Princeton Boosts Financial Aid Program

With a new financial aid policy that will offer over $4000 more to some lower and middle-class applicants, Princeton University last month broke from Ivy League convention in a bold move to diversify its campus.

Faced with an elitist image and an increasingly upper-class student body, Princeton abandoned a policy like Harvard's for one that will convert some loans into grants and shrink many families' expected contributions.

As news of the changes spreads, Harvard and other universities are standing pat--with state schools relying on their already-cheaper tuition and Byerly Hall still mostly satisfied with its current system.

Still, some high schools and professional college counselors say that the new policy could give Princeton a competitive edge against less expensive institutions and Ivy League schools with traditional aid systems.

The New Plan

Princeton's governing board approved the new policies late last month. Next fall's first-years will be the first class affected by the changes, which will be gradually implemented over the next four years.

The new policy will eliminate all loans when student's families make less than $40,000 a year--absorbing what had been $4,080 in debt into an increased grant package in some cases.

For families with annual incomes between $40,000 and $57,500, loans will decrease but not disappear, meaning for example that a family making $50,000 will still take out $1,580 in loans.

"We looked at the last two freshman classes and saw a drop in students on financial aid," said Don Betterton, Princeton's director of Financial Aid. That percentage was 39 percent for the class of 2001--at a time when Harvard's percentage hovers in the mid-40s.

"Our main objective was to make Princeton more financial-aid friendly for lower- or middle-income students," Betterton says. "We wanted to counteract sticker shock... so that we can say we truly meet all demonstrated need."

The plan was also geared to benefit middle-class students by eliminating home equity in calculating expected contributions from families making $90,000 or less.

Home equity is an estimate of a house's value, which in financial aid systems like Harvard's is lumped with annual income in calculating a family's ability to pay.

For example, certain families earning $85,000 with high home equity could now pay $2,700 less every year than they would have before.

Princeton officials said last month that the new loan policies will affect 10 to 15 percent of the incoming class, with the homeequity changes helping 30 to 35 percent.

Princeton will pay for this aid increase with a$4-6 million annual budget deficit in the shortterm--absorbed by the largest endowment perstudent in the nation.

Harvard's endowment, now at $11 billion, is farlarger than Princeton's overall, but must supporta far larger number of students due to Harvard'sgreater number of graduate students.

Out From Behind the Ivy Wall

Financial aid officers said the system whichPrinceton is scrapping has been around fordecades, extending back to the days when the Iviesand other top schools collaborated in determiningfinancial aid.

This collaboration was originally done by theOverlap Group, a consortium of schools which hadmet since 1958 to make sure students admitted toseveral schools received fairly similar aidpackages from each.

This consultation was ended by a JusticeDepartment investigation in 1991 spurred bycharges of price-fixing. Still, until last monthformer group members had offered most applicantsvery similar aid packages.

"We kind of got out of step," Betterton says ofPrinceton's changes, made at a time when mostIvies are holding steady to their current systemof determining student need.

Some, like Brown University, have even begunadmitting in recent years that a student's abilityto pay full price may influence admissionsdecisions in certain cases.

Still, some say that even those Ivies with themoney to follow Princeton's lead should stay theircourse to preserve the value of their educations.

"If the Ivies were to make their educationcheaper across-the-board, they would have tosacrifice their ability to be highly selective andoffer very high quality," writes Kahn AssociateProfessor of Economics Caroline M. Hoxby '88 in ane-mail.

"The education they provide would be worth less(in fact, they might become a lot more like someof the schools that struggle to become more likethe Ivies)," adds Hoxby, whose research hasfocused on the economics of higher education.

At Harvard, Director of Financial Aid James S.Miller declined to comment. President Neil L.Rudenstine said that the University intended tostudy Princeton's new policy before making anychanges.

"If we make a move, we want it to be sensible,healthy and constructive, and we want it to besomething we can live with for a long time,"Rudenstine says.

