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College Questions Sustainability of Financial Aid

01 October 2012

Grinnell College, which this year reported the fifth-largest endowment of any liberal arts college, announced Thursday that it would spend the next few months engaged in a conversation with campus stakeholders about changing its financial aid policies – including potentially, but probably not, going as far as making changes to need-blind admission. That makes it the second high-profile liberal arts college, following Wesleyan University this summer, to broach the topic in recent months.

Grinnell's announcement stands out for two major reasons. Grinnell is one of the wealthiest liberal arts colleges in the country, so the idea that it would view its current financial aid model as unsustainable could be a bellwether that the sector as a whole is reconsidering the model. Second, the college's administrators are taking an unusually public approach to a discussion that arouses strong emotions, trying to educate all campus constituents on why they think change might be necessary and hoping that, in doing so, they can mollify potential critics.

By many metrics, Grinnell is thriving. Applications, the academic profile of its incoming class, and alumni engagement are all up. The endowment grew almost 19 percent last year, reaching $1.5 billion. But long-term trends worry the school. The college's discount rate, the amount the institutional spends on financial aid as a portion of its gross tuition revenue, is more than 60 percent, and financial models predict that it will top 70 percent within five or 10 years. At the same time, there is evidence that endowments likely won't grow at the same rate they grew in the 1990s and early 2000s. Families are also showing signs of reluctance to accept higher tuition prices.

Grinnell's discussions follow closely on the heels of an announcement this summer by Wesleyan University that it was moving away from need-blind admissions, saying that if the college could not generate enough money to cover financial aid, it would consider students' financial need in some of its decisions (possibly 10 percent of the class). The move has generated backlash among students, alumni and others at the university. Grinnell administrators said a policy like Wesleyan’s is on the table.

Many colleges and universities are need-blind, but there is some variety in how colleges and universities approach being need-blind. Some are need-blind only for students in the United States, and others become need-aware for students they select off the waitlist. Grinnell is need-blind for students on the waitlist, and while the college is nominally need-aware for international students, in recent years the discount rate for those students has been roughly equal to that of domestic students.

Grinnell administrators have said repeatedly since Thursday’s email that a complete rejection of need-blind admissions is highly unlikely. Instead, the college has mentioned a variety of other measures that could help lower the discount rate. Some of those measures would not affect the college’s need-blind status, such as raising the cap on student loans and efforts to encourage more full-pay students to attend. Others would modify that status slightly, such as moving away from need-blind for international students or when selecting students off the waiting list.

*Source: Inside Higher Education

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