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University expands financial aid to low-income, foreign students

Boldly expanding the University's commitment to provide financial aid to lowerand middle-income students, the Board of Trustees approved January 24 what it called "the most important changes in Princeton's financial aid policies in several decades."

The trustees' passage of a plan to spend approximately an additional $1.5 million in financial aid per class, beginning with the Class of 2002, was approved as part of the $572 million operating budget for 1998-99. That budget also included the lowest increase in tuition, 3.7 percent, in more than 30 years.


The financial aid package is composed of three parts that will be phased in class-by-class over the next four years so that once the Class of 2005 arrives, the University expects to be spending $6 million more per year on aid. It currently spends about $24 million per year.

The amount of the new outlay may vary, however, depending on how well the aid package does in attracting more lower-income students, Provost Jeremiah Ostriker said.

Passage of the proposal this year appears to have been sparked, at least in part, by worrisome numbers for the University administrators: Enrollment of both lower-income and minority students is on the decline.

In enacting the aid reforms, though, the University establishes itself as a national pacesetter in financial aid, leaving other Ivy League schools to follow its lead or face competitive disadvantages.

The cornerstone of the reforms is the conversion of student loans to direct scholarships and the reduction in home equity as a factor in determining a student's aid. The plan also boosts the University's funding for international students, who are not admitted on a need-blind basis.

"We want any student who believes that he or she may be able to benefit from a Princeton education to consider Princeton irrespective of that student's financial resources," said Dean of the College Nancy Malkiel, who chairs the student-faculty committee on financial aid.



With the loan-to-scholarship conversions – aimed primarily to benefit lower-income students – the University will no longer require any student loans when a family's income is below $40,000, roughly the national median family income. The loan burden will be reduced incrementally for students with family incomes between $40,000 and $57,500.

The home-equity reduction – targeted at middle-income students – will also be implemented on a sliding-scale basis. Home equity will be completely removed from aid calculations for families with income up to $90,000 and home equity as high as $100,000 or income up to $60,000 and home equity as high as $150,000. For families with more home equity and greater incomes, home equity will either be reduced by one-half or one-quarter in aid calculations.

"For families at or below the national median, it is no more expensive to go to Princeton than to go to your state university" with the new aid reforms, according to Financial Vice President Dick Spies GS '72.

"The message is really simple: We have a need-blind admissions policy. We want to make sure it is truly need-blind," Ostriker said. "We want to make sure that is not just a motto but a truth."

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The University's increase in aid to international students, the smallest part of the aid reform package, will allow the University to provide aid for seven more international students each year with the expectation that four will attend the University, according to the report of the student-faculty committee on financial aid.

Though not part of the aid reforms, the 3.7-percent increase in tuition is also a "significant but small" step toward making financing a Princeton education more "reasonable," Ostriker said.

But with the University facing a 4-percent rate of growth in salaries, the Provost noted that students should not expect tuition growth to fall much lower. "We can't have our primary source of expenditure growing at a faster rate than our primary source of income," Ostriker said.

The University's ability to launch the financial aid package this year came from a confluence of conditions, including the success of fund-raising, the decisions of PriCom last year, and a recent decrease in the number of students on financial aid.

Fund raising – coming on the heels of the 250th Anniversary campaign –has exceeded expectations in both annual giving and donations directly to scholarships, Spies said. This allows the University financial security in undertaking a commitment as expensive as increasing aid, even though budget deficits are projected for the three years following 1998-99.

In addition, the Priorities Committee and the trustees chose to trim the rate of growth in tuition last year instead of expanding financial aid. Their budgetary conservatism resulted in a 3.9 percent increase in tuition (then the lowest in 30 years) and an expected budget surplus of $1.7 million, allowing for a focus on new spending this year.

After denying the student-faculty financial aid committee's request for more funding last year, "there was an understanding that we would be coming back to address financial aid concerns this year," Malkiel said.

Indeed, even before debate on the measures began this year, Associate Provost and PriCom Executive Secretary Georgia Nugent '73 said PriCom had a "predilection to do something" on financial aid due to the sentiments expressed by last year's members.

Last year's proposal was smaller and focused more on relief for middle class students, Malkiel said.

In enacting the aid reforms this year, administrators said the University was also reacting to warning signs that the schools is becoming less socioeconomically diverse. This concern was a theme of the aid committee's report, which found that over the past 10 years there has been a decline in the number of students from families earning less than the national median family income.