Rudenstine says that, as an undergraduate, heundertook loans and work-study as part of afinancial aid package and had a greaterappreciation for his education as a result.

"I felt it was important to be investingsomewhat in my own education," Rudenstine says. "Ifelt that having a job and borrowing some moneywas something that I could and should bear."

Princeton spokesperson Justin Harmon told theChronicle of Higher Education thatPrinceton meant to say to lower-or middle-incomestudents "If you're thinking about going to astate university, think again."

At Rutgers, the state university of New Jersey,Vice President for University Budget Nancy S.Winterbauer says that scholarships make tuitionvirtually free for high-achieving New Jerseystudents.

She says she applauds Princeton's move becauseit gave some students greater choice in highereducation, but says that even after the changesthe cost of a Princeton education was often higherthan Rutgers' $4000 full annual tuition.

"When [high-achieving] kids come here, theycome here virtually free," Winterbauer says. "Thiswill make Princeton more competitive, but Rutgersis already a first-quality education at an almostfree price."

The Consumers

Princeton's changes have been well publicizedamong universities and reported in the BostonGlobe and the New York Times, but their pressreleases are still on the way to most high schoolguidance counselors.

Still, counselors say that from what they haveread of the plan, it could have a profound affecton some students' college choices.

"For next year, it certainly will impact [how Icounsel students]," says Gordy C. Axtman, guidancecounselor at Cambridge Rindge and Latin School."To students from a low socio-economic background,now this school says we're actively recruitingyou, and providing resources for you to use."

Leslie S. Goldberg, a professional collegeconsultant in Hingham, says that between twootherwise equal schools, the specter of paying offloans after graduation could push high schoolseniors to a school offering more grants.

"I would hope that the decision wasn't justbased on more grants," Goldberg says. "I'd hate tosee that as a determining factor, but reality saysthat it is."

Parents of college-bound students will be theones most attracted by the changes, according toRosemary Garcia, a guidance counselor at the BronxHigh School of Science in New York.

She says Princeton's greater attractiveness toparents could have indirect but powerful influenceon their children's choices.

"[Cost] is something that every student isgoing to consider," Garcia says. "But parents aregoing to be the most influenced, and they aregoing to sway [their children] one way oranother."

Still, Garcia says that for her students"Harvard is such a draw, no matter what it costs."At Stuyvesant High School in Manhattan, guidancecounselor Carol Katz agrees that the changes mightnot significantly dull Harvard's competitive edge.

"Harvard has always been fair in aidingpeople," Katz says. "I don't think I know ofanyone who turned away from Harvard because [offinancial considerations]."

She says she also doubts that Princeton'spolicies, applied to a pool of far fewer than2,000 accepted students, would give it far moreclout in the competition for the most qualifiedapplicants.

"It's not like it's City University [of NewYork]," she says. "Princeton has to accept youfirst--you have to get in in order to benefit."CrimsonHenry H. KimPrinceton's New Financial Aid Newpackages offer more aid in the form ofscholarships.

Princeton will pay for this aid increase with a$4-6 million annual budget deficit in the shortterm--absorbed by the largest endowment perstudent in the nation.

Harvard's endowment, now at $11 billion, is farlarger than Princeton's overall, but must supporta far larger number of students due to Harvard'sgreater number of graduate students.

Out From Behind the Ivy Wall

Financial aid officers said the system whichPrinceton is scrapping has been around fordecades, extending back to the days when the Iviesand other top schools collaborated in determiningfinancial aid.

This collaboration was originally done by theOverlap Group, a consortium of schools which hadmet since 1958 to make sure students admitted toseveral schools received fairly similar aidpackages from each.

This consultation was ended by a JusticeDepartment investigation in 1991 spurred bycharges of price-fixing. Still, until last monthformer group members had offered most applicantsvery similar aid packages.

"We kind of got out of step," Betterton says ofPrinceton's changes, made at a time when mostIvies are holding steady to their current systemof determining student need.

