The university will eliminate all loans, substituting outright scholarships, for students of families with incomes below $40,000 (roughly the national median) and will significantly reduce the loan burden on a sliding scale for students from families with incomes between $40,000 and $57,500. These loans will be replaced by additional scholarship amounts.

Princeton's shift to a more generous policy will be phased in over four years, starting with next year's freshmen, of whom 10 to 15 percent should benefit. The new policy won't affect next year's sophomores, juniors, and seniors.

The changes were enacted to make Princeton more attractive to a wider demographic range of students, not just those with higher family incomes. The changes will result in a substantial increase in scholarship awards for most students on financial aid, making the amount they pay in line with what it costs to attend major state universities.

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. The university will reduce the contribution expected from home equity by one-half or one-quarter for all other families eligible for financial aid. This proposal aims to reflect more accurately a family's liquid assets and would benefit about 35 percent of the next incoming class, said Don M. Betterton, director of undergraduate financial aid.

The university also increased its scholarship budget for international students by roughly a third.

These changes to the financial aid formula were recommended by the budget-setting Priorities Committee and approved by the trustees on January 24.

The university initiated the changes in part out of a concern that Princeton's price tag of more than $30,000 may keep some qualified students from applying. In recent years the percentage of students on financial aid has averaged roughly 43 percent of each class, but had declined to 39 percent in the current freshman class of 2001.

In addition to the changes in financial aid, the Priorities Committee recommended a 3.7 percent increase in undergraduate tuition, room, and board, bringing the price of a Princeton education to $30,531, the first time it has topped $30,000. (The inflation rate is about 2 percent.) Last year's increase was 3.9 percent. Shapiro explained that costs in any labor-intensive industry, be it "education or lawyering," tend to increase faster than inflation as measured by the Consumer Price Index. He said the university is achieving its goal of keeping increases at or below increases in family income, which last year grew by 5 percent.

The change in Princeton's financial aid policies is a reaction in part to the expressed concerns of Princeton parents, said Justin Harmon '78, a university spokesman. Also, the university wants to halt the slide in the percentage of students on financial aid.

Shapiro emphasized that Princeton is not making these changes for competitive reasons, but as part of its commitment to providing adequate financial aid to any student who qualifies for it. The university, explained Betterton, would like to see similar institutions follow Princeton's lead in reaching out to low- and middle-income families.

The median income of students receiving aid is $70,000, and the average scholarship Princeton provides is almost $15,000. A financial aid package typically includes some combination of loan (up to $4,080 a year), scholarship, and campus job (generally nine hours a week). Later this spring, families will be able to estimate how much they would have to pay through a financial-aid estimator program, which they will be able to visit through Princeton's Website: http://www.princeton.edu.

The university is taking the initiative at this time, said Shapiro, because it has the financial ability to do so, thanks to robust endowment growth and successful fund-raising. Princeton's endowment per student - $701,000 as of June 1996 - is the highest of any college in the nation.

In formulating its budget recommendations, the Priorities Committee began with a projected $1.7 million surplus for fiscal year 1999, attributable in large part to the success of Annual Giving, budget cutbacks over the last two years, and sponsored research budgets that proved healthier than anticipated. Despite a longer-term budget forecast that is less optimistic - deficits of several millions of dollars are projected for the three years following 1998-99 - the committee concluded that the university's overall financial situation is strong enough to support the new policy. When fully implemented, it is expected to add $6 million a year to the university's financial aid budget, which currently stands at $24 million.

It's uncertain what impact the new policy will have on financial aid programs at other schools that compete with Princeton for students. Among Ivy League schools, the percentage of students on financial aid is roughly the same. On February 4, a week after Princeton's announcement, Yale said it would adopt a similar policy. Harvard spokesman Alex Huppé said he didn't know whether Princeton's changes would influence Harvard's financial aid formula.

At Princeton next year, undergraduate tuition will be $23,820, an increase of 3.9 percent; the room charge will be $3,077 and the board rate $3,634, both up 3.0 percent. Graduate tuition will also be $23,820.

