U. seeks ways to free funds for student aid

Officials want to use more of the endowment on financial aid costs. The University has had problems meeting undergraduates' financial-aid needs -- which now total about $50 million per year -- for as long as Student Financial Aid Director William Schilling can remember. But officials have recently begun working to make such problems a thing of the past. At stake is Penn's need-blind admissions policy, which disregards applicants' financial situation, as well as the University's ability to offer aid packages competitive with those of its peer institutions. The problem lies in Penn's endowment, which just isn't big enough to support the undergraduate financial aid budget. To avoid depleting the $2.5 billion investment fund, policies strictly limit how much of it can go toward the general budget each year. As a result, out of the $50 million Penn spends annually on student financial aid, only $2.3 million can come from the endowment. With 4,000 undergraduates receiving aid each year, that places Penn squarely at the bottom of the eight-member Ivy League in terms of how much of each institution's endowment goes to financial aid demands. Princeton University, for example, covers 95 percent of its undergraduate financial aid through its endowment, according to a report in the September 23 Almanac. The University's general operating budget funds the remainder of the financial-aid pool -- which puts the squeeze on other programs. "It's really critical to maintain the quality of our student body -- that we be able to respond to the financial needs of students we want to see at Penn," Schilling said. Tuition at private, four-year colleges increased 90 percent from 1980 to 1995, but financial aid increased at only about half that rate, according to the New York-based College Board. Admissions Dean Lee Stetson was unavailable for comment. Although administrators have not yet set an official figure, the University needs an estimated $100 million to $200 million in donations in order to allow more of the endowment to go toward financial aid, according to Bonnie Devlin, a top official in Penn's Development and Alumni Relations office. The University began a long-term fundraising campaign in July 1996, which has netted about $20 million so far, Devlin said. Many of the donations go toward endowed scholarships, she added. Board of Trustees Chairperson Roy Vagelos is personally spearheading a trustees committee attempting to find ways to increase the portion of the endowment earmarked for financial aid. When Vagelos enrolled in the University in 1954, a semester's tuition cost $250. Although current Penn students accustomed to paying $11,125 per semester might laugh at that amount, Vagelos was able to attend Penn solely because of financial aid. The campaign to help other students follow in his footsteps ranks "probably No. 1" among Vagelos' priorities. "Penn is quite underendowed from the point of view of undergraduate financial aid, compared to our Ivy League competition," Vagelos said. Spending budget funds on financial aid "restricts the total use of our funds and gives us much less flexibility as a university." To make the difficult task of raising $200 million a bit easier, the University is launching several creative programs designed to get alumni excited about contributing. One of the initiatives, "Penn Pals," lets a contributor sponsor one specific College student for all four years of his or her education. How it works: An alumnus agrees to donate $10,000 a year for five years. For four years, the student gets $5,000 in aid, while the other half goes into the endowment. In the fifth year, the endowment gets the entire $10,000. Since development officials will raise $50,000 to match the individual donation, the total contribution is $100,000 -- and that magic number endows a student "in perpetuity," Vagelos said. The Penn Pals campaign began in July and could begin supporting students in next fall's entering Class of 2002, according to Devlin. The University's troubles aren't unique in higher education, according to Larry Zaglaniczny of the Washington-based National Association of Student Financial Aid Administrators, of which Penn is a member. "[Private universities are] striving hard to keep down their costs and at the same time providing as much financial aid as they possibly can," said Zaglaniczny, the organization's associate director for government relations.

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