dealing with mom & fin aid.

Colleges and Universities A-Z Smith College
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<p>Isn't the level of generosity somewhat dependent on the group that receives the aid? Princeton may have a median income that is more than twice as much as Smith's, but it also supports a broader economic class. The cost of attending Smith is roughly equal that of attending Princeton, yet Princeton provides aid from its poorest families up to a much higher income level than does Smith. Princeton also does not expect its students and their families to take out loans. That's pretty darn generous.</p>

<p>It can be argued that Smith is more generous because it admits a larger percentage of low income students and then supports them. It can be argued that Princeton is more generous because it supports both low income and upper-middle income students, and everyone in between.</p>

<p>The problem with Princeton is that lower income students are less likely to apply because of the school's historical connection to the upper class. I'd also bet that Princeton's admission standards are much tougher for the economically disadvantaged. Smith admits a greater range of proven ability -- that is, Princeton might take a lower income student with mid-600s on the SATS, but Smith would accept one in the mid-500s. Although both schools have students with perfect and close-to-perfect scores, Smith is more generous with its admissions. That allows for a student body with a lower median income since SAT scores are tied to income level. (I'm not saying that SATs are the only basis for the difference; I'm just using them as an example.)</p>

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<p>The major beneficiaries of the Princeton program (you can look at the data yourself) are those with incomes in the $100k-$160k range. That is because they fear losing some of these applicants to the Vanderbilts and Emories of the world, where they might receive merit. The actual percentage of Pell Grant recipients at Princeton is still way less than half those at Smith. </p>

<p>The data above indicates that Smith is both more generous in need-based aid to those who receive aid AND give this aid to a substantially higher proportion of the student body than Princeton. (The best algorithm for this is need per student attending, but I -- actually the schools themselves in the Common Data Sets - also broke out actual average need-based grant and the percentage of students receiving it.)</p>

<p>At any rate, what prompted this conversation were questions about "arbitrary removal of aid". The gross data don't indicate that is the case. However, there is a much larger percentage of students receiving aid at all, so a larger number of chances to revise, based on changes in EFC/FASFA.</p>

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<p>"That is because they fear losing some of these applicants to the Vanderbilts and Emories of the world, where they might receive merit."</p>

<p>Princeton doesn't have to worry about the students lost to the Vanderbilts and the Emories of the world. Its prestige encourages students to take on enormous debt. Just look at what CC students are willing to do for prestige. The NYU thread alone will show you that shaky financial decisions are often made with the often erroneous belief that a name-brand degree will quickly return the investment.</p>

<p>The financial aid officer who came up with Princeton's plan was concerned about the debt load of graduating students, and saw how the middle/upper-middle class students were being crushed by it. These students were being disadvantaged economically before they even began their careers. If you think about it, this now-supported class of Princetonians will now be able to give back to the university much more quickly, probably repaying the grants through continued support.</p>

<p>Shirley Tilghman, the current president of Princeton, has launched several initiatives to increase the "purple hair" quotient in the student body. She wants the economically disadvantaged, the creative types, the ethnically underrepresented. Unfortunately, with elite admissions the way it is, Princeton cannot easily find these students. A bigger accepted class this year may help, although that remains to be seen. </p>

<p>Again, to return to the topic of arbitrary removal of aid, you are right. There is no indication that Smith uses a bait-and-switch FA scheme.</p>

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<p>"Princeton doesn't have to worry about the students lost to the Vanderbilts and the Emories of the world. Its prestige encourages students to take on enormous debt."</p>

<p>Instead of looking at what they say, look at what they DO. The data is all out there for people to see. </p>

<p>Gordon Winston, a well-known higher education economist at Williams, found between 2 1/2 and 3 times as many "qualified" low-income students for prestige colleges as they actually accepted. By "qualified", he meant students that are currently in the SAT range of their accepted students, without any correction made for their low-income status. The reason they don't have these students is because they haven't put out the effort to get 'em. That could change.</p>

<p>But it hasn't as of yet. Four years after the "reforms" at Princeton, Princeton is less economically diverse than it was 25 years ago (and also has fewer African American students than they had in 1972, and only a tiny fraction of the low-income African-American students they had then. But that's another issue.)</p>

<p>Look at the Princeton vs. Smith data. There is a much lower percentage of students receiving need-based aid, and, even after the no-loan policies, their average grants are lower. (and this is so even though they have much more money to spread around.)</p>

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<p>I still think that the difference between Princeton and Smith has less to do with policy and everything to do with filling classes. Princeton's admissions are getting more selective every year, while Smith has to work hard to attract the right type of student. The greater range in student preparation at Smith allows to fill classes with promising young women, especially from lower income brackets. Princeton's selectivity makes it more difficult to achieve diversity.</p>

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<p>“There is a much lower percentage of students receiving need-based aid, and, even after the no-loan policies, their average grants are lower. (and this is so even though they have much more money to spread around” </p>

<p>Neither statement is accurate. Generosity in the eye of the beholder. Princeton’s students, as well as those at many other colleges, graduate with a significantly lower debt burden vs. Smith. While Smith might offer 7% more students aid, that hardly represents a “much* higher percentage than Princeton or many other colleges. And the grant awards in dollars are almost identical between the two. Princeton offers 97% in grants totaling 28,209/, 3% loans/jobs. Indebtedness at graduation—4,960 …Smith, 78% in grants totaling 28,223. 22% loans/ jobs Indebtedness at graduation 18,800. The same low indebtedness at graduation found at Princeton can also be found at many top tier colleges.</p>

<p>“Actually, it is pretty easy to derive "a surrogate" of median income (actually, income/assets), for 568 (100% of need) schools, for "average" sistuations.”</p>

<p>Actually it isn’t. And as I said, income without the knowledge of net worth is, for all practical purposes, meaningless. The average net worth of parents (not applying for aid) at any university is next to impossible to determine. 401, IRAs, Roth’s, holdings in private equity firms (VC or Angle investments) and numerous other retirement assets aren’t reported to colleges. Nor are option grants –exercised or not- various hedging mechanisms, security and commodity assets, CDs, funds held in trusts or off shore holdings, 1st, 2nd and 3rd home equity valuations, etc. Many of the aforementioned assets can be held in combination of LLCs, trusts, business corps et.al legal webs making the average forensic accountants eyes glaze over when attempting to determine net worth or liquidity of assets. And that is as it should be. </p>

<p>One of our CEOs has a yearly salary of only 125k…..But his stock holdings, albeit in a privately held company, make his net worth ~ mid 7 figures. No algorithm or government figures would reveal that fact. And a college such as Smith certainly would have no basis to now confidential facts when computing the parents’ median net worth/income. Ditto for any college re: most assets.</p>

<p>MWFN summed up this entire argument very succinctly “Princeton also does not expect its students and their families to take out loans. That's pretty darn generous”</p>

<p>And to be brutally honest, while I commend Smith for serving the very low income portion of our communities, it’s also self-serving and readily admitted by the Smith administration ( and you) as a way to attract enough applications to continue to make the institution viable in the future. Smith has combined their endowment with ten or so other institutions to reach a critical mass that will allow the college to avail themselves of sophisticated financial investments previously only available to large endowed colleges such as Yale, Harvard, et.al. Let’s hope Smith uses their increased ROA, which should now be closer to that of Harvard, for the purpose of allowing Smithies to graduate without substantial debt burdens.</p>