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PRINCETON UNIVERSITY
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Date: January 26, 1998
Princeton Changes Its Financial Aid Policies To Increase Affordability For Lower and Middle Income StudentsPRINCETON, N.J., January 26--Princeton University's trustees have made two changes in financial aid policy that will significantly increase Princeton's affordability for lower and middle income students. They also have reaffirmed a policy that is designed to ensure that Princeton students and their families retain the full benefit of new federal tuition tax credits that begin to take effect this year.
Together, these measures represent "the most important changes in Princeton's financial aid policies in several decades," the trustees said. "They will result in a substantial increase in scholarship awards for most students on financial aid, and we hope they will send a very clear message that one of Princeton's highest priorities is to be affordable to all students and their families."
Under its new policies:
* Princeton will not require any student loan when a family's income falls below $40,000 (roughly the national median). For these students Princeton will entirely replace the current loan requirement with additional scholarship aid. In addition, Princeton will reduce its loan requirement for students with family incomes between $40,000 and $57,500.
* Princeton will reduce the amount it expects a family to pay for students on financial aid by removing or reducing the contribution expected from home equity in its financial aid calculations. When calculating what a family is able to pay, Princeton will no longer include the value of the family home for most families with incomes below $90,000. It will reduce the contribution expected from home equity by one-half or one-quarter for all other families eligible for financial aid, and it will increase its "asset protection allowance" for families that do not own their homes. Families with more than one child in college or other special circumstances may qualify for aid at Princeton with incomes as high as $150,000.
* Princeton has reaffirmed its decision last fall not to make any upward adjustment in its assessment of a family's financial capabilities as a result of the new federal tuition tax credits that were enacted last summer. This will allow eligible Princeton students and their families to obtain the full relief that these credits were intended to provide--up to $1,500 a year for the first two years of college and up to $1,000 a year for all other years.
These measures were recommended by President Harold T. Shapiro and approved by Princeton's trustees on Saturday (January 24). The trustees also approved a 3.7% increase in tuition, room and board for 1998-99, the lowest percentage increase at Princeton in more than 30 years. (Last year's increase was 3.9%.) As a result of recent success in raising funds specifically for financial aid for international students, the trustees increased Princeton's scholarship budget for these students by roughly a third. While Princeton is fully need-blind and meets the full financial need of all American and Canadian students, financial aid for international students has been limited to a specified scholarship budget.
"Princeton already has a very strong financial aid program, and these changes will make it even stronger" Shapiro said. "We already provide financial aid to some 43% of our undergraduates, and some 85% of all the scholarship aid our students receive comes from the University's own resources. The median family income of students receiving aid is $70,000, and the average scholarship we provide is almost $15,000.
"Our principal aims," Shapiro added, "are to do as much as we can to be sure that no student decides not to apply to Princeton solely for financial reasons, and to make Princeton as affordable as possible for those who attend. We believe that for most lower and middle income families, these changes will bring the amount they actually pay at Princeton in line with--or below--what it costs to attend the major state universities."
According to Provost Jeremiah Ostriker, who chairs the Priorities Committee, the faculty-staff-student committee that each year makes recommendations to the president on the next year's operating budget, "Princeton has always tried to keep the maximum loan component of its financial aid package at a relatively modest level (it is currently $4,080 a year), but we believe that even this loan amount--and in some cases any loan amount--can be a real financial deterrent for families of modest means. We also have come to believe that our expectations for what families should be asked to contribute from home equity have been too high. Depending on a family's income and the value of its home, our elimination or reduction of the contribution expected from home equity could reduce what a family is expected to pay by as much as $3,000-4,000 a year.
"These are expensive changes in policy," Ostriker added. "The fact that we are able to take these steps and also limit our increase in charges to 3.7% is a great tribute to our alumni, who have been exceedingly generous in recent years both through our Annual Giving campaigns (which provide unrestricted funds that we can apply to these purposes) and in capital giving directed toward financial aid."
The changes will take effect beginning with the class that enters Princeton next fall (the Class of 2002). Students with financial aid awards who have recently been admitted through Princeton's early decision program will receive new award letters reflecting these new policies.
Princeton, which established its first scholarship in 1792, is fully need-blind for all American and Canadian applicants, which means that admission decisions are made without regard for a family's financial circumstances, and it awards financial aid solely on the basis of need. Princeton meets the full need of each admitted student, with need defined as the difference between a student's annual budget (including tuition and fees, room and board, and an allowance for books and other expenses) and what in Princeton's judgment the student and his or her family can be expected to contribute. (The family contribution is based on income, assets, savings, family size, number of children in college, and other factors.) Students on financial aid typically receive a term-time job (generally about nine hours a week) and are asked to take out a federally subsidized loan of up to $4,080, and then any remaining need is awarded in the form of scholarship. Scholarship amounts can vary from as little as $500 to more than $28,000. Under its new policy, Princeton will not include any loan requirement in the financial aid packages it offers students from families with incomes below $40,000, and it will reduce the level of loan on a proportionate basis for students from families with incomes between $40,000 and $57,500. These loans will be replaced by additional scholarship amounts. Princeton also assists all families in making their parental contributions by offering its own loans to parents at very favorable rates and by allowing a variety of payment options.
The attached case studies illustrate how Princeton's new policies will affect families at several income levels. (Each case assumes a family with two children, including one in college.)
* A student from a family with an annual income of $30,000, savings of $10,000, and home equity of $40,000 would receive a scholarship increase of $4,380, to a total scholarship of $28,200. This family benefits both from the elimination of any contribution based on home equity and the absence of any loan requirement. The total annual cost to this student and family would be $2,780, plus the $2,060 the student would earn at a campus job.
* A student from a family with an annual income of $50,000, savings of $15,000, and home equity of $60,000 would receive a scholarship increase of $3,080, to a total scholarship of $22,500. This family benefits from the elimination of home equity and a $1,580 reduction in the loan requirement. The total annual cost to this student and family would be $5,980, plus the campus job and a loan of $2,500.
* A student from a family with an annual income of $65,000, savings of $20,000, and home equity of $90,000 would receive a scholarship increase of $3,500, to a total scholarship of $16,240. This family benefits from the elimination of home equity. The total annual cost to this student and family would be $10,660, plus the campus job and $4,080 loan.
* A student from a family with an annual income of $85,000, savings of $40,000, and home equity of $110,000 would receive a scholarship increase of $2,700, to a total scholarship of $7,090. This family benefits from a 50% reduction in its contribution from home equity.
To help families and college counselors estimate how much a family actually would have to pay, Princeton is developing an early financial aid estimator program on its Web page. When the system becomes operational later this spring, families that visit the site through Princeton's home page [www.princeton.edu] will be able to learn about Princeton's financial aid policies and practices. After the family answers about a dozen questions regarding its financial status, the system will calculate an expected family contribution, compare it to Princeton's charges to arrive at an estimated award, and "package" the award into scholarship, loan (if applicable), and campus job. Although the information will be preliminary, if the family's income and asset information remains relatively stable, the family should get a good idea of the probable amount of scholarship, loan, and campus work. Most families that qualify for financial aid will find that the contribution expected of them will amount to significantly less than half of the University's full price.
Companion documents:
Entire press kit and charts
Press release: Princeton Changes Its Financial Aid Policies (this document)
Fact sheet: Questions and Answers
Press release: 3.7 Percent Increase in Student Fees Lowest in Three DecadesBack to Princeton news
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