UNIVERSITY OF PENNSYLVANIA — Along with 27 other prestigious universities, Penn has agreed to new guidelines that will change how eligibility is determined for financial aid.
The 28 signatory schools are all institutions that admit students on a need-blind basis — that is, the student’s ability to pay for an education does not influence an admission decision.
However, need-blind admission does not guarantee need-blind aid policies. As a result, there has been concern that when it comes to financial aid, some of these schools — many of whom charge over $30,000 a year in tuition — are giving more to the most desirable students, and not to the most needy.
“We are mindful that the competitive landscape has changed with the kinds of financial aid being offered by other peer institutions,” University President Judith Rodin said.
“We worried about one of the responses to that being an erosion of the need-blind policy that we all very strongly subscribe to,” she said.
Rodin was one of several presidents who initially came together to discuss instituting the guidelines.
According to Penn’s Director of Financial Aid Bill Schilling, many disparities existed between aid packages even though most schools used a system set down by the College Board, a group that regulates various aspects of college admissions.
“While most of the schools involved in this effort used the College Board’s system [of determining financial aid], they were making local exceptions and modifications to it, creating significantly different determinations of aid from school to school, all of which have the same philosophical approach to aid,” Schilling said.
The signatories hope that in most cases, these guidelines will increase the aid given by most schools.
“The impact is going to vary a lot from college to college depending on what they do now,” Schilling said. “Schools will have to determine what they can do.”
But the hope is that the new guidelines will provide continuity between financial aid packages amongst the different institutions.
“We’re all starting on the same page with the same basic approach,” Schilling said.
“We want students to be making their decisions on the basis of academic issues that differentiate the kinds of schools that they’re looking at, and not financial issues. And the more that we can help that to be the case, the more successful this will have been,” Rodin said.
Sarah Flanagan, vice president of government relations for the National Association of Independent Colleges and Universities, said that the goal of these guidelines is to “encourage colleges to put more of their resources towards the needy.”
This is not to say that the guidelines are meant to give a set definition to every school as to what constitutes “needy.”
Flanagan noted that, while the guidelines will work well for these institutions in a general sense, not every guideline will work for every school.
“Each institution is different in its mission, and is going to have to decide for themselves what’s the most appropriate way to distribute their money,” she said. “Every college has a different portfolio and a different student body.”
Harvard and Princeton both declined the offer to join the other schools in officially adopting these guidelines. Both schools felt that the guidelines, in their specific situation, would only hinder the aid they would be able to give.
“In some cases, at schools with large endowments, they may have already made the decision to go beyond what these guidelines do. They may see this as moving in the wrong direction for them,” Schilling said.
Several of the guidelines include considering the higher cost of living in large cities like New York or Washington, making allowances for a student whose parents are not covered in a retirement program, and — one of the more controversial guidelines — not forcing parents to contribute more from a tax-advantaged college savings account than they do from their regular assets.
Another guideline states that, for students whose parents are divorced, schools must look into the financial status of both parents and stepparents, even though only two of these individuals will be considered in the end.
According to Schilling, the situations of divorced parents don’t lend themselves to hard, fast rules.
“The federal government says to look at the household where the student lives, and that is what we would generally do and what we have generally done,” Schilling said.
“This approach says it’s appropriate to look at both custodial and non-custodial parents, but you should not be expecting contributions from all four,” he said.
All in all, the guidelines will still not perfect the financial aid process, but will be a worthwhile first step.
“This was an effort to try to recalibrate the need formula and the components in it to cut a broader swath and to give more access to the aid,” Rodin said.
“It’s an expensive thing to do, and it’s something that is not without consequences for all institutions, but something that we feel helps us get closer to the goal of not shutting out the middle class.”