The Priorities Committee presented a balanced budget for next year totaling $572 million. Of the funding requests put before the committee, recommendations were made to reduce the average size of language classes; to provide additional academic advising for undergraduates; to offer additional computing support for students in the residential colleges; to augment support for graduate students; and to expand the program of training in English as a second language for international graduate students who will teach. Together, these initiatives will add $363,000 to the operating budget.

Shapiro after a decade

At a press conference in April 1987, when Harold T. Shapiro *64 announced that he would assume the presidency of the university on January 2, 1988, a reporter asked if he had chosen the date so he could still claim to be president of the University of Michigan on New Year's Day, when the Michigan football team might compete in the Rose Bowl. After the laughter subsided, Shapiro paused, looked out at the crowd, and with perfect timing, answered "yes."

Shapiro's dry humor and reserved demeanor were two personality traits the university did not expect from its highest leader.

In 1993, when a Daily Princetonian special issue commemorated his first five years in office, Shapiro received mixed reviews from faculty, who found him unapproachable, and from student leaders, who complained he lacked interest in student concerns.

However, as Shapiro celebrates his 10th anniversary as president, administrators and students agree that his ability to combine a clear direction for the future with timely, subtle wit has served the university well.

No one is sure whether Shapiro has changed his style of leadership to better fit the personality of the university, or if Princeton has grown more accustomed to its reserved, intellectual president. But five years later, most advisers, coworkers, and assistants have nothing but praise for Shapiro.

Marcia H. Snowden, who has served as Shapiro's assistant since he arrived on campus, said, "The criticism he received early on reflected a different personality. He was a more reserved person, but through office hours, teaching, and getting to know more faculty, he has become more comfortable."

Shapiro succeeded William G. Bowen *58 - an outgoing, hands-on leader - as president. Those who have worked with both men noticed a drastic change in the style of leadership. "Bill Bowen is a rather different person," said Associate Provost S. Georgia Nugent '73. "He is gregarious, while Harold, by and large, is a more private person.

"Though he has a different style, over time Harold has become warmly attached to the community," Nugent added. "He is wonderfully accessible and a great listener one on one, but he had trouble translating that to groups in the beginning."

Vice President and Secretary Thomas H. Wright, Jr. '62 agreed that Shapiro has changed: "He seemed a disinterested and unknown person for the first few years. That has changed as he became familiar with the individuals in the university." Princeton's presidency, Wright added, "is an unusually powerful one," and Shapiro "may have had trouble adjusting from Michigan's less centralized authority structure."

Focus on academics

Administrators credit Shapiro for leading the university to increased academic success. The most important quality in a Princeton president is "devotion to education," said Robert F. Goheen '40*48, who occupied 1 Nassau Hall from 1957 to 1972. "Harold Shapiro has that. He has further strengthened an outstanding faculty and kept the focus of the university on research and undergraduate teaching."

"He is full of new ideas," said Provost Jeremiah P. Ostriker. "He has been steadily more open, confident, outgoing, and innovative rather than becoming stale. Most administrators start out with a burst of energy and then fizzle out. In his case, it is the other way around."

According to Robert H. Rawson, Jr. '66, chairman of the board of trustees' executive committee, in addition to strengthening academics, one of Sha-piro's major accomplishments has been to ensure the university's financial success. He "introduced a strategic planning project, including a strong fiscal policy," said Rawson. "He encouraged the capital campaign and was careful to make sure [the Priorities Committee] had a budget to work with."

Students, too, have found Shapiro to be more receptive. "He has allowed student concerns to be placed at the top of the agenda," said USG president Jeffrey S. Siegel '98.

Ostriker said the faculty appreciate the positive tone Shapiro has set for faculty-student discussions. "There is less us-versus-them," Ostriker said. "I credit a fair amount to Shapiro's personal leadership."

-Christine B. Whelan '99

This article was adapted from one that appeared in The Daily Princetonian.

Faculty File
A high-tech entrepreneur shares his vision

When Ed Zschau '61, a visiting professor in the electrical engineering department, completed his final lecture of the fall semester, he flipped on a boom box. The song, "My Way," without the words, filled the Bowen Hall auditorium.