Some, like Brown University, have even begunadmitting in recent years that a student's abilityto pay full price may influence admissionsdecisions in certain cases.

Still, some say that even those Ivies with themoney to follow Princeton's lead should stay theircourse to preserve the value of their educations.

"If the Ivies were to make their educationcheaper across-the-board, they would have tosacrifice their ability to be highly selective andoffer very high quality," writes Kahn AssociateProfessor of Economics Caroline M. Hoxby '88 in ane-mail.

"The education they provide would be worth less(in fact, they might become a lot more like someof the schools that struggle to become more likethe Ivies)," adds Hoxby, whose research hasfocused on the economics of higher education.

At Harvard, Director of Financial Aid James S.Miller declined to comment. President Neil L.Rudenstine said that the University intended tostudy Princeton's new policy before making anychanges.

"If we make a move, we want it to be sensible,healthy and constructive, and we want it to besomething we can live with for a long time,"Rudenstine says.

Rudenstine says that, as an undergraduate, heundertook loans and work-study as part of afinancial aid package and had a greaterappreciation for his education as a result.

"I felt it was important to be investingsomewhat in my own education," Rudenstine says. "Ifelt that having a job and borrowing some moneywas something that I could and should bear."

Princeton spokesperson Justin Harmon told theChronicle of Higher Education thatPrinceton meant to say to lower-or middle-incomestudents "If you're thinking about going to astate university, think again."

At Rutgers, the state university of New Jersey,Vice President for University Budget Nancy S.Winterbauer says that scholarships make tuitionvirtually free for high-achieving New Jerseystudents.

She says she applauds Princeton's move becauseit gave some students greater choice in highereducation, but says that even after the changesthe cost of a Princeton education was often higherthan Rutgers' $4000 full annual tuition.

"When [high-achieving] kids come here, theycome here virtually free," Winterbauer says. "Thiswill make Princeton more competitive, but Rutgersis already a first-quality education at an almostfree price."

The Consumers

Princeton's changes have been well publicizedamong universities and reported in the BostonGlobe and the New York Times, but their pressreleases are still on the way to most high schoolguidance counselors.

Still, counselors say that from what they haveread of the plan, it could have a profound affecton some students' college choices.

"For next year, it certainly will impact [how Icounsel students]," says Gordy C. Axtman, guidancecounselor at Cambridge Rindge and Latin School."To students from a low socio-economic background,now this school says we're actively recruitingyou, and providing resources for you to use."

Leslie S. Goldberg, a professional collegeconsultant in Hingham, says that between twootherwise equal schools, the specter of paying offloans after graduation could push high schoolseniors to a school offering more grants.

"I would hope that the decision wasn't justbased on more grants," Goldberg says. "I'd hate tosee that as a determining factor, but reality saysthat it is."

Parents of college-bound students will be theones most attracted by the changes, according toRosemary Garcia, a guidance counselor at the BronxHigh School of Science in New York.

She says Princeton's greater attractiveness toparents could have indirect but powerful influenceon their children's choices.

"[Cost] is something that every student isgoing to consider," Garcia says. "But parents aregoing to be the most influenced, and they aregoing to sway [their children] one way oranother."

Still, Garcia says that for her students"Harvard is such a draw, no matter what it costs."At Stuyvesant High School in Manhattan, guidancecounselor Carol Katz agrees that the changes mightnot significantly dull Harvard's competitive edge.

"Harvard has always been fair in aidingpeople," Katz says. "I don't think I know ofanyone who turned away from Harvard because [offinancial considerations]."

She says she also doubts that Princeton'spolicies, applied to a pool of far fewer than2,000 accepted students, would give it far moreclout in the competition for the most qualifiedapplicants.

"It's not like it's City University [of NewYork]," she says. "Princeton has to accept youfirst--you have to get in in order to benefit."CrimsonHenry H. KimPrinceton's New Financial Aid Newpackages offer more aid in the form ofscholarships.