Increased endowment means lowest tuition increase in 34 years.
By: Jeff Milgram
Some good investments and a successful five-year fund-raising campaign will give Princeton University enough money to replace undergraduate student loans with grants.
The elimination of student loans will take part of the sting out of a 3-percent tuition increase for the 2001-2002 academic year.
The increase is the lowest by percentage in 34 years, university officials said Saturday.
At a press conference after the university’s Board of Trustees meeting Saturday, Princeton officials also said 145 first-year science and engineering doctoral students will be given fellowships that will provide full tuition costs and a stipend for living expenses. Previously, two-thirds of all such students relied on research grants or teaching assignments.
University officials also said they would accelerate the program to renovate dormitory rooms and build as many as 150 units of housing for graduate students. Grad students have been invited to join a steering committee to develop plans for the building project, university officials said.
The money for these programs will come from a $57 million increase in endowment spending. The university has an $8 billion endowment, officials said.
The $57 million will go into the university’s 2001-2002 operating budget of some $760 million, university officials said.
The move away from student loans bucks a national trend in which loans have been making up an increasing portion of student financial aid packages. Nationally, loans make up 60 percent of all student aid, university officials said.
In 1998, Princeton eliminated student loans for low-income students. "Now we’re eliminating loans for all," university President Harold T. Shapiro said Saturday.
Princeton is the first elite university and possibly the first American university with the exception of the military service academies to eliminate loans, said Robert K. Durkee, the university’s vice president for public affairs.
"We want to ensure that no student admitted to Princeton feels that he or she cannot attend because it would present a financial hardship," said President Shapiro, who added that the university also will pay for health coverage for low-income students.
"One of the most important responsibilities of the trustees is to try to find the right balance between achieving the highest possible standards of excellence for this generation and ensuring the university’s financial capacity to continue to achieve those standards for future generations," said Robert H. Rawson, chairman of the university’s Trustee Executive Committee.
"We want to invest more in the current generation of students," President Shapiro said.
Beginning next fall, financial aid packages will consist only of grants, which need not be repaid, and contributions from students’ jobs.
The new policy does not forbid students or their families from borrowing money to finance needs that are not part of the student budget or to replace a shortfall in earnings. Parents also would be able to borrow to meet their expected contribution, university officials said.
The new policy will affect a substantial number of Princeton students. About 40 percent of all freshmen receive financial aid, university officials said, and nearly 25 percent currently have taken out student loans, which average about $2,615.
The university will not forgive student loans, but all undergraduates will be eligible for the outright grants.
Don Betterton, the university’s director of undergraduate financial aid, said students across the country often graduate from college owing between $15,000 and $20,000, a substantial sum that can create hardships and cause some students to put off graduate school. Princeton students should be able to graduate without any debt, university officials said.
The no-loan policy and other improvements in financial aid will cost Princeton more than $5 million next year. President Shapiro said the money will come from strong growth in its endowment and the success of the $1.2 billion five-year Anniversary Campaign.
In addition to giving full fellowships to first-year science and engineering doctoral students, Princeton will expand its summer stipend program for all doctoral students in the humanities and social sciences. Another 325 graduate students will be eligible for year-round financial support, the university said.
The university also said it will increase graduate student stipends, particularly for those receiving university-supported fellowships and for teaching assistants.
"These initiatives will put Princeton very much in the lead of support of graduate students," said President Shapiro. "They will enable our students to concentrate even more fully on learning and conducting research. We especially are pleased to be able to make this important decision during the year-long celebration of our Graduate School’s centennial."
The first-year fellowship will cost the university $4.2 million and the summer stipend program will cost $1.8 million.
The elimination of teaching and research assignments will give first-year science and engineering doctoral candidates an opportunity to improve their English proficiency, Mr. Durkee said. Undergraduates have complained that teaching assistants from foreign countries are often difficult to understand.
About 70 percent of Princeton’s graduate students live in university housing. The tight local market has made it difficult for student to find affordable housing off campus, said John Wilson, dean of the Graduate School.
"Princeton has a track record of providing housing for a high proportion of its graduate students," Dean Wilson said. "The university considers this very important because it locates the students close to the libraries and laboratories and helps ensure that the students feel they are a part of the academic community."
This marks the fourth time in the past decade that Princeton has increased its endowment spending rate. Increases in 1992, 1996 and 1999 were used primarily to create a stable source of funding for building maintenance and renovation, university officials said.
"We have been fortunate in recent years to be able to increase our endowment spending while also preserving Princeton’s financial capacity for the longer terms," said Provost Jeremiah Ostriker, chairman of the university’s Priorities Committee, who helped develop the proposal to increase endowment spending. "These spending adjustments have allowed us to invest more of our financial capital in the physical plant that is such an important university asset, and in the human and intellectual capital that lies at the heart of the university."
The increase means that about 37 percent of the university’s $760 million budget will come from the endowment, university officials said.
Princeton’s undergraduate charges will increase to $33,613 next year. Tuition will be $26,160, an increase of 2.87 percent; rooms will cost $3,596, an increase of 5 percent; and board will be $3,857, an increase of 2 percent.
Graduate School tuition will increase by 2.87 percent, to $26,160. Room and board charges will vary according to housing and dining plans, but the increase willbe at rates similar to those for undergraduates, university officials said.
In addition, the university will change its undergraduate financial aid formula, improve the salary pool for faculty and staff, expand its Romance Languages and Literatures program, expand the Office of Career Services, support new programs in the Office of the Vice President for Campus Life, admit international students on a "need-blind basis," increase library acquisitions and provide funding to support the university’s new writing program, under which all freshmen will be required to take specially designed writing seminars.