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BY LINDA HOU

In print | Published April 8, 2010

With few indications of the economy quickly making a full recovery, Swarthmore will have to find ways to maintain its financial aid and admissions policies, especially since the college has had a 30 percent increase in financial aid expenses from two years ago to now, according to Director of Financial Aid Laura Talbot. Meanwhile, comparable colleges have also faced difficult decisions in those policies.

“What we’ve seen is that the financial aid, year after year, has been one of the fastest growing parts of the college’s budget,” Sue Welsh, vice president for finance and treasurer, said. “And we’ve been able to pay for that with gifts to the endowment and because the endowment has been doing well. The big worry for us now as a longer term is if this growth rate increases, will we be able to keep up.”

As of March this year, Swarthmore is one of 46 U.S. colleges that has both need-blind admissions for U.S. nationals and permanent residents and meets all demonstrated need of admitted students, according to the U.S. News and World Report. A need-blind policy disregards a student’s financial aid need when making admissions decisions.

When asked if Swarthmore’s financial aid program will be sustainable in the future in spite of such increases, both Welsh and Dean of Admissions and Financial Aid Jim Bock ’90 said that keeping need-blind admissions and meeting all financial aid needs of admitted will be a challenge but, at the same time, remain a priority to the college.

Samuel Hayes ’57, however, believes that Swarthmore will not be able to afford need-blind admissions in the future. Hayes is a member of the Swarthmore Board of Managers and the Jacob H. Schiff Chair in Investment Banking Emeritus at the Harvard Business School.

“I think that the cost of the package that we’re providing on an unlimited basis for entering students is going to be very difficult to support given our endowment and the trends in admissions applications,” Hayes said.

Bock also said that this is not a problem unique to Swarthmore and that the college is doing well compared to many others.

“This is a problem not just for Swarthmore, but all of higher-education,” Bock said. “I’m thrilled that … even in a time of crisis, we’ve been able to provide financial aid.”

Some colleges, for example, have shifted away from a need-blind policy and toward a “need-aware” — or “need-sensitive” — policy. A need-aware policy allows colleges to take whether or not students applied for financial need into account while making admissions decisions.

A New York Times article from March of last year reported, however, that this policy typically “goes to the students at the margins, the ones who would probably be ‘maybes’ when the admissions committee considered applications. Those students are less likely to get in if they are financially needy and more likely to get in if they can afford to pay.”

Among other colleges, Bryn Mawr, Reid and Carleton have recently become need-aware.

According to Carleton Dean of Admissions and Financial Aid Rod Oto, Carleton admits students under need-blind admissions until near the end of the admissions process, when the college reaches its financial aid budget limits. Then students are admitted through a need-aware policy. Two years ago, Carleton admitted 2 percent of its freshman class under need-aware admissions. Last year, they did so for 8 percent of their students. Like Swarthmore, though, Carleton meets full demonstrated needs of its students.

“Our decision in terms of being need-sensitive is that there’s no reason to admit somebody if we can’t fund them properly, especially given the cost of our school,” Oto said. “We try to be need-blind for most of the process, but at the end, because of the budget, we have to be need-sensitive. We simply don’t have enough money to fund all of the students.”

Welsh said at Swarthmore that 57 percent of financial aid is funded by the endowment that is specifically for financial aid, while the rest comes from endowment with no restrictions on how it could be spent. About half of Swarthmore’s operating budget depends on the endowment. The true cost of a student to attend Swarthmore is about $87,000. Minus tuition, the rest comes from the endowment. In a way, Welsh said, even the full-paying students were receiving financial aid from the college.

“Until the financial crisis in the past years, the endowment was growing. So [the increased cost of financial aid] wasn’t coming at the expense of anything. Everything was growing. Growth in financial aid might now begin to compete with the rest of our budget,” Welsh said.

Swarthmore’s endowment saw a 30 percent, or about $400 million, decrease in endowment value between June 2008 and June 2009. The endowment did not begin to decrease until the 2007-2008 school year. The latest data released on the college’s website said that the endowment’s market value was $1.1 billion as of June 23, 2009, making Swarthmore 12th in terms of endowment per student ratios in the US.

Oto said that Carleton hopes to have need-blind admissions when possible. While he does not think being need aware discourages students from applying to Carleton, Oto said that having the need aware policy reduces diversity at Carleton.

“We continue to look for the possibility of change [for the admissions policy], but it’s going to take time and money,” Oto said. “[Carleton is] not as diverse as it could be, and obviously there are some students that could add to diversity that are not admitted because their need is too high.”

Hayes, however, said that need-blind admissions is not necessary for a diverse student body.
“I think that we can sustain a very diverse student body without need-blind admissions. We can use our resources or financial aid to insure that we obtain a diverse student body,” Hayes said.

Hayes said that as schools like Carleton become need-aware or even need-based, Swarthmore will have an increase in number of applicants who need financial aid.

“With a shrinking number of colleges and universities continuing to offer need-blind admission, a disproportionate number of needy students will be applying to this smaller group of need-blind admissions institutions,” Hayes said. “Therefore, we have to expect that the proportion of the entering class requiring financial aid are likely to rise.”

According to Talbot, 40 years ago 34 percent of Swarthmore students needed financial aid. Now, it’s 50 percent of students.

Talbot said that this and increased amount of need per family has caused the increases in financial aid.

While other colleges are struggling, Amherst College expanded need-blind admissions not only to U.S. nationals and permanent residents but also to international students beginning with the class of 2013. Swarthmore is not need-blind for international students.

According to Dean of Admissions and Financial Aid Tom Parker at Amherst, the percent of international students enrolled per class has increased from 5.5 to 10 percent since the college made this change.

“The number of applicants has grown and the diversity of the pool has grown,” Parker said. “Ironically, the number of full-paying applicants has increased as well. I think [having need-blind admissions for all students] has a symbolic effect.”

Amherst is one of six colleges to have need-blind admissions for all students while meeting their demonstrated need. The other five colleges are Dartmouth College, Harvard University, MIT, Princeton University and Yale University.

At Swarthmore, Bock said, every year, about 10 percent of the college’s financial aid budget is allotted for international students. This means that the college will estimate how many international students who need financial aid the 10 percent can provide for, and only accept the number of international applicants who applied for financial aid that would yield that number of students. This policy is necessary, Bock said, because international students tend to need more aid. Currently, Swarthmore is seven percent international, and about half of the international students receive financial aid.

Parker said Amherst will cut back on other parts in the budget and will probably maintain their need-blind admissions policy in future years. Amherst saw a 20.1 percent decrease in its endowment last year, and increased its expected summer earnings contributions for the 2010-2011 school year.
Williams College and Middlebury College had implemented need-blind policies for all students until two years ago, when they changed to need-aware admissions for internationals due to budget reductions.

“The recent and ongoing recession has made it necessary to severely cut back on expenditures,” said Dick Nesbitt, Dean of Admissions at Williams, in an e-mail. “Since moving to [the need-blind] policy in 2006, our financial aid budget soared astronomically as the percentage of internationals swelled to almost 9 percent of the student body. With this new policy, we are better able to manage our numbers.”

Nesbitt said that Williams has also reinstituted loans in the financial aid packages of students whose annual family income exceeds $75,000 as a part of their budget cut.

Welsh, Bock and Talbot all said that it will be the colleges’ priority to insure need-blind admissions and meeting full demonstrated need of admitted students.

“The decision about financial aid is renewed rather than opened up and started from scratch,” Talbot said. “It’s an important central focus of Swarthmore’s mission … to make certain that students of all economic backgrounds can go.”

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