Moscato discusses Princeton's leadership in shifting financial aid landscape

A number of colleges and universities across the country have announced improvements in their financial aid programs recently, increasing affordability for low- and middle-income students. Many of them have reduced or eliminated student loans, emulating Princeton's landmark no-loan financial aid policy initiated in 2001.

That same year Princeton also led in reducing the contribution expected from low- and middle-income families by excluding home equity from consideration in the determination of need for aid, and making similar reductions in calculating need for families that rent. In 1998, Princeton introduced the first "Financial Aid Early Estimator," an online calculator to help families assess what Princeton would cost them.

Despite the recent publicity about changes in financial aid, there still remain misconceptions about college affordability and the differences among aid programs. Director of Financial Aid Robin Moscato answers questions about the changing face of financial aid and Princeton's role in shaping its evolution.

What sets Princeton's financial aid program apart?

Many prospective applicants don't know the following key fact about our aid plan: It's not unusual for students from families with incomes up to $150,000 to pay less to attend Princeton than what they would pay at their state college or university. Even families earning $150,000 to $200,000 may qualify for grant aid that reduces Princeton's tuition by more than 50 percent on average.

The policies we initiated in 2001 -- replacing loans with outright grants and eliminating the value of the family home from the assessment of need -- have made this possible, and they recently seem to have inspired a number of other colleges and universities to enhance their own aid programs in these same ways.

But equally important is that we have continued to make adjustments in our aid program since 2001 to respond to the needs of students and their families. These have included reducing the number of hours we expect students on financial aid to work, increasing the dining allowance for juniors and seniors to provide more freedom of choice, providing additional support for term break expenses for international students who can't travel home, and making annual updates to our need formula to help keep parental contributions reasonable. We also have increased our outreach efforts to inform as many potential applicants as possible about our aid program.  

One driving characteristic of the Princeton aid program is the unwavering commitment of the entire University to the principle of access. Not only is admission a need-blind process, we actively encourage talented students from the broadest possible range of financial circumstances to apply for admission, and then we provide substantial assistance, not only to students from low-income backgrounds, but also to middle- and higher-income families who need help paying Princeton's costs.

The press recently has expressed concern about universities shifting aid from the neediest students to middle- and upper-middle-income students. At Princeton we provide all the aid that is needed by all students who qualify for aid. Low-income families make very modest or even no financial contribution, while other families are asked to contribute at levels that fully account for their particular financial capacities and circumstances.

What effect have the various improvements in financial aid had on the demographics of the student body?

The past 10 years have been a time of exceptional change at Princeton, and the aid initiatives have had an unmistakable impact on the economic diversity of our student body. About 54 percent of this year's entering freshman class is receiving financial aid, with an average grant award of $31,187. These figures are significantly higher than for the class of 2001, the last class to enter before the aid improvements, which had 38 percent on financial aid with an average grant of $15,000. These figures are also higher than most of our peer institutions. 

The effect has been even more pronounced for students from low-income backgrounds, which we define as those families earning at or below the national median income. Before the no-loan program, these students made up about 8 percent of our class. Today, low-income students have more than doubled in number and make up about 15 percent of the most recently entered freshman class of 2011.

Other schools advertise that families with incomes below some level -- usually about $60,000 -- get a "free ride."  What is Princeton's policy? 

Students from families at these income levels typically would receive grants that cover essentially all of their college costs except for the amount we would expect them to earn through campus jobs and summer jobs, although we even have the capacity to be flexible on summer jobs when necessary. 

What does Princeton do for a family where each parent may make $50,000 or more per year?

There's no doubt that families who earn between $100,000 and $150,000 feel significant pressure when it comes to paying for college, and our need formula recognizes this.

In our current freshman class, students from families with incomes between $100,000 and $125,000 are receiving average grants of $27,700, and those from families in the $125,000 to $150,000 income range average $22,700 in grant aid.

As incomes rise above $150,000, some families who apply for aid are judged to have adequate resources to cover Princeton's costs and are not offered a need-based grant. However, in the class of 2011, more than 80 percent of students applying for aid from families earning between $150,000 and $200,000 receive grants that average $17,100.

