In the latest round of financial-aid reforms at the nation’s top universities, Stanford University will reduce or eliminate the expected parental contributions for families making under $100,000 annually, the university announced Tuesday.
Stanford will require no parental contribution from families with incomes under $60,000, while families with incomes between $60,000 and $100,000 will not be expected to pay tuition but will be charged for the costs of room, board and other expenses. The aid initiative also eliminates the need for student loans. While commending Stanford’s move, Yale officials said Tuesday that they consider Yale’s new aid initiative, announced last month, to be slightly stronger than Stanford’s.
The new initiative will boost Stanford’s annual financial-aid budget to $114 million next year, according to the university’s statement. Yale’s financial-aid budget for next year stands at $86 million.
Stanford has about 25 percent more undergraduates than Yale.
“By devoting more resources to financial aid, we seek to underscore what has long been the case — that no high school senior should rule out applying to Stanford because of cost,” Stanford University President John Hennessy said in the statement. “We understand how families face serious financial pressures, and we are doing all we can to assist them.”
Stanford’s announcement comes slightly over two months after Harvard University unexpectedly unveiled a financial-aid initiative that dramatically reduced the expected parental contribution from middle- and upper-middle-income families and eliminated the need for student loans. Yale followed suit in January with a similar aid policy.
In the past two months, the University of Pennsylvania, Dartmouth College and Cornell University have also announced new financial-aid programs.
The financial-aid changes come at a time when the country’s wealthiest universities are facing increased scrutiny from Congress over the rising cost of tuition and the schools’ growing endowments.
Stanford’s endowment of $17.2 billion is the third largest of any university in the country, behind Yale’s endowment of $22.5 billion and Harvard’s at $34.9 billion.
To help pay for the growth in its aid budget, Stanford increased its endowment payout last year to 5.5 percent, according to the statement. The university also plans to double the financial aid goal of the “Stanford Challenge,” its current fundraising campaign, to $200 million.
Yale Director of Student Financial Services Caesar Storlazzi called Stanford’s new initiative a “great move by a great university” but maintained that Yale’s aid policy, while similar in many points to Stanford’s, is slightly superior.
Yale, like Stanford, has eliminated the parental contribution for families making less than $60,000. But while Stanford will require families making between $60,000 and $100,000 to pay the cost of room, board, travel, personal expenses and books, Yale asks families making between $60,000 and $120,000 to pay between 1 and 10 percent of family income on average.
This means that a family at Yale in this range will contribute $12,000, on average. At Yale, the total cost for room, board, travel and personal expenses is around $14,000, using an average travel allowance, Storlazzi said, meaning that Yale’s new policy is more generous for these families.
In the statement, Stanford did not mention any plans to stop including home equity or other assets in aid calculations, Storlazzi pointed out. Starting in the 2008-09 academic year, Yale will exclude $200,000 worth of assets — which could include home equity — from each family’s aid calculations.
Like Stanford, Yale has also eliminated the need for student loans by making the required student contribution amounts low enough for students to pay solely with summer and on-campus earnings.
Of the Ivy League schools, Harvard, Yale, Princeton University and Penn have eliminated all student loans from aid packages, while Dartmouth and Cornell have announced a partial elimination of student loans.
Alhough Yale’s initiative may be slightly more generous than Stanford’s, Yale Dean of Undergraduate Admissions Jeff Brenzel said, the bottom line is that a “wave” of aid changes seems to be sweeping the nation — a positive trend for all current and future college students.
“I hope the ultimate effect of all this is to encourage in the strongest possible way the aspirations and efforts of students from modest means,” Brenzel said in an e-mail. “If the wave continues, the news should ring out that the best schools in the country will also be the most affordable.”
The average family contribution for Stanford students receiving financial aid in the 2008-09 academic year will be reduced by 16 percent as a result of the new aid program, according to the statement.
Washington University in St. Louis also announced changes to its financial-aid program Tuesday, saying that it will eliminate the need for loans for students from families making less than $60,000 annually.