Despite recession, financial aid holds steady

Despite the recession, Director of Student Financial Services Caesar Storlazzi said he does not expect Yale’s spending on financial aid to rise.

While current economic conditions will make it more difficult to predict Yale’s financial aid expenditure in the coming years, and might seem to suggest that more families would have trouble paying tuition, Storlazzi noted that spending on financial aid rose only slightly this year from last year and that Yale families have historically been financially resilient in tough times.

“I anticipate the number of students on financial aid next year compared to this year will be pretty flat,” Storlazzi said. Upward and downward shifts in family incomes mean that Yale’s aid expenditure as a whole will remain relatively unchanged, he added.

Storlazzi noted that Yale families typically fare better than the general population in times of economic hardship.

“One thing we have seen in the past 25 years is that Yale families tend to be very resilient financially to market downturns,” he said, recalling that during the stock market crisis of the mid 1980’s, the Financial Aid Office received fewer requests for financial aid reviews than expected.

A similar phenomenon occurred last year when the office invited students and their families to apply for aid or to have their existing aid packages reviewed in light of the financial crisis. The office was surprised to receive only around 50 applications that were linked to the economic downturn, not all of which qualified for additional aid, Storlazzi said.

But Yale experienced a much sharper spike in the number of students eligible for financial aid in 2008, when the University undertook a major overhaul of its financial aid policies, abolishing parental contributions for families earning less than $60,000 annually and reducing contributions for families earning under $200,000 to between one and 10 percent of their incomes. While endowment losses have forced budget cuts across a number of Yale departments this year, University President Richard Levin confirmed in his letter to the faculty this past September that the University will continue to support financial aid expenditures. Storlazzi confirmed that there are no projected cuts to Yale’s financial aid budget.

Since 2007, the number of students on financial aid has risen from 2,256 to approximately 2,900 this year, pushing Yale’s financial aid budget to $92 million last year, or more than triple what Yale spent in 2002.

Ryan Munce, vice president of the National Research Center for College and University Admissions, an organization which gathers information on student attitudes and educational plans from nearly 5.5 million students nationwide, agreed with Storlazzi that he would be “very surprised” if there were a significant change to Yale’s financial aid expenditure this coming year. Munce explained that while more families may apply for aid out of fear and uncertainty, not all those families will actually be eligible for aid.

Indeed, the number of applications to Free Applications for Federal Student Aid, an online form commonly known as FAFSA and completed by college students to determine their eligibility for federal student financial aid, for the first six months of this year is up 19.7 percent over the same time last year.

But current economic conditions will make it more difficult for the Financial Aid Office to accurately pinpoint aid expenditures for the next few years, Storlazzi said.

“The chance for a variance in our projections will be higher because there are variables over which we have no control,” Storlazzi said. “I think it will take around a couple of years for the economy to turn around and for everyone’s families to catch up.”

Mark Kantrowitz, publisher of FinAid.org, a Web site that offers financial aid information and advice to college-bound students, also called for caution when projecting financial aid expenditures for schools such as Yale with generous financial aid budgets.

“While Yale tends to attract wealthier students, it is also crucial to recognize that the downturn affects everyone,” he said. “Some of the country’s most prominent firms such as Lehman Brothers have collapsed, and there will be families facing unemployment and large cuts to their income.”

Kantrowitz pointed to a study conducted by the education research firm Maguire Associates that indicates that families this year are much more cost sensitive compared to last and the lag effects from last year’s downturn will only begin to materialize this year.

Comments

  • Observer

    This is interesting because at Harvard I understand that they anticipate a not inconsiderable rise in financial aid due to greater need among families hurt by the economic dip.

    Is the difference between the Harvard and the Yale experience due, presumably, to the fact that “Yale families have historically been financially resilient in tough times,” as Director Storlazzi puts it, whereas the families of current Harvard undergraduates are less resilient?