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Stanford sets tuition, changes financial aid policies
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 incomes. Last year's average family income growth was approximately 4 percent nationwide.
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:
c 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.
c 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.
"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.
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, 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.