The University Board of Trustees last week approved a new financial aid plan that will eliminate the requirement for students to borrow funds from the University as part of their aid packages.
Financial aid will be calculated with additional University grants in place of loans, saving the average financial aid student from accumulating between $15,000 to $20,000 in debt during his or her four-year tenure in college. The new plan will take effect with the class of 2005 and will be used during the renegotiations of financial aid packages for the classes of 2002, 2003 and 2004.
"We feel that with today's initiative that Princeton is really available to any family. [Qualified students] can easily manage to come to Princeton with little financial obligation if they can demonstrate need," President Shapiro said during a press conference in Nassau Hall on Jan. 27.
"We wanted to feel secure enough that we were doing everything we could reasonably do to eliminate the financial barriers to a Princeton education," he said.
The elimination of loans from financial aid will affect a large portion of the campus, Shapiro said. Nearly 30 percent of the Class of 2004 currently receives loans as part of a financial aid package. Though the number of recipients of financial aid vary from class to class, Shapiro said he believes the same percentage is accurate for the entire student body.
The University will also become only the fourth university in the country to admit international students on a need-blind basis. The trustees formally approved the trial international admissions plan implemented last year.
In addition to these two changes, the University has also altered several other financial aid policies and practices.
The required amount of the student's savings contribution has been reduced from 35 percent of personal savings to 5 percent. In previous years, the University has required a 5 percent contribution of family savings and a 35 percent contribution of the student's personal savings.
"We have now equalized those rates at the lower rate of 5 percent so that we no longer make distinctions in that sense between the assets the student has and the assets the parents have," Shapiro said.
The trustees also approved a reduction in students' summer savings contributions by $500 for middle-income students and $800 for lower-income students. The University will also extend grants to cover the costs of the University Health Plan for lower-income students.
Families who rent their homes will also receive a $140,000 allowance against their savings — which is the amount of the average homeowner's home equity. This will normalize the treatment of renter and owner families' savings, Shapiro said.
Funding for the new initiatives will come from additional endowment spending of $57 million. The spending increase, which normally grows at a trustee-determined rate of 5 percent a year, represents a 25 percent increase over the normal rate. This is the fourth time in the last decade the trustees have made an upward adjustment.
The additional endowment spending is part of the University's $760 million operating budget for 2001-2002. Endowment spending, including this year's extraordinary increase, is 37 percent of the total budget.
President Shapiro said the spending is possible because of the success of the Annual Giving program and the strength of the University's investment portfolio.
"We're positioned pretty well because . . . we have some flexibility to absorb some downward movement of the market," Shapiro said, adding, "The educational programs I view as permanent and irreversible. The financial aid I view as permanent and irreversible. We do have some flexibility in our renovation program should situations demand it."
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