessment-for-twelve-weeks model, if she works for 12 weeks and earns $3,500 per week, her taxes are estimated at about $10,000 and her student contribution would be about $21,500. This would leave her with only a little over $10,000 from her summer work as net gain (although she will quite likely gain some of the money taken out in taxes as a refund later). This puts her $21,500 behind Amy in terms of summer gains.
If a summer contribution were abolished, Kara would keep the full $21,500. However, even if Student Financial Services changed their policy from assessing the twelve weeks of highest income to just the eight weeks of highest income, Kara would make substantial gains. If this eight-week assessment was the policy adopted, Kara would still owe over $12,500 as a summer contribution, but her summer earnings after her contribution and taxes would be significantly more helpful at roughly $19,000. This would provide Kara with a benefit for her summer labor that is at least closer to the benefit Amy is getting for doing the same job.
At this point one might wish to point out that if we are taking less from students in summer contributions that this budget deficit needs to be made up somewhere. And one might be worried that this would lead to a reallocation of funds away from other needy students. While this is a sensible worry, I think if Harvard Law wishes to be true to its stated aim of making Harvard Law affordable for everyone who is accepted, a shift in the summer assessment policy for the sake of greater fairness should result in finding additional funds in a way that would not cost other needy students financial aid.
Harvard is richer than any other university in the world, in the order of billions. The money is there. (Although access to additional such funds is probably not something that would be easy for Student Financial Services.)
The current summer contribution system widens the wealth gap between students with the greatest amount of financial need and the rest of the Harvard Law School class. There are many ways in which the current system could be altered to make the summer contribution less of a burden on students with the greatest financial need. If we care about making Harvard Law affordable in a more equitable way, I suggest that the powers that be should seriously consider a modification to the current summer contribution policy.
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