Soon, Zschau began belting out his own versiona fitting conclusion to a first-time engineering course, High Tech Entrepreneurship:

"This course, its end is near,

now that I have ended this

final session,

A thought, for your career, it

is a most important lesson,

As you go down life's path,

either slow or in a hurry,

Recall the Nike ad, just do it

your way."

A few more verses passed, all of which highlighted his 90-minute summary lecture, entitled "Launching New Enterprises and Entrepreneurial CareersSome Pointers and Personal Perspectives." Nearly everyone in attendance appeared both awestruck and amused, including James Wei, the dean of the Engineering School, who was sitting in the front row. "I have never heard a colleague serenade the class at the last lecture, and Ed Zschau has a very pleasant baritone voice," said Wei.

The course introduced students to the analysis and actions needed to launch a successful high-tech company. It addressed ways to evaluate whether new technologies and business ideas are commercially viable and to determine how to best implement those ideas.

A standing ovation greeted the final verse:

"With all you have learned and then some luck,

You'll probably make a gigabuck,

And give it all to Old Nassau,

Just do it your way."

Doing it his way

Zschau (rhymes with pow) is a professor at the Harvard Business School who took a semester's leave to take part in a new program that brings noted teachers to Princeton. In addition to having an entrepreneurial background, he is a former IBM senior executive and served two terms in Congress. Throughout his unconventional career, he has followed the advice he offers his students. But if a willingness to challenge convention has helped him, so too has luck. As recounted in his final lecture, his life might have taken a very different path if he hadn't broken his leg while playing rugby during his senior year at Princeton.

A philosophy major, Zschau applied to and was accepted by the Navy's Officer Candidate School. But the broken leg prevented him from attending, so instead of committing to the Navy he enrolled at Stanford Business School, to which he had also applied. Stanford awarded him his M.B.A. in 1963, followed by a master's in statistics and a Ph.D. in business administration. He stayed on at Stanford to teach, eventually cochairing its business-policy department.

Zschau was 28 years old and realized he knew nothing about actually running a business. Deciding to get some hands-on experience, he founded System Industries, Inc., a Silicon Valley computer products company. Dependent on venture capitalists to fund his startup, he soon discovered an important lesson about them: "They always told me they had deep pockets, but what I didn't know was that they also had awfully short arms."

At the time, venture capitalists were investing a paltry $50 million annually into U.S. startups, mainly because if the firms were successful, the investors would have to pay a capital-gains tax of 50 percent on their earnings. As a member of the American Electronics Association, Zschau worked with Representative William Steiger to draft the Investment Incentive Act of 1978. Congress approved the bill, and the capital-gains tax was reduced to 28 percent. Consequently, during the 1980s, $4 billion annually poured into venture opportunities, mostly in high-tech companies. This increased investment has helped give U.S. firms an advantage over their foreign competitors and fuel American dominance in the computer and biotech industries.

Working with Congress whetted Zschau's interest in public service and led to a decision to enter politics. He was elected to the U.S. House of Representatives in 1982 and reelected two years later, but decided not to try for a third term once he realized he "couldn't make a difference" as one of 47 representatives from California. But being a Senator was different, so in 1986 he ran for the upper house as the Republican challenger to incumbent Democrat Alan Cranston.

Although he lost the election by 100,000 votes, defeat was just another opportunity. Returning to the business world, Zschau became chairman and CEO of Censtor Corporation, a developer of advanced magnetic-recording components used in high-capacity disk drives. Then, in 1993, Louis Gerstner, the new chairman and CEO of IBM, tapped him to be general manager of the company's storage-systems division. But Zschau soon realized he didn't like large companies, especially after he had to downsize the division's 15,000-person work force by more than 40 percent. So he became a professor of management at Harvard Business School and began working with various entrepreneurial enterprises and public-policy organizations.

To Zschau, the entrepreneurial life means "being a builder, someone who is creative and wants better ideas implemented," rather than accepting the status quo. An entrepreneur, he says, is "someone who is courageous enough to take the risks associated with those ideas. Someone who is a dreamer, imagining a world that might be and asking, Why not?" As an entrepreneur, he told his students, you will have "the satisfaction of looking at something that is good, and if it weren't for you, it would not exist at all."

-Steve Eisenberg