In a decision that surprised the world of higher education, Princeton University announced recently that it will replace all undergraduate financial aid loans with institutional grants, though other top schools are not so quick to follow suit.
Although Dartmouth and other universities are examining following Princeton's bold move, with all carefully contemplating the costs of a similar shift in their own policies, none have yet reached final decisions to follow suit.
According to Dartmouth Director of Financial Aid Virginia Hazen, it is still much too early for Dartmouth to reach a decision as to whether or not they will make a similar policy shift in the future."We always need to take time to think about this and if and how we will respond" to Princeton's change, Hazen said.
Before the College can reach such a decision, it must examine the costs of such a policy, and whether or not the College could afford the policy while still remaining need-blind in its admissions process, Hazen said.
"The long term implications are what we really need to look at," she explained. Only if the College could remain need-blind for the indefinite future, and only if the financial health of the institution would not be negatively affected, would Dartmouth embrace such a shift in their financial aid policies.
Furthermore, such a decision would be placed in the hands not of the Financial Aid Office but of the College President James Wright and the Board of Trustees.
"Just because another institution decides that it will change its financial aid policies doesn't mean that every other institution will follow suit," she said.
At Yale University, administrators are "very actively" studying Princeton's move and contemplating the impacts of such a policy, according to Yale Associate Director of University Financial Aid Caesar Storlazzi.
The university has fielded a number of calls from prospective students and their parents, asking what impact Princeton's changes will have on Yale's financial aid program.
Yet Storlazzi hopes to avoid overt competition with other colleges' financial aid policies.
"Let's say Yale and Harvard match Princeton. Then Princeton has to do something else" to make their financial aid packages again preferable, such as removing work-study requirements.
And in response, Harvard and Yale will again find themselves in the same position of trying to match Princeton's offer, Storlazzi explained.
He said he worries that schools would become trapped in the "spiraling of financial adjustments," each trying to outbid the other for more generous financial aid packages. In the end, many schools would be left unable to compete, according to Storlazzi.
This "bidding war" among schools did not began just with Princeton's recent announcement, but took root several years ago, when, after Princeton announced lower student loan levels, Dartmouth and other Ivy League institutions followed with similar reductions in loans and student contributions.
Still, Yale has been "numerically number-crunching to see the impact" of such a policy, on both their applicant pool and institution's financial health.
Although it cost Princeton a hefty $5 million from their strong endowment to fund their policy changes, to remove loans from all financial aid packages at Yale could cost upwards of $7.5 million, Storlazzi said.
Currently the average financial aid recipient at Yale graduates $17,350 in debt, and the university has done nothing in recent years to reduce undergraduates' loan levels.
Although the university's president and provost are "looking in great detail" into the issue, they have yet to reach any concrete decision, Storlazzi said.
The financial aid changes at Princeton announced two weeks ago will take effect next fall, with the financial aid packages of the incoming class of 2005, and students in the classes of 2002, 2003 and 2004 will have their packages re-calculated.
Students will save between $15,000 and $20,000 of accumulated debt, according to a Princeton University press release.
