After the initial excitement of receiving Dean Fred Hargadon's "YES!" letter, an acceptance to Princeton University prompts many families to examine their finances and squeeze their wallets to find the needed tuition and costs of $33,613 a year.
But the University Board of Trustees' approval of a bold, new financial aid plan on Jan. 27 may change the way parents and students pay for a Princeton education. The plan replaces loans from all financial aid packages with grants and changes requirements for student contributions.
No longer required to go into debt, prospective students will have an added incentive to apply to Princeton.
The "no-loan" policy and its accompanying financial aid changes are estimated to cost the University more than $5 million a year. The plan, though among the first at institutions of higher education in the country, is designed to be a modest, permanent change.
"This package was designed in part for flexibility. We're not trying to use up every conceivable dollar we can put our hands on," President Shapiro said during a press conference on Jan. 27. "We think there is leeway to think about this in the future because, for one reason, we didn't use up all possible flexibility, and second, there is a lot of uncertainty out there in the capital market."
The new programs will require additional funding over the next decade as the Wythes plan is implemented and the size of the student body increases. Shapiro noted, however, that growth is built into the spending plan.
Shapiro also announced that tuition will grow this year by the lowest rate in 34 years. He said cost controls are aimed at linking increases to the rate of median family income growth.
Though tuition levels could be frozen if allocated the amount of funding appropriated for new financial aid programs, the University appears unlikely to continue efforts to reduce undergraduate tuition cost growth.
In its report to the president, the committee concluded, "It is, financially, extremely difficult to continue to reduce tuition growth, one of our primary sources of income, below the rate of growth of salaries, our primary expense item. Thus it is unlikely that we will be able to continue this trend for much longer."
Shapiro said the University is not looking for an admissions advantage over peer institutions.
"We had not hoped for a competitive advantage here. What we hoped for is what we did would be followed by our competitors so that education as a whole would be open," Shapiro said. "After all, Princeton is only a small group of students."
Shapiro commented that after the University's last major financial aid policy change, "Our competitors followed our lead in that area, which is what we hoped for."
It appears that other universities may follow Princeton's newest financial aid plan once more.
Morton Owen Schapiro, president of Williams College, told the Chronicle of Higher Education that many schools may be afraid of losing their ability to compete on the same level if they fail to implement similar plans. "There are going to be a lot of schools out there saying, 'Oh, my God, do I have to match this,' " he said.
Administrators at other Ivies, however, do not seem quick to match the University's latest initiative. Harvard and Yale universities have both reported that they are considering financial aid changes, but are not planning any action in response to Princeton's new plan.
Other schools are questioning whether Princeton's new financial aid plan is the best method to alleviate students' cost burdens.
"There are other approaches to the problem. Rice has a long history of using its large endowment to subsidize tuition costs. The tuition of other colleges, like the Ivy League schools, are some 60 percent higher," wrote Vice President for Enrollment at Rice University Ann Wright in a letter to the editor published in The New York Times yesterday.
She continued, "While these policies limit a University's tuition revenue, they are in the best interest of students."
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