While 11.3 percent of students were in the lowest national income deciles in the Class of 1992, only 6.9 percent were in the same groupings in the Class of 2001, according to the aid committee report.

In addition, the classes of 2000 and 2001 had the lowest percentage of students receiving aid from the University in the past five years, the report said.

"Either the reality or the impression was that Princeton was too expensive for lower-income students," Ostriker explained.


Two sources familiar with the proceedings of the aid committee said it was not just decreasing numbers of poor students, but also falling numbers of minority students that provided an impetus for action this year – even though that was never mentioned in the aid committee's report or in any public statement released by the University.

One of the sources, both of whom spoke on condition of anonymity, said the committee was able to see a correlation between the fall in the number of students on financial aid and the fall in the number of minority students at the University.

The source said that a goal of the financial aid expansion was to make Princeton "a more attractive choice" for minorities.

The falloff in minority enrollment was included in a memorandum to the aid committee from the admission office that was obtained by The Daily Princetonian:

The number of black students has fallen from 103 in the Class of 1999 to 83 in the Class of 2000 to 69 in the Class of 2001, according to the memo. The number of Puerto Rican students has fallen from 32 to 24 to 19.

The number of Mexican, Hispanic, Asian and Native American students has remained relatively constant, however, the memo indicated.

Over the same period of time, the number of students on financial aid declined from 49 percent in the Class of 1999 to 41 percent in the Class of 2000 to 38 percent in the Class of 2001, the committee's report said.

"It's a vicious cycle. You need a critical mass of minority students to attract more minority students. Once that level falls, it's hard to build back up again," said David Ascher '99, the USG president and a member of the aid committee.

"I can't speak for all members of the committee," he added, "but I know that the dropping level of minority enrollment was a major concern of mine upon entering into these discussions."

Malkiel and Spies said the financial aid measures were not aimed at increasing the number of minorities specifically. Rather, they said, these proposals were aimed at increasing socioeconomic diversity, regardless of race or ethnicity.

"When (the minority) numbers have declined, rather than increased, we worry about that," Malkiel said. "But that's a continuing theme, not an immediate charge."

Ostriker said the fall in minority enrollment was not discussed at PriCom meetings, and Spies said that while the drop in minority numbers may have been "a small factor," it "was not a driving force" behind the aid proposals.

But, one of the sources said the aid committee spent much of one meeting discussing ways to recruit minorities to Princeton, and both sources said administrators appeared to be shaken by the fall in minority enrollment.

A fear that emerged from committee discussions, one source said, was that the aid proposal would amount to the administration "trying to buy their way out of it instead of addressing structural concerns" of the minorities.

The aid committee will likely look into ways to improve the University's image among minorities this semester, Ascher said. However, the agenda has not been officially set, according to Malkiel.

National Spotlight

As Princeton is the first of the Ivy League schools to unveil its yearly budget, the University's plans put pressure on competing schools to reign in rising tuition costs and expand their financial aid options at the same time.

Spies said he could not anticipate how other schools would respond, but "it's undoubtedly got people's attention, and there's nothing bad about that."

He also played-down the competitive motive of the aid package, saying the goal was "not to be more competitive than Harvard or Stanford, but to get more students interested in places like Princeton."

However, in published reports from The Wall Street Journal to The Associated Press wire, admission officials from other schools said Princeton was "making a break" with the pack of highly selective schools in enacting these measures.

And, the aid committee's report said the reforms would likely "place Princeton in a better competitive position when admitted students consider the relative strength of their financial aid awards as they make their college decisions."

For schools with larger student bodies – such as Harvard University and the University of Pennsylvania – matching the University's plans would be costly. In addition, it is highly unlikely that they could respond in time to formulate plans that include the Class of 2002.

Beyond the Ivy League, Princeton's concurrent expansion in aid and decrease in the rise in tuition also run counter to national trends.

According to a study by the nonprofit Council for Aid to Education released last summer, colleges are expected to have less funding on hand in the future and fewer students from low-income families are expected to be able to attend college.

The study concluded that "the opportunity to go to college will be denied to millions unless sweeping changes are made to control costs, halt sharp increases in tuition, and increase other sources of revenue."

Predictions for Princeton under its new aid plan could not be more different. "Financial resources should not in any way," Malkiel said, "deter a student from thinking about Princeton."