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BY MOLLY WESTON

In print | Published April 15, 2010

Over the course of this semester, this column has tracked many of the aspects of the college’s budget that can seem disconnected from students’ day-to-day lives. Financial aid, however, is one aspect that deeply, directly affects students. This week, we’ll explore what financial aid costs, where it goes, and how Swat stacks up against peer schools.

Parsing what the college “spends” on financial aid is a tricky business because it isn’t really “spending” in the conventional sense. Instead, financial aid represents the additional portion of the college’s spending that it must fund from its own resources. Thus, when the college plans its budget, it calculates the amount it would gross from tuition and fees if all students paid the full amount, then subtracts the amount it expects to spend in financial aid. For the 2010-2011 fiscal year, the college would expect to receive $76.5 million in student revenues without financial aid, but instead only expects to receive $48.8 million, a $27.7-million difference. The combination of increased tuition and fees for next year with an estimated 11 percent increase in scholarship expenses will push this amount up from $24.9 million for the 2009-2010 budget year, with expected net students’ revenues rising from $48.2 million to $48.8 million.

What does this mean on a per-student basis? In the 2008-2009 fiscal year (the last for which a financial report has been released), 49 percent of Swarthmore students received need-based scholarship from Swarthmore. The average scholarship amount was $29,151, up from $25,008 the previous year. As a percentage of charges, the average scholarship amount was 61 percent in 2008-2009, up from 55 percent in 2007-2008.

Year to year variation partially reflects the way Swarthmore articulates its commitment to financial aid. The college is committed to meeting 100 percent of demonstrated need, as determined by the financial aid office (on the basis of a number of standards, including the FAFSA’s expected family contribution). For many students, the college’s definition of their family’s ability to pay (and therefore their need for financial aid) differs from their own interpretation, often by several thousands of dollars. Thus, throughout this column, please note that the college’s definition of need may not be (and often is not) the same as students and their families would define it.

Even the fact that the college meets full demonstrated need puts Swarthmore in an elite and generous group: as of 2008, just 63 college and universities in the US even claimed to meet full demonstrated need. This list is composed mostly of private schools, with some prominent public exceptions, like the University of Virginia and the University of North Carolina at Chapel Hill, and includes all three Tri-Co schools, all eight Ivy League universities, and all of US News & World Report’s Top 10 Liberal Arts Colleges. The last is a bit tautological, as part of the ranking system includes the financial resources of schools (which are, obviously, closely related to ability to commit to meeting need).

Another very expensive and much-discussed portion of the way Swarthmore does financial aid is the no-loan initiative, announced on December 8, 2007 and begun for the 2008-2009 academic year. This provision followed what was at the time a growing trend among peer schools and extended a commitment the college had already made to Swarthmore Scholars, Evan Scholars, McCabe Scholars and Lang Scholars (like myself). As with the full-need commitment, “no-loan” in this case does not necessarily mean that students and their families take out no loans. Instead, it means that when the college makes its financial aid offer to meet all of what it considers to be a student’s need, it does so entirely with grants and work-study. Prior to the no-loan initiative, the college still pledged to meet all of demonstrated need, but it sometimes did so by offering students and families loans. The price tag on this initiative was hefty: when the college announced the loan-free policy, it estimated that per-year cost would be about $1.7 million.

Only about 40 US colleges and universities claim to be loan-free and just 14, including Swarthmore, place no income or residence limitations on eligibility (many schools, like UPenn, are loan-free for students whose families have incomes below a certain threshold, while many state schools offer loan-free packages only to in-state students). Williams College and Dartmouth College, both of which began their loan-free financial aid programs around the same time as Swarthmore, have recently begun reintroducing loans. As of this writing, Swarthmore remains committed to its loan-free policy, a commitment it reaffirmed in the operating budget released in February for next budget year.

Swarthmore’s exceptional generosity and attention to affordability, even among wealthy peers, has not gone unnoticed. The Princeton Review, in their most recent release, named Swarthmore one of just 13 colleges and universities on their “Financial Aid Honor Roll” for earning a 99 (the highest score) for financial aid. The Princeton Review’s Best 371 Colleges also named Swarthmore number one in the country for student satisfaction with their financial aid packages. In conjunction with USA Today, The Princeton Review also named Swarthmore number one among all private colleges and universities as a “Best Value,” beating out even schools with larger per-student endowments, such as Harvard and Yale Universities. Kiplinger ranked Swarthmore second (to Pomona College) in the country among liberal arts colleges as a “Best Value” for quality and affordability.

In the recommendations for adjusting the college’s spending proposed by the Ad Hoc Financial Planning Group and approved by the Board of Manager in December 2009, $457,000 in changes to financial aid were approved. The only change to financial aid specified was an increase in expected student summer earnings from the previous rates ($1450 for first-year students and $1890 for returning students) to an unspecified higher rate, after many years of no increase. The Financial Aid Office’s website reports that the college now expects students to earn at least $2000 in the summer prior to beginning Swarthmore and $2,500 during each of the subsequent summers.

For the future beyond next fiscal year, however, it is possible that more changes will need to be made. According to the previously mentioned proposal, Swarthmore’s scholarship expenses have risen steadily and significantly at a rate that may prove unsustainable. In 1993, scholarship expenses made up 24 percent of gross student charges (i.e. students and their families covered 76 percent of tuition and fees). In 2009, scholarship expenses made up 34 percent of gross student charges. These rising costs have been covered through increases in endowment income and the capital campaign and the Financial Planning Group noted that, “growth is unlikely to be sustainable in the future.” As a result, the Planning Group recommended that the possible lack of sustainability of recent growth in financial aid spending be considered in the college’s long-term financial planning and adjustments to spending.

In light of all this information about how exceptionally fortunate we are as Swarthmore students, it is worth considering the blurry line between “financial aid” and general college spending. As we saw a few weeks ago, tuition and fees do not cover the per-student cost of a Swarthmore education even for those students who do not receive formal financial aid. For the 2010-2011 fiscal year, the college’s operating budget projects per-student spending of approximately $72,448 ($108.6 million total spending, spread over an expected 1499 enrolled students). Total student charges, however, will be $51,500, up 3.8 percent from the previous year. This difference represents what the Annual Giving office calls an “invisible scholarship” of almost $21,000 for each and every Swarthmore student, provided though the generosity of Swarthmore alumni and friends past and present.

Please join me in two weeks for my final column, which will look at just who makes the crucial decisions about the college’s budget. As always, please feel free to contact me with any questions, concerns, or comments about this week’s column, next week’s topic, or the budget process in general.

Molly is a senior. She can be reached at mweston1@swarthmore.edu.

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