U. unveils Trustee Scholars financial aid awards

The program, designed to attract the best students, follows financial aid changes at other top schools. In a move indicative of the cutthroat competition characterizing the Ivy League's recruitment of top high-school students, the University has instituted a new scholarship program for the upcoming acadmic year. Under Penn's Trustee Scholars program, as many as 50 outstanding freshmen will receive financial-aid packages without burdensome loans. Instead, the entire amount of the students' demonstrated need will be funded by grants and work-study earnings. The scholarships will extend throughout the students' four years at Penn. The program -- announced Friday in conjunction with the increase in tuition and fees -- comes in response to a recent, steady institutional trend of improving financial-aid packages for lower- and middle-class students. Since Princeton University began the trend in January, Yale University, Stanford University and the Massachusetts Institute of Technology have followed suit. According to Associate Vice President for Finance Frank Claus, the University will select only the cream of the aid-eligible crop for the new program, beginning with the Class of 2002. In determining a student's financial need, Penn will also disregard a family's eligibility for the new federal Hope scholarship and Lifetime Learning tuition tax credits. The Hope scholarship program, which began on January 1, allows single-parent families with an income below $50,000 a year and two-parent households earning below $100,000 annually to receive up to $1,500 in tax credits for the first two years of their child's college education. And beginning in July, many students whose families fall within the same income bracket will be eligible for the Lifetime Learning tax credit: a 20 percent credit on the first $5,000 of college tuition and fees paid each year through 2002 and the first $10,000 in tuition and fees paid thereafter. According to Claus, the majority of Ivy League schools already subscribe to a policy of dismissing the tax credit in awarding aid. Enhancements to the University's financial-aid program come two months after Princeton University unveiled a revamped financial-aid plan that eliminates all student loans for families with incomes below $40,000, replacing them with grants, which do not need to be repaid. Princeton also ceased to count home equity -- the value of a home minus mortgage payments -- in determining aid packages for families earning less than $90,000 a year and vowed to award more scholarship aid and fewer loans to families earning $40,000 to $57,500. And last month, both Yale and Stanford universities followed in Princeton's footsteps. Yale announced it will exempt up to $150,000 of a family's savings, home equity and other assets in determining need. The next day, Stanford announced that students' outside scholarships won't lower aid packages. And earlier this month, MIT announced it will reduce the amount of aid in loans and work-study requirements by $1,000. Additionally, Stanford trustees voted to cap the amount of home equity at 3 times a family's income when constructing aid packages. Claus described Penn's new initiatives as "not so radical," adding that the University capped home equity at 2 1/2 times annual income back in 1993 due to inflated real estate prices. Still, Penn Student Financial Aid Director William Schilling said the other schools' announcements spurred Penn officials to brainstorm methods to increase scholarship aid. Struggling under the strain of a relatively low endowment, however, places Penn at a significant disadvantage in relation to the other Ivies, according to Claus. Princeton is armed with a $4.8 billion endowment, which covers 95 percent of the school's $24 million yearly expenses for financial aid. Of the $50 million Penn allocates annually for financial aid, only $2.3 million, or 4.6 percent, is covered by the University's $2.89 billion endowment. With 4,000 undergraduates -- or 57 percent of the student body -- receiving aid each year, this percentage lands Penn at the bottom of the Ivy League in its endowment-financial aid ratio. Through the Trustee scholarship program, officials will increase spending on financial aid by $125,000 a year -- largely funded by outside gifts, income on endowment and the 1998-99 4.5 percent tuition increase. Princeton's new plan, by contrast, has earmarked $1.5 million in additional funding for aid that will be paid for by its overwhelming endowment. "We can only do things within our means," Claus said, adding that the University is working hard to raise an additional $200 million in donations to allow more of its endowment to go to financial aid. And according to Schilling, the size of Penn's student body -- roughly double that of Princeton -- means that "it would cost [Penn] twice as much to implement a plan like Princeton's." Currently, students hailing from families with income below $40,000 a year receive about $3,500 to $4,000 in loans, with the remainder of the need covered by grants and work-study opportunities, Schilling said.