November 14, 2008

Cornell Further Caps Loans For New Financial Aid Plan

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Despite the recent economic downturn, Cornell announced its plan to increase need-based financial aid to students and families. The plan, following a financial aid initiative announced last January, will allow many Cornell students to graduate debt-free and will relieve some of the enormous economic burden placed on lower to middle class income bracket families.
“In the current volatile and difficult economic circumstances, many current and prospective college students and their families are concerned about the affordability of a university education. Particularly at this unsettling time, Cornell University must open its doors even wider,” President David Skorton stated in a press release.
Cornell’s current need-based financial aid policy eliminates need-based student loans for family incomes below $75,000 and caps annual need-based student loans at $3,000 for family incomes between $60,000 and $120,000.
Effective next fall, the new financial aid initiative will include three main components. First, parental contribution is eliminated for students whose families make less than $60,000 or whose assets are below $100,000. Second, need-based loans are capped at $7,500 annually for students who have financial need and whose families have annual incomes above $120,000. Lastly, parental contribution is reduced for selected students who have financial need and whose families have annual incomes above $60,000.
“Our new policy will allow students, despite the current economic conditions, to be able to choose Cornell and to thrive here. With these enhancements, we will have the best chance each year to attract the strongest class,” Cornell Interim Provost David Harris said, according to the University.
For example, under the old financial aid package, families with an income of $50,000 and $95,000 of assets would have to pay a parental contribution of $5,000 per year, totaling $20,000 over four years. Under this new initiative, the same family would pay zero parental contribution. This is especially useful for the roughly 20 percent of Cornell students who come from families with incomes under $60,000.
While this initiative is meant to help those students who need financial assistance the most, it will still benefit those who have family incomes above $120,000. Currently, for an eligible student whose family income is $125,000 with assets of $200,000, the need-based loan would total $10,900. Under the new financial initiative, this same student will have a need-based loan capped at $7,500. Therefore, the student will be graduating with $13,600 less in need-based loan debt over four years.
The last component of this initiative helps selected students with their financial aid packages. According to Simeon Moss, director of Cornell press relations, selected students are those who already qualify for need-based aid and will contribute broadly to the diversity of Cornell. For a student coming from a family with $120,000 income and $200,000 assets, the current system would call for a parental contribution of $20,025. Under the new initiative, the parental contribution would be reduced to $12,500, leading to a savings of $30,100 over four years.
Other peer institutions have also announced changing financial practices in order to compensate for the hard economic times. According to the Brown Daily Herald, Brown announced yesterday that it will allow students to pre-enroll in Spring term classes, regardless of an outstanding debt balance above the previous cap of $1,000.
However, Cornell’s size and student body present a unique obstacle.
“Not only is Cornell larger than many of its peers, it is also more socio-economically diverse. In fall 2007, Cornell had 1,863 undergraduates, or about 14 percent of its undergraduates, receiving federal Pell Grants, typically awarded to students whose family incomes are below $45,000,” Harris said.
Currently, 60 percent of Cornell undergraduates receive financial aid and 45 percent receive need-based aid. Cornell plans to spend $138.9 million on undergraduate financial aid in 2008-09, 97 percent of which will be spent on grant aid that is not repaid to the university.