Thanks to an $8.5 billion endowment, Princeton University will become the nation's first university to implement a financial aid system that does not use student loans. Starting next fall, undergraduate students entering Princeton will receive aid in the form of grants and work study.
Princeton officials think the new grant program will encourage financially strapped college-bound students to consider their school.
To meet students' family financial need, both Princeton and the University now use a system that divides financial aid packages into three components. Grants are awarded by the school, and work study is earned by the student through jobs on campus. Student loans make up the remaining amount of aid.
Under Princeton's new system, it will provide the student loan amount as a grant that will not be repaid.
The institutional grant program should "emphasize even more strongly that [students from low and middle class families] can afford to come, by eliminating" the barrier of the student loan component, said Richard Spies, Princeton vice president for finance and administration.
"We thought it is so important for places like Princeton to be affordable," Spies said.
Princeton officials decided to change their policy when they were "picking up the signal that the loan expenses for too many kids was a barrier," Spies said.
Spies said he hoped other institutions will follow Princeton's lead and enact similar programs so that college-bound students needing financial aid would have a wider variety of educational choices.
"The whole goal is to make students from lower- and middle-income families think about Princeton and places like Princeton," Spies said.
At the University, students who qualify for financial aid are offered a combination of public and private grants, as well as loans and work study. In-state students also are eligible for grants given by the state.
"It takes a lot of financial resources" to implement an institutional grant program, said Colette Sheehy, vice president of management and budget.
Sheehy said the program would not work at the University, which has an endowment of $1.8 billion as of December 2000. Princeton has the nation's second-highest endowment-to-student ratio with $1 million per student.
Sheehy said the University is dependent on state funding, so it cannot provide students with as much financial aid as Princeton. Because the University has fewer students in need compared to Virginia's other public institutions, it receives less money from the state for financial aid.
"We have about 33 percent of our students who are needy, compared to about 80 percent at [other state] institutions," she said.
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