Sweeping financial aid reform at other Ivy League schools is putting pressure on University President Amy Gutmann to follow through with her inauguration promises of new financial aid programs at Penn.
New policies at Yale, Princeton and Harvard universities have improved financial aid packages for low-income students. While Gutmann acknowledged that these reforms highlight the University's weaknesses, she said that Penn currently does not have the financial resources to make such dramatic changes.
"Our financial aid policy isn't as good as several of our peers'," Gutmann said. "We could be better."
In her October inaugural address, Gutmann pledged to make Penn affordable for all qualified students. Her commitment to financial aid reform is a part of the Penn Compact, Gutmann's three-pronged plan for the University's future.
Last September, Gutmann took steps in that direction with an increase in graduate student stipends. She plans to address undergraduate financial aid this semester.
"We have a very firm commitment -- which is only going to get firmer -- to need-based financial aid," Gutmann said.
Yale's reforms came after students staged a sit-in in the university's financial aid office last month, demanding changes to the university's policies. Effective next fall, Yale will no longer require families earning under $45,000 a year to contribute to their child's tuition.
Harvard instituted a similar policy last year, and Harvard admissions officials said the number of applications to their university has consequently gone up.
But according to Gutmann, at this point Penn may not be able to provide financial aid packages as generous as other universities'. Penn's comparatively small endowment prevents it from making large changes as Yale has done.
"We don't have the endowment resources built up over decades from donations," Gutmann said.
The operating budget -- which funds the day-to-day operations of the University -- is the source of most undergraduate financial aid at Penn. Only 12 percent of financial aid is funded by the University endowment. Eighty-eight percent comes from unrestricted revenue, like tuition and state funds.
Penn's endowment ranks fifth in the Ivy League, behind Harvard, Yale, Princeton and Columbia.
"We're going to be obviously putting a redoubled emphasis on development efforts to raise additional endowment for financial aid," Student Financial Aid Director Bill Schilling said.
Gutmann said that she hoped to cut back on the number of loans given in financial aid packages. Princeton, for example, awards only grant money -- and no loans -- to low-income students.
Grants differ from loans in that students must repay a loan after graduation.
"I'm committed [to] going into a campaign to raise more money so that we can lower the loan burden on our students," Gutmann said.
She also noted that Penn -- unlike several other Ivy League universities -- cuts back on financial aid benefits for students who receive scholarships from non-Penn sources.
"Most of our peers in the Ivy League do not cut back," Gutmann said. "We do. That's a disincentive to get an outside scholarship."
