November 16, 2011

University Spends All-Time High on Financial Aid

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Amid soaring tuition, the University spent an all-time record of $224.5 million on undergraduate financial aid in 2011 — a 9.5 percent increase from last year, according to a Division of Planning and Budget report. Since 2004, financial aid spending has increased an average of 13.1 percent annually, the report stated.

Still shy of reaching a campaign goal of $350 million for aid by 2015, administrators highlighted challenges in keeping high tuition costs from pushing middle-income students out of Cornell and expanding support for international students, while sustaining an increasingly expensive financial aid program.

Since President David Skorton announced sweeping changes to the University’s financial aid policy in 2008 — replacing need-based loans for families with annual incomes of less than $75,000 a year with a combination of direct money and work study — Cornell increased its spending on aid by 64 percent, said Thomas Keane, director of financial aid for scholarships and policy analysis. As tuition increases have out paced the rate of inflation, however, the average cost of attendance continued to rise for families with no demonstrated financial need, Keane said.

‘Middle Income Melt’

“We are bringing in more lower-income students, but there’s also a factor at the other end — as our costs keep rising, we keep adding more people in that top margin,” Keane said. “There’s both more students at the poorest level and more upper-income families.”

Since the 2010 – 2011 academic year, Cornell hiked  tuition at its endowed colleges by 4.8 percent and at its contract colleges by 7.9 percent.

Prof. Ronald Ehrenberg, industrial and labor relations and economics, said that while the University has tried to minimize the financial burden on low-income families through these changes, “It’s not as clear [that Cornell has] been doing as good of a job to the middle class — the people who do not receive a lot of financial aid.”

Noting that tuition intensified and economic stress have increased financial burdens on families, Ehrenberg said, “There is a risk of middle income melt. It’d be horrible because we’re training the next generation of leaders, and we want our leaders to come from all places of the socioeconomic distribution. … To exclude middle-income students would not be a socially acceptable thing for the University to do.”

Increasing socioeconomic disparity at Cornell could create “extraordinarily increasing friction” on campus, Ehrenberg said.

Keane, however, said that he was “more worried about middle-income melt a few years ago than I am today.” Because the University lowered its loan levels for all students, capping loans at $3,000 for families making $75,000 to $120,000 and to $7,500 for families making above $120,000, there are more aid-eligible students in all income ranges, he said.

According to an email from Barbara Knuth, vice provost and dean of the Graduate School, “data collected from the Admitted Student Questionnaire suggests that the percent of enrolling respondents who estimate their family income in ‘middle-income’ categories … e.g. $80,000 to $149,999 … changed very little, from 33 percent in 2001 to 34 percent in 2009.”

Since the University increased its financial aid offerings in 2008, the percent of admitted freshman applicants who choose to enroll at Cornell — the University’s “yield” — increased across all income groups eligible for financial aid, Knuth said.

Competing for Students

Cornell announced in 2010 that it would match financial aid offers of Ivy League universities and peer institutions. According to a Division of Planning and Budget report, the University reported a 51 percent yield in 2011, compared to Harvard’s 77 percent, MIT’s 65 percent and Columbia’s 61 percent.

While the initiative was launched to help the University attract accepted students offered financial aid packages by competing schools, Keane said it “did not help bring in people significantly.”

He said that of 164 students who requested and were granted a match in the 2010 – 2011 admissions cycle, 87 — or 53 percent — came to Cornell.

Still, Keane said that with its current financial aid policies, Cornell’s yield on freshman aid recipients is higher than its yield on all freshmen combined. Students who do not qualify for financial aid are “price sensitive” — making it more likely they have merit scholarship offers from non-Ivy universities, whose offers may become more attractive to them, he said.

Ehrenberg, while agreeing that economic pressures could push some “middle and upper income families who were previously paying to go to private colleges … to public institutions,” said that this was less of a threat for Cornell.

“I think the saving grace of the University is the relatively poor financial condition of public universities. Students will have to look twice at whether they think they can get the quality of education [that they can get at Cornell] at the publics,” he said.

Growth Spurs Influx Of International Students

According to the International Students and Scholars Office, only 30 to 40 international students in each entering class receive scholarships from Cornell. Their enrollment at Cornell reached an all-time high this year, however, as the ISSO reported that international students make up 17.5 percent of the student body.

Charles Phlegar, vice president for alumni affairs and development, said that the University is seeking to raise $50 million in financial aid for international students. He said the school raises more money domestically than internationally because of the concentration of Cornell alumni in the U.S.

“Cornell’s always been really, really well known in China, but our ability to fund people who have the academic background but not the economic background [to attend Cornell] … there’s still a ways to go there.”

Despite this, the number of Chinese students at Cornell has more than doubled in the last four years, increasing from 401 students in 2006 to 835 students in 2010, The Sun reported in September. Brendan O’Brien, director of the ISSO, said the trend was most likely caused by economic change in China, rather than a change in the University’s tuition support.

“The change in financial aid policy may have contributed slightly to the increase in numbers of students from China, but the growing economy in China is a much greater factor,” O’Brien said.

Sustaining Financial Aid For the Future

While acknowledging that Cornell’s costly financial aid policies “put pressures everywhere in the University,” Keane said that he does not anticipate cutbacks “for the foreseeable future.”

Phlegar said that one major avenue of fundraising is the Cornell Annual Fund, a gift program through which alumni, parents and donors can donate money to the University. Last year, the program raised an all-time record of more than $30 million, he said.

Additionally, as the University’s body of international alumni grows, Phlegar said many alumni have begun supporting Cornell’s financial aid initiatives abroad, a trend that he expects will strengthen in the years ahead.

“We’re increasingly finding alums willing to and able to support scholarships for individuals from their home countries,” he said.

Phlegar cited Ratan Tata ’62, who established the $25 million Tata Scholarship Fund for Students from India in 2008.

“That’s helped not only promote Cornell in India but also given students who could simply not afford to come to Cornell the opportunity to do so,” he said.

Phlegar said that he “could probably not raise enough money in my lifetime to support students who are in need of financial aid,” but affirmed how critical fundraising will continue to be in the years to come, citing Skorton’s commitment to student aid.

“Any time someone says we can’t afford this, Skorton says, ‘We can … We have to afford it.’ Any person, any study is what makes us special. We talk about Cornell being the original equal opportunity university, and we have to protect that core value,” he said.

Original Author: Akane Otani