As Yale looks for ways to cope with a $68 million deficit for the coming academic year, cutting the financial aid budget may be a possibility.
Yale announced in December it will decrease the financial aid given to students whose families make over $130,000 a year beginning with the class of 2015, and Director of Financial Aid Caesar Storlazzi said the University has not ruled out shrinking financial aid further. Despite the cuts, the overall financial aid budget will go up by a projected $9 million in the coming academic year, and one university endowment expert said scaling back this amount could be the solution to Yale’s economic troubles.
Asked by the News if Yale — like Dartmouth, Stanford and other peer institutions — would decrease financial aid to provide relief to the budget, Storlazzi said Wednesday it was “something Yale could consider.”
“We look at all of these things all the time, to decide when the time is right,” Storlazzi said. “It’s not something we’re afraid of, not something we’re avoiding.”
When the Yale endowment tumbled 24.6 percent in the financial crisis of 2008–’09, University President Richard Levin pledged to preserve Yale’s academic core and maintain the University’s commitment to financial aid. Indeed, financial aid spending has continued to rise throughout the nationwide recession.
Roger Kaufman, a professor of economics at Smith College, said the amount of financial aid Yale doles out to middle-class families is still too much. The University could balance its deficit by shrinking aid to students whose families are not affluent by Yale standards but are relatively well-off on a national scale, such as those who make about $200,000 a year, he added.
“A good portion of financial aid goes to what we normally in America call wealthy people, but at Yale are closer to the middle because it’s such an affluent student population,” Kaufman said.
The University has already lessened financial aid for families at the higher end of the income range while increasing it for those in the lower brackets, Levin said during a January interview. Beginning with the class of 2015, families with incomes above $130,000 will see their aid slightly decreased, and the income level below which parents have no required tuition contribution will rise from $60,000 to $65,000. The University currently caps parent contributions at 10 percent for families with annual income levels of $130,000 or less.
Levin said Wednesday night that it remains undecided whether Yale will cut aid further.
If Yale continued to diminish financial aid as a budget-tightening measure, it would by no means be the first university to do so.
Dartmouth cut loan-free financial aid for families with income above $75,000 — starting with the class of 2015 — in February 2010 to save an estimated $5 million annually. Stanford announced over the summer that its financial aid budget would decline for the first time in a decade to save $2.5 million in 2010-’11. The university decreased aid to families earning more than $200,000 annually and also upped the expected student contribution by $250.
Yale most recently announced in mid-December that the financial aid budget would swell to an estimated $117 million in 2011–’12, up from $108 million in 2010–’11.
Still, students have not escaped entirely unscathed. The University announced in March 2010 that the student contribution to financial aid packages would increase from $2,600 to $3,000 — a measure designed to raise an additional $1.1 million in revenue and help Yale close the $100 million budget gap it faced that year.
Yale enacted massive financial aid reform in 2008, reducing the average family contribution to 10 percent for households that make between $120,000 and $200,000 a year.