In the last year, the nation’s private colleges have laid off staff, shelved construction projects, slashed sports teams and turned down thermostats to cut costs. But student financial aid has kept flowing. Now the weak economy is forcing some institutions to limit their generosity after many of them doubled or even tripled financial aid over the last decade to attract more applicants and reduce student debt.
Two of the nation’s most selective private colleges — Dartmouth and Williams — announced they would no longer offer aid packages that allow students of any income to attend without taking out loans. Other schools are expected to follow suit, meaning many students will have to take on more debt.
Situations vary depending on the school, but experts expect financial aid at private schools to be less generous than last year while colleges increase tuition by 4 to 6 percent. Many colleges dipped into savings last year to substantially increase student aid out of concern their enrollments would plunge because of the economic downturn, fears that went unrealized at most schools.
"There’s a bit of a feeling that in increasing aid, maybe colleges went a little overboard because there was a lot of panic a year ago,” said Roland King, vice president of public affairs for the National Association of Independent Colleges and Universities.
“I think it’s going to be a more austere year.”
South Florida’s private colleges — which typically don’t offer loan-free packages — are taking a different tack, keeping financial aid levels at par and — in some cases — even increasing the aid available.
“We can’t afford to reduce the financial aid,” said Andre Lightbourn, director of enrollment at St. Thomas University in Miami. “I think it would be a grave mistake to try to cut back.”
The University of Miami has no plans to cut back its aid program, said James Bauer, UM’s assistant vice president for enrollment management and executive director of financial assistance, and may even increase what it offers.
Barry University in Miami Shores will spend 2 to 4 percent more on student financial aid next year, said Dart Humeston, director of financial aid. “About 47 percent of our students have demonstrated a higher need this year than last year,” said.
Students at South Florida’s private universities, as well as its public universities, have long depended upon a combination of federal and state grants, scholarships, university contributions, family contributions, work-study and loans to finance their educations. Unlike the large Eastern schools, most South Florida colleges don’t have large endowments — endowments that at other schools have taken financial hits in the economic downturn.
Earlier this month, Dartmouth College in Hanover, N.H., announced sweeping cutbacks in the wake of the recession. The Ivy League school said it will lay off about 76 staff as part of a plan to close a projected $100 million budget gap.
The Dartmouth board also approved a 4.6 percent increase in undergraduate tuition, room and board, and fees, raising the annual tab to $52,275. The school said it would increase its financial aid budget 10 percent to help offset the tuition increase. But one big part of the aid program will be cut: The plan to offer loan-free financial aid for students of all income levels beginning with the class entering in fall 2011.
`The simple reality is that we just can’t afford that anymore,” said Dartmouth President Jim Yong Kim.
Williams College, a private liberal arts school in Williamstown, Mass., became the first school to announce it would rescind a no-loans policy, starting in fall 2011. Williams has said the neediest students will not be required to take out any loans, but it has not announced details.
Other elite private schools are sticking with their no-loan policies, at least for now.
Among them is Amherst College in Massachusetts, which has doubled its low-income student enrollment in recent years, in part through more transfers from community colleges and more international students.
Rice University in Houston plans a modest tuition increase and an increase to need-based financial aid. Rice President David Leebron said the school remains committed to a financial aid package that includes eliminating loans for families with incomes of less than $80,000, and capping total loans for four years of college at $10,000.
`It’s a challenging time,” Leebron said.