Aristocracy of Knowledge: Make U.Va. Accessible
Alumni who studied on the Grounds prior to about 1970, when full co-education began, often remark about the extent to which the University has changed. Take the case of financial aid. When I came in 1961, financial aid for students and the job placement office were small enough operations that one person ran a single office for both. Prices charged to students were relatively low. Most families could afford or come close to affording these prices. Students who needed aid, as I did, took out relatively small loans, received relatively small scholarships, and picked up part-time jobs.
Nowadays, we attract ever-larger numbers of students who are the first in their families to attend college, who fulfill Mr. Jefferson's public purpose, and at the same time, pose challenges. Because of the state's policy of shifting the cost of education from taxpayers to students and their families, prices are higher relative to the general cost of living than they used to be. Families dealing with the cost of college in our time often struggle to make things work. The poorest families and those with more than one child face especially hard challenges.
Most financial aid programs are federal in origin. They are deeply flawed. Federal Pell grants for the poorest students are too small—$4,050 this year against an all-inclusive in-state undergraduate cost of $14,500 (out-of-state, $30,300). Most financial aid comes as loans, which (despite low interest rates) work poorly for low- and middle-income families with multiple children in college. Part-time student jobs still help, but few or no students can earn enough at part-time jobs to cover the real cost of going to college, even here, where low prices are the rule. And students who work more than 10 or so hours per week may well jeopardize their chances to earn top grades.
We have dealt with these and related facts, including the rapid erosion of state support for in-state students, in various ways. The last capital campaign brought resources to let us move toward providing 100 percent of demonstrated need—a goal we will reach with the next entering class. Tuition nowadays provides both base funding for faculty salaries and supplemental funding for financial aid to students. Still, our neediest families and many middle-income families see the federal loan programs as two-edged swords. Moderate debt may well motivate young college graduates. Large debt discourages good students from pursuing postgraduate study. And the poorer the student's family, the less likely it is to see borrowing as the path to opportunity.
In February, the Board of Visitors took extraordinary steps to make the University affordable for all students by creating and funding Access U.Va. This new program combines loan-free (i.e., all-scholarship) financial aid packages for students with the greatest need, caps need-based loans for middle-income students, and commits to meet 100 percent of demonstrated need for all undergraduate students. Access U.Va. is the most comprehensive financial program now available in any public university. It reaches the most students, provides incentives to excel for students from every economic background, and protects students and families against the worst consequences of the national trend toward passing on the cost of education to children.
The Board of Visitors committed $16 million annually for these reforms, which come in four parts:
Elimination of need-based loans for low-income students. Beginning with new students in fall 2004, we will replace all need-based loans with grants in the financial aid packages of students whose family incomes are 150 percent or less of the federal poverty guideline. The effect will be that these students and their families will not need to borrow (or to count on part-time work) to pay the calculated price of attendance.
Cap on need-based loans for each entering class. Beginning in fall 2005, we will cap the amount of need-based loans for all students at 25 percent of the total in-state cost of attendance over four years. We will provide grants from University sources to meet whatever remaining demonstrated need each qualified student may have.
Continue meeting 100 percent of demonstrated need for all qualified undergraduate students. We began working toward this goal in 2001.
Provide comprehensive financial education to prospective and current students and their families. Essentially, we believe that current state and federal sources of information confuse and mislead families. We plan to do better.
Much of the cost of these reforms comes from unrestricted endowment income, which has now become a significant source of support for programs identified by the Board as essential. Capital campaign contributions and extraordinary investment returns are the chief sources of this money. On December 31, 2003, the endowment held directly by the Board totaled slightly under $2 billion, and the foundation endowments amounted to another $600 million or so. This is the largest-ever month-end figure for the endowment. For the year ending June 30, 2003, the return was 9.2 percent. In size and in the effectiveness of fund management, the consolidated endowment has become one of the most powerful endowments ever assembled to support a public university. It compares favorably to all but a handful of private endowments.
Alumni support in general, and now in the form of Access U.Va., has moved a long step toward creating the "aristocracy of knowledge" that Mr. Jefferson intended here. It benefits every student and every faculty member in countless ways. For them, and for those who will come after them, I say thank you.
Sincerely,
John T. Casteen III
President