3.5 percent rise
in undergrad costs; criteria modified for financial aid
Acting to keep Stanford affordable to all students,
the university's Board of Trustees on Tuesday, Feb. 10,
approved the smallest percentage increase in price in
three decades and increased its commitment to financial
aid.
The term bill will rise 3.5 percent next year,
slightly below the expected growth in family income. Last
year's average family income growth was approximately 4
percent nationwide.
Related Information:
The increase will bring the total price of tuition,
room and board to $29,879. Undergraduate tuition itself
will go up 3.8 percent for 1998-99, or $810, to $22,110.
Room and board will rise 2.8 percent, or $212, to $7,769.
“The relationship of tuition increases to family
income is something that we have been concerned about for
a number of years,” said Board of Trustees Chairman
Robert Bass. “Substantial reductions in
administrative costs over the past six years have allowed
us to restrain fees, despite pressures on the
university's budget.”
In 1996-97, 44 percent of Stanford's 6,550
undergraduates received need-based scholarships totaling
nearly $49 million. Almost 70 percent of students receive
some form of financial assistance. In increasing the
university's commitment to that aid, the trustees:
• Voted to assist middle-income families by
limiting the impact of home equity when calculating
financial aid eligibility. In those calculations, home
value will be capped at three times annual household
income before the amount of home equity is determined.
This widely used standard acknowledges that, although
home equity can often be easily accessed through loans,
many families do not have enough income to support the
additional borrowing. Approximately one-third of Stanford
families receiving financial aid will benefit from this
change, which will assist those with home values that
have risen much faster than their household incomes.
• Changed how the university considers outside
scholarships when determining undergraduate financial aid
packages. Such outside scholarships will further reduce,
and in many cases eliminate, students' required
contributions from academic-year jobs and loans.
Both new policies will be implemented for all current
and incoming undergraduates beginning with the 1998-99
academic year.
The policy changes were prompted by a study conducted
by the Committee on Undergraduate Admissions and
Financial Aid, a survey of parents of Stanford juniors
and seniors organized by the Provost's Office, and
several focus groups with parents of current
undergraduates sponsored by the vice provost for student
affairs.
“For several years, the faculty, administration
and trustees have been very concerned about – and
have been studying – the pressures facing
middle-income parents,” said Stanford President
Gerhard Casper. “We are determined to ensure that
Stanford remains financially accessible to all students,
including those from middle-income families.”
“We believe that all families should contribute
what they can to the costs of students' educations,”
Bass said, “but we do not want middle-income
families to be unduly squeezed. This change means that
many families whose homes have appreciated in value
relative to their annual incomes will not be
disproportionately penalized in the financial assistance
they receive from Stanford.”
For example, a family with an annual income of $55,000
will have its home value capped at $165,000 for the
purpose of calculating how much home equity will be
considered an asset that the family can use toward
college expenses.
“Home equity should be considered when
determining how parents can meet their responsibilities
for their children's education,” said Tim Warner,
vice provost for budget and auxiliaries management.
“But in a period of rapidly rising home values in
many areas of the country, it is important to set that
responsibility at a realistic level.”
Under the second new policy, outside scholarships won
by a student could reduce, or eliminate, the requirement
for that student to have a work-study job or take out
loans as part of the Stanford financial aid package.
About 900 Stanford students annually receive scholarships
from a variety of outside organizations.
“We want students to reap the benefit of any
outside scholarships they receive and to have less debt
when they graduate,” said Robert M. Kinnally, dean
of admission and financial aid.
“The new financial aid policies reflect the
university's commitment to need-blind admissions and are
consistent with our financial aid philosophy, student
population and resources. We will continue to seek ways
to strengthen our financial aid program to assure that we
are meeting the needs of Stanford students and their
families,” he said.
Under the changes, the university will provide an
estimated $3.8 million in additional financial aid per
year, according to Warner. Of that, $1.8 million will
support the home-equity change and $2 million the change
regarding outside scholarships.
The tuition, room and board set by the trustees
continues a trend of the last two years, when tuition
increases were held to 4 percent. Tuition funds represent
about half of Stanford's unrestricted budget – the
pool of money that can be used as needed to support a
wide range of university needs, such as academic
programs, faculty and staff salaries, financial aid,
library materials and computing costs.
“Universities by their nature are a very
labor-intensive enterprise,” Bass said. “They
don't have the benefit of adding more machines to
increase productivity. Their stock in trade is the
intellect of the faculty and of the students.”
Academic initiatives such as the freshman seminars
program are expensive to fund, he said, but they are well
worth it from an educational perspective.
A tight local labor market, rapidly escalating housing
and rental prices, and decreasing federal reimbursement
for research also continue to put pressure on the
university's budget.
Bay Area costs have risen faster than in many other
regions, according to Warner. “Even though the
inflation rate nationally was around 2 percent last year,
the local rate was about twice that,” he said.
“We buy goods and services and hire people in this
market, so we need to be cognizant of trying to stay
competitive in this regard.”
Still, as President Casper noted in testifying in
October to the National Commission on the Cost of Higher
Education (see related
stories), the price of undergraduate tuition
covers, at most, two-thirds of the true cost of attending
Stanford. Undergraduate education and every student
– even those paying full tuition – are highly
subsidized by gifts, the university's endowment and other
investment earnings, he said.
Stanford's current tuition is lower than that charged
at 13 of the 18 highly selective universities belonging
to the Consortium on Financing Higher Education. It also
is lower than that charged at 42 of the 112 institutions
listed by the Cambridge Associates survey of private
colleges and universities.
The board also approved new tuition rates for the
graduate and professional schools that paralleled that
for undergraduate tuition, with the exception of the
Graduate School of Business, which elected to raise its
tuition by 4.1 percent. SR
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