On average, parents of aid students contribute amounts equal to about 13 percent of their annual income. The range of contributions, however, runs from 0 percent for lower-income families to 16 percent for higher-income families that have more resources. 

What kinds of financial circumstances are taken into account when determining an aid award?

The answer is perhaps best illustrated by example. A student whose parents are school teachers in Worcester, Mass., earning a combined $130,000 a year, enters with the class of 2011. The family also has a younger son who is a senior in high school. They have all of the usual assets and expenses for a family of four.

The parents contribute $18,000 toward Princeton's costs in 2007-08, which is close to what they would have expected to pay if their child had attended their state university. After calculating $4,500 in expected student earnings from a summer job and campus work-study, Princeton provided a $27,125 University grant to cover the balance of the student bill. There are no loans that have to be repaid, only grants. The family can spread out its contribution over time by taking advantage of Princeton's Parent Loan Program.

When the student's brother enters college next year, Princeton will split the amount the parents are expected to pay for their children's expenses, cutting the parents' contribution to Princeton in half. This results in a $9,000 contribution from the parents and a University grant of $36,125.

Private school fees, the cost of caring for an elderly or ill relative, and many other factors might further reduce the amount families are expected to pay, and also increase the University's grant.

How does Princeton make its financial aid assessment? Would the University ever adopt the concept of payment caps based on income?

The Princeton aid program is solidly based on need and not merit. We do not award academic or athletic scholarships. We take into consideration a wide variety of financial and family circumstances through our need formula, without employing caps tied to income or any other single factor.

Princeton's view is that each applicant's situation should be carefully assessed, and need for aid determined as fairly as possible. Parents are asked to contribute what they can reasonably afford, and we meet full need without loans, making it possible for aid recipients to graduate debt-free. Most students have a campus job, working between seven and eight hours per week.

This system of determining aid by assessing a family's ability to pay results in very large grants for the lowest-income students and a comprehensive aid plan that helps moderate-, middle- and even upper-middle income families afford the cost of attending Princeton.

Most need-based aid programs operate in a similar manner, determining aid on a case-by-case basis after considering many factors in each review. I know of none that uses an income cap system, despite recent news reports that describe estimated averages as caps.   

Does Princeton's aid keep pace with tuition?

Over the past decade, our aid grants have increased two and a half times faster than the University's tuition. In the 1997-1998 academic year, the average student aid grant covered 65 percent of the tuition charge. For this 2007-08 year, the average aid grant covers more than 95 percent of the tuition charge. Not only is the Princeton aid package keeping up with costs, it is clear that families have gained ground as far as being able to afford a Princeton education.

How does Princeton fund its financial aid program?

The University relies heavily on its own resources to fund its aid program. More than 92 percent of the $81 million scholarship budget for the 2007-08 academic year comes from University endowed and yearly sources, such as annual gifts from alumni. More than $65 million of the $81 million comes from scholarship endowment, and approximately 5 percent comes from state and outside awards, with the remaining 3 percent funded from federal student aid programs.

While the term "budget" is usually understood as a fixed fund, there is actually no predetermined limit for Princeton's scholarship program. Because the University places no limit on the number of aid applicants who can be admitted under our need-blind process, and because we meet the full need of every admitted student who receives aid, our aid budget fluctuates each year to provide whatever is necessary to support this policy. People are frequently surprised to learn that Princeton is paying out more this year in aid -- $81 million -- than it is taking in through tuition, $75 million.

What is your primary challenge as a financial aid director?

My top priority and biggest challenge is getting the word out that Princeton is an affordable option for those with the opportunity to attend. 

Families read more about national tuition increases than they do "net price," which is the cost of attending college after scholarship grants are deducted. The tuition charge for a student entering Princeton this past fall was $33,000, but for more than half of these entering students, financial aid grants reduce the tuition cost by 95 percent to an average of $1,800.

At Princeton and throughout our peer institutions, many thousands of students receive significant tuition discounts through aid programs each year. This is worthy of a headline, but is unlikely to get one.

The important story is that as schools expand their aid offerings and try to get the word out about the availability of aid, applicants across the country from lower- and middle-income backgrounds are the winners. The critical message for students is not to be deterred by the sticker price, because you may be missing out on some of your most affordable college options.