Financial Aid: Revamped packages reach out to middle-income families

In the University's quest to increase access to a Penn education, middle-income students are the next frontier.

Last week, the University's Board of Trustees approved a financial aid initiative that will provide loan-free aid packages to all students from families whose incomes fall below $60,000 per year.

"We're creeping [the threshold] up so that we get some of the middle-income students as well," said Bonnie Gibson, vice president of the Office of Budget and Management Analysis.

Gibson said middle-income families can be some of the "most squeezed" when it comes to affording college tuition.

The 2005 U.S. Census placed the country's annual median household income at $46,326. For households with two income earners, it was $67,348.

By increasing the initiative's threshold to $60,000 for the 2007-2008 academic year, officials hope that Penn will be able to extend the program's benefits to students who do not qualify as socio-economically disadvantaged.

This initiative gives a boost to the financial aid policy the University announced last spring, which replaced loans with grants for students with family incomes below $50,000.

Penn Executive Vice President Craig Carnaroli said that with this year's and last year's initiative, "we're trying to basically signal the affordability of Penn."

Carnaroli said Penn did not have this year's increase planned when officials announced last year's initiative.

Instead, the increase was the result of strong endowment performance over the past year.

Still, the University's $5.9 billion endowment lags behind some of its peers', meaning that much less of Penn's financial aid funds can come from endowment.

Carnaroli said that "it would be premature" to expect another increase next year. He added that, because the University has a need-blind financial aid policy, its long-term goal is to reduce Penn students' overall average debt burden.

Penn's renewed commitment to middle-income students follows initiatives with similar goals at some of the University's peer schools.

Last year, Harvard University announced a financial aid policy that would reduce parental contributions for students whose families earn between $60,000 and $80,000.

More recently, Stanford University committed $5 million to reducing middle-income parental contributions last month, defining the range as incomes between $60,000 and $135,000.

"We recognized that families with higher incomes were also struggling to meet our expectations," Stanford Director of Financial Aid Karen Cooper wrote in an e-mail.

Yale University currently has no policy in place specifically for middle-income students, according to Caesar Storlazzi, Yale's director of financial aid.

Yale's policy for low-income students eliminates parental contribution for all students from families with incomes below $45,000, but students may still receive packages including loans.

Storlazzi said student confusion might result from all the new financial aid initiatives.

"A student getting admitted to both Yale and Penn will have to compare apples to apples," Storlazzi said.

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