U. starts no-loan financial aid policy

The University took a major step toward alleviating debt for some students on financial aid yesterday.

Penn President Amy Gutmann announced yesterday that students from families with yearly incomes of $50,000 or less will now receive grants in place of loans in their financial aid packages.

Eligible students -- including those already enrolled at Penn and members of the incoming freshman class -- will not owe the University any money upon graduation. The grants will not necessarily cover all tuition costs for students who qualify, though.

Several of Penn's peer institutions have implemented similar policies providing unconditional financial aid packages to students below a certain income level in recent years.

The change, Gutmann said, will help Penn attract a more economically diverse applicant pool.

"It ... sends the accurate signal that Penn is affordable to students regardless of income," she said.

Gutmann is not the only university president to spearhead such financial aid efforts.

Harvard University's policy, implemented two years ago, is to pay full tuition for students from families with incomes lower than $40,000 each year. It pays some of the cost for families with incomes of $40,000 to $60,000.

Last year, Yale University announced a similar plan to completely pay for students who come from families earning $45,000 or less per year.

Though Penn is not going to guarantee that all tuition costs will be covered, Gutmann said that Penn's comparatively small endowment makes the school's initiative unique.

Many other Ivy League schools pay for such financial aid programs with money gained by investing their endowments.

Penn is the first major research university to rely primarily on its operating budget -- which covers day-to day costs -- to pay financial-aid bills that total more than $78 million each year, Gutmann said.

In order to fund the initiative, Executive Vice President Craig Carnaroli said the University has found creative ways to cut costs.

Officials have not only raised money through alumni donations but have also worked to manage operating costs.

"These initiatives [include] renegotiating contracts to lower insurance costs, refinancing debts ... and spending less money when buying things," he said.

Yesterday's decision to increase total undergraduate charges to $43,960 for the 2006-2007 academic year -- a 5.4 percent increase from this year's total cost of $41,766 -- was partially motivated by the need to support financial aid, Carnaroli said. This higher tuition is then added to the operating budget, which helps pay for financial aid.

Please note All comments are eligible for publication in The Daily Pennsylvanian.