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Stanford Report, April 7, 1999

The view from Financial Aid

This month, Stanford's 10 financial aid officers will be pulling tough duty, facing the annual bombardment of inquiries from high school seniors considering whether to accept offers of admission.

Stanford is one of a small number of schools that still employs need-blind admissions, meaning offers of admission are made regardless of a family's ability to pay. Generally using the methodology of the College Scholarship Service, financial aid officers put together a package of scholarships and loans designed to cover Stanford's costs, including expected family and student contributions.

Cynthia Hartley, director of financial aid, said there seems to be two varieties of families: those who seem to know Stanford's financial aid handbook verbatim, "and those who we swear have never opened it."

During a recent discussion, Hartley, senior associate director Sue Wood and associate directors Sheryl Nichols and Ron Diaz said families are usually more confused than angry about their aid packages. The advent of the Internet has allowed parents and students to use such web sites such as http://www.collegeboard.org to do their own financial aid computations before they even receive Stanford's package.

"We're not usually that far off, or if we are it's easy to identify something they've left out, such as untaxed income," Hartley said. "What's more the issue is that they don't like the results either of their calculation or our calculation. So their anxiety is more about 'how can you expect me to pay this much.'"

Financial aid officers want to make sure families have omitted nothing that could help them receive more aid, such as unusual medical expenses or supporting a grandparent.

Then, they help families devise a strategy to meet their expected contribution.

For example, Hartley said, "I'll talk to them about maxing out on the Stafford loans," which are subsidized low-interest loans available to qualified students. The loan amount is limited to only $2,625 freshman year, but then increases to $5,500 by junior year.

"They're better off getting student loans, which have a lower interest rate and better repayment terms, than parent loans," said Hartley. "So I'm sure there are many families that exhaust all the student loans first and then the parents will borrow or kick in the rest, knowing they'll help the students pay back the student loans."

From counselling students, Diaz finds that many, especially those entering technical careers, are unconcerned about mushrooming debt loads because, with the economy booming, they expect to land good-paying jobs. And while he said humanities majors may rightly worry, "a lot of them understand that our prime target is to get them out of here with a bachelor's degree, and borrowing is the means of getting there," he said.

The fact that students are eligible for increasingly high Stafford loans as their undergraduate career progresses at least partly explains concerns that their packages get "worse" over time. Stanford asks that they take maximum advantage of money available from other sources on favorable terms, which may decrease Stanford's financial aid contribution.

It is also true that as parent and student incomes rise over time, so will their expected contributions toward tuition and room and board.

"The more the family makes, the more the need analysis [formula] is going to come up with a higher contribution," Hartley said.

Formulas may not be perfect, Nichols added, but how else can the university fairly determine how much families can pay?

"The formula doesn't reflect everybody's living circumstances, so somebody's mortgage may be $2,000 a month and someone else's $800 a month. We understand, we too live and pay bills, so we understand the realities," she said.

"But the key is there has to be some means by which everybody is assessed equally, more or less." SR