NEWS RELEASE

02/11/92

CONTACT: Stanford University News Service (650) 723-2558

Financial aid will keep pace with 1990s, officials predict

STANFORD -- Despite hard economic times and a projected tuition increase, Stanford officials feel confident that the university's undergraduate financial aid program should be able to keep pace with increased student need in the 1990s.

Stanford has no plans to abandon its policy of need-blind admissions - the practice of admitting U.S. students regardless of their financial status - and will continue to make every effort to meet their computed financial needs through grants, loans and part-time jobs, according to Robert Huff, director of financial aids.

In fact, Huff said, Stanford may even be able to reduce slightly the "self-help" component of many students' financial aid packages next year, enabling them to get through Stanford with shorter working hours and less debt.

"We decided very early on in the budget-cutting process that there were certain goals that we wanted to continue," Huff said.

"First, we wanted to retain need-blind admissions. Second, we wanted to meet the need of all students who have demonstrated need. Third, we wanted to maintain our competitiveness with peer institutions. And fourth, we did not want to injure our multicultural gains of the past five years.

"Everything we thought about, all the calculations we made, were run against those particular goals."

Like most private universities nationally, Stanford significantly increased its need-based financial aid program during the 1980s as tuition rose (current tuition is $15,102, plus $6,159 for room and board), government aid failed to keep pace, and the university worked to diversify its student body.

About 63 percent of the undergraduates at Stanford are now on some form of aid, including loans and term-time jobs. As the recession continues, that number is likely to climb higher: Requests for financial aid are up at least 10 percent this year, Huff said.

Unlike many financially strapped colleges that have had to abandon need-blind admissions altogether, though, Stanford has devised a plan that will cut its almost $25 million scholarship budget by about $2.5 million over the next four years while retaining key elements of its need- based program.

Among the proposed changes, which will affect incoming students only:

• Beginning next year, both custodial and non-custodial parents in divorced families generally will be asked to contribute toward their child's Stanford education, just as married parents are.
• Students will have to provide information on where their siblings are attending college. If a sibling's costs are less than the Stanford student's costs (this is typical if the sibling attends a state or community college), then the parents will be asked to contribute the difference to the child attending Stanford.
• Trust funds or bank accounts of more than $10,000 in a student's name may not be used to offset the parents' expected contribution.
• Families whose estimated income in the current year exceeds the previous year by more than $2000 will have their contributions based on the current year income estimate.

Also beginning next year, California residents will not receive their award notices until it is apparent that they have applied for Cal Grants. This will likely apply to both incoming and current students, Huff said.

Stringent methodology

In order to obtain such detailed information, parents of students applying for Stanford financial aid will be required to fill out a form seeking family information not required for government financial aid.

The "Stanford Methodology" (as opposed to the less stringent "Congressional Methodology") will be used to assess exactly which family resources are available to pay for college.

"Some family assets are more available than others," Huff explained. "For example, efforts to reduce tax liability may not reduce family ability to pay for college."

Undoubtedly the most controversial of the new rules will be the required contribution from non-custodial parents.

"This is a policy the Ivies have had for years," Huff said. "The way it works is this: Students are informed when they apply for financial aid that they must file a non-custodial parent financial statement. The student is supposed to send the form to the parent. But if the student writes back and says, 'I don't know my father and we haven't been in contact for 20 years,' that's likely to be the end of it.

"This is a very sensitive area and we are going to deal with it that way. We're prepared to make exceptions - there are exceptions everywhere, in the whole financial aid process."

Added Sally Mahoney, acting vice president for student resources: "What we're really seeking is a contribution from parents - two parents in an intact family, and two parents if it happens that their relationship is severed. If, together, their capacity is not up to paying for Stanford, the student will get aid.

"This is not an effort to avoid giving out need-based aid. It's simply to take into account, in a fair way, the capacity of parents."

No layoffs planned

In all of this, Mahoney stressed, communication between the Financial Aids Office, students and parents will be critical.

No layoffs are being made in the already stretched Financial Aids staff, and the office's $1.13 million budget for administration will stay intact.

Perhaps most important, the office is proposing to invest in a new computer system that will enable the office's nearly 20 staff members to handle financial-aid package preparation and requests quickly and easily.

"Once the routine things are taken care of, then the staff can spend time at the extremes, where we're dealing with exceptions," Huff said.

Any extra money saved by all of these measures will be used to decrease the amount that students are expected to contribute to their own education, through loans and work-study.

During the past four years, in an effort to remain competitive with similar institutions nationwide, the university has been attempting to reduce the self-help component of its student aid packages - from 25 to 20 percent of the cost of attendance.

"We're slowly moving in that direction," Mahoney said, "and we will continue, even in these reductions, to make progress in that direction."

FINANCIAL AID FACTS

• In 1991-92, 63 percent of Stanford's undergraduate students are receiving financial aid: 10 percent solely from external sources and 53 percent as a result of applying to Stanford for aid. A total of 44.4 percent have aid based on computed financial need. The 8.6 percent of students who have Stanford aid not based on computed need include 4.6 percent who receive help, typically loans and jobs, to replace part of their parents' expected contribution, and 4 percent who have athletic aid.

• The average scholarship of the 56.3 percent of undergraduates receiving that form of aid is $9,964. The average scholarship awarded by Stanford from its funds in response to demonstrated financial need is $9,327.

• To qualify for scholarship aid, undergraduate students are expected to provide up to 25 percent of their cost of attendance through self-help (long-term loan and term-time job). Of the $49,312,000 that students are receiving in 1991-92 financial aid, $38,043,000 (77.1 percent) is in scholarship aid, $9,049,000 (18.4 percent) is in long-term loans payable after graduation, and $2,200,000 (4.5 percent) is in term- time jobs.

• Of the students who graduated in 1990-91, 46 percent borrowed during their undergraduate years. The average cumulative loan at Stanford of these borrowers was $9,967.

• The principal sources of the scholarship aid awarded to undergraduate students in 1991-92 are as follows:

Stanford General Funds $16,546,000

Current Gifts - Non-Athletic 700,000

Endowment Income - Non-Athletic 6,995,000

Athletic Awards 4,832,000

Departmental Awards 87,000

Federal Pell Grants 1,270,000

Federal Supplemental Grants 1,056,000

California State Grants 2,787,000

Other External Awards 3,770, 000

TOTAL $38,043,000

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