Princeton Switches Student Aid From Loans to Grants
Princeton University, in an aggressive effort to help students avoid the crushing debt load they often face after graduating from college, has revamped its financial-aid programs to eliminate loans and replace them entirely with grants.
The decision, approved by Princeton's board of trustees late last month, takes effect next fall. About 40 percent of students in the class of 2004 at the prestigious 6,300-student university in New Jersey receive some financial aid, and nearly one-quarter take out loans to cover college costs.
"We want to ensure that no student admitted to Princeton feels that he or she cannot attend because it would present a financial hardship," university President Harold T. Shapiro said in a statement announcing the decision.
Higher education experts said the move could put intense pressure on other Ivy League schools, such as Harvard and Yale universities, to follow suit in order to compete for students. But they said it seemed unlikely that colleges and universities elsewhere would do the same.
"This is a very important development, and it could set a precedent for many other selective institutions," said Terry W. Hartle, a senior vice president of the Washington-based American Council on Education. "Princeton University has once again pushed the envelope with financial aid. It is clearly a breakthrough pro-position."
But only a few colleges and universities, he said, will have the monetary muscle to adopt and sustain similar plans.
"This is a very expensive proposition," said Mr. Hartle, who monitors financial-aid issues, "and only a small number of colleges will have the financial resources to match it."
Princeton's new approach to financial aid greatly expands a program that the university launched in 1998 to reduce low- and middle-income students' dependence on loans by replacing them with grants for students from families earning less than $46,500 a year and reducing loan reliance for students from families earning from $46,500 to $66,500.
Princeton officials estimate that the no-loan provision and other improvements to the university's financial-aid programs will cost more than $5 million next year. The university will cover those expenses with money from its growing endowment, now estimated at about $8 billion, and with annual donations. Princeton officials say they spend an estimated $29 million a year on financial-aid programs.
College officials say the change should allow students who stay within a reasonable budget and meet part-time work requirements to graduate without any debt instead of owing $15,000 to $20,000 or more at the end of four years as is currently the case.
Princeton students will pay $33,613 for one year of tuition, room, and board next fall, a 3 percent increase over this year.
Vol. 20, Issue 21, Page 5