By Peter Sullivan
The Board of Trustees voted Saturday to keep the College need-blind but to take other steps to slightly cut back financial aid to address a projected budget shortfall.
The trustees approved a six percent increase in the comprehensive fee and gave the administration leeway to choose specific revenue-raising changes within the constraints of remaining need-blind in the admission process and meeting 100 percent of demonstrated financial need. The changes include an increase in the loan cap, an expansion of merit aid, the admission of slightly wealthier international students and the possibility of adopting the CSS Profile financial aid form, which has a methodology that tends to award less aid than the College’s current methods.
“Every single board member felt we have to do something and we have to do something substantial,” said Clinton Korver ’89, Chair of the Board of Trustees. “The debate ranged from all the things you might imagine, [including] completely giving up need-blind. In some ways, the proposal that was passed was a modest version of what some of the discussions were about, and, by the way, was influenced a lot by the input from faculty and students and the administration on what’s important to the institution. It came through very loud and clear that access and diversity were really important values and we want to basically stay true to those values as much as we can.”
The College’s discount rate, a measure of financial aid spending taken by dividing aid given out by the full sticker price, is 61 percent. That is second only to Harvard, and the rate was expected to keep growing under the status quo as costs rose but families’ ability to pay did not. Projections posted online by the College show a $5 million deficit by 2017 if no changes are made. Vice President for Enrollment Joe Bagnoli said he hopes the changes will lower the discount rate to 58 percent next year, and President Raynard Kington said a goal was to eventually have it be ten points lower, around 51 percent.
Effect of Changes on Access and Diversity
Kington said there is a tradeoff between access and diversity on one hand and financial realities on the other.
“Inevitably, you have to make tradeoffs,” he said. “And we think we’ve gone beyond the point of sustainability. We’ve sort of gone past the tipping point of sustainability for our institution. And we’re so far above everyone else in terms of our commitment [to access and diversity.]”
He used the prevalence of Pell Grants as an example. “We’re doing a hell of a lot better than many of our peers, if not most of our peers, in terms of percentage of Pell eligible,” he said. “I think Harvard is under 10 percent Pell eligible. That’s shameful. We’re at 24 and we’re near the top.”
Bagnoli said the changes were designed to compromise the College’s commitment to social justice as little as possible.
“My own perception of social justice does not preclude the possibility that some highly qualified students who have resources might, as a result of their participation, make it possible for the institution to redirect aid to those without,” Bagnoli said.
He added that the College remains committed to having a strong middle class, something many peer institutions do not have.
“We do anticipate some modification of the financial need profile of the entering class, but the way we intend to get there is not just simply take all of the people out of the middle class and put them in the upper class,” he said.
One revenue-raising strategy that was considered but that the College decided not to adopt was more rigorous financial aid policies. For example, currently the College is often lenient with students who turn in aid application forms late. This strategy would have made the deadlines stricter.
“We’re not going to pursue that in quite the way it was described as an option,” Bagnoli said. “Part of the reason for that is we don’t want to disadvantage students that come from circumstances where they have the least amount of support in the college application and financial aid application process.”
Another consequence of these changes could be a small decline in the academic quality of the student body. For example, factoring wealth to a greater degree into international student admissions, where the College is already need-aware, could mean slightly lower academic quality than if academics were the only consideration.
However, Bagnoli said early signs of success from the new program to notify top applicants of their admission earlier, in hopes of increasing the yield among them, could offset any declines in academic quality in other areas.
“The early success that we’ve seen this year would suggest to us that while we want to keep an eye on the overall profile of the class that we don’t expect much compromise to the profile this year,” he said.
Kington stressed that in the long term, the College can increase the quality of its classes by presenting a better face to the outside world. “The bottom line is that the more attractive we are as an institution, the better we do at all the things that tell our story, from the webpage to how we recruit students, to communications, all those things, the more flexibility we have to have a balanced class,” he said.
Raising Resources for New Uses
In addition to addressing projected deficits, the College’s leaders also want to have enough money to be able to invest in new programs, innovate and replenish the endowment for the future.
“If we don’t have enough resources to invest in our program on a regular basis and explore new things, then we’re in trouble,” Kington said. “We need to be sustainable, we need to make sure that we have the diversity that we want and value and that we’re giving opportunities. We need to make sure that we’re paying our bills, that we’re investing in programs and making sure that we are replenishing our endowment. I think it matters that future generations need to have the resources that we’ve had and so with regard to some people’s suggestion: no, we’re not going to just spend down the endowment and not worry about our kids’ opportunities.”
Korver focused on having the resources to innovate in the world of online education.
“In the past, it was all about research,” he said. “People would compete with Nobel Prize winners. Harvard would go, ‘Well I’ve got 10,’ and Stanford would say, ‘I’ve got 12.’ Well, it’s hard for us to play that game. If now the game is all of a sudden the quality of your teaching, as evidenced by these videos that are publicly available to everybody, I think we can compete in that game.”
Details of the Changes
To raise the revenue to accomplish these goals, one of the changes is an increase in the loan cap from its current level of $3,000 per year to $3,500 in the first year, $4,500 in the second year and $5,500 after that.
Merit aid will be offered to five to seven percent more admitted students with the expectation that the aid will increase yield and that students with higher academic qualifications on average come from wealthier families. However, finances are not directly considered in awarding merit aid. Additionally, merit scholarships will no longer be increased as tuition rises.
The possible switch to the CSS Profile, which most peer institutions already use, would lower the average amount of aid given out because the profile calculates family’s need differently. For example, the profile factors in home equity, while the College’s current method does not.
The College will also seek to recruit more students from Iowa. Students in Iowa who apply to Grinnell tend to be wealthier than the average applicant.
More students will also be encouraged to apply through Early Decision. Students who apply Early Decision tend to be wealthier because the process is binding, meaning students are required to go to Grinnell no matter what financial aid package they receive.
Implementing an early action application option is still under consideration.
It is also still possible that the College will become need-aware in the future. It will conduct annual assessments of alumni giving, endowment performance and tuition revenue. The Board will then decide by fall 2015 if the College is meeting its financial goals. If not, it can order more aggressive strategies to increase student revenue or end need-blind admissions beginning with the class enrolling in 2017.
“What we really should be focused on is access and diversity,” Korver said. “Need-blind is a way to get to access and diversity but there are other ways to get there, too. So in my mind, I would say access and diversity are more important than need-blind. I don’t know if everybody in the Grinnell community would say, ‘Oh, of course’ or if that would be controversial.”
When it comes to balancing values such as academic excellence and innovation with access and diversity, Korver said the goal is to take a holistic approach much like the approach for admitting students. “We want a picture that’s balanced,” he said. “It’s the nature of the beast. There are a lot of things we’re trying to achieve with Grinnell in the world and there are a lot of things we’re trying to achieve with this education and so we have to be able to balance a lot of these things.”