Cents-less
Financial aid piggy bank in need of more cash

By JASON ALT
Collegian Staff Writer

Chris Saunders used to stay up late at night when he was Undergraduate Student Government president --thinking about how he and other students could remedy the need for more financial aid.

There was plenty for Saunders to ponder.

More students were relying on financial aid to pay for their Penn State education, federal grants were covering less of overall tuition costs, two-thirds of all enrolled undergraduates were applying for financial aid, and students were increasingly relying on and defaulting on their loans. University officials were scrambling to improve Penn State's ability to provide an affordable education, but short-term solutions were scarce.

In 1993, Penn State's tuition was 142 percent higher than 10 years before, and the University found itself unable to meet $63.1 million in documented undergraduate need, according to a study released earlier this year by the University Faculty Senate's Committee on Admissions, Records, Scheduling and Student Aid.

It is now almost a year since Saunders last wore the crown of USG president, but he is no less concerned about financial aid. The same difficulties exist, and University officials are still scrambling for answers -- now in the wake of threats of reduced help from the state and federal governments.

"It's an entire systematic problem that we're going to have to come to grips with soon, or we're going to get to the point where no one can afford to go to school," Saunders predicted. "We're putting this enormous financial situation on each successive generation, and something's got to be done."

But what that solution is remains the $63 million question.

"It's certainly becoming increasingly difficult to provide affordable education, particularly for middle-class Americans," said University President Joab Thomas. "There's always been a gap, but it's gotten worse as federal aid has diminished."

And time may be running out. Some people believe the University is approaching a critical point --one where it may take a fundamental paradigm shift in the way the United States approaches higher education to make Penn State and other schools affordable.

Officials set hopes on billion-dollar drive

"I think some of that has already started," said Anna Griswold, assistant vice provost for student financial aid. "It is at a critical level that can cause the University to go into a financial crisis, but I don't know when that will occur, or how that will occur."

Penn State officials are banking on an upcoming capital campaign --one predicted by some to net a billion dollars -- to lessen some of the burden. Thomas has repeatedly promised that boosting endowments for student aid is one of the campaign's highest priorities, although he cautioned that donors play a significant role in deciding how their money will benefit the University.

John Cahir, vice provost and dean for undergraduate education, said he believed strongly that the campaign could provide a long-term solution -- if such a solution exists.

"My own opinion is that we'll never get to the place where we'll be able to meet the need figures totally. But we can try," he said.

A capital campaign will never raise the cash necessary to eliminate Penn State's financial aid deficit, said University President-elect Graham Spanier. That belief, he said, is a common misunderstanding surrounding fund-raising campaigns.

"People donate money to a university to create a margin of excellence, not to pay for basic operations," Spanier said. "So you can't solve a tuition problem through private fund raising. Private fund raising results in gifts to greatly improve a university in selected areas, but the only way to keep up with the day-to-day cost of a university is with state appropriations and tuition."

The scope of an endowment campaign could not reach the necessary number of affected students, Spanier said.

"Certainly one of my fund-raising priorities would be to obtain gifts to endow scholarships for students," he said, "but even if you receive gifts that would endow 100 scholarships, or even 1,000 scholarships, when you've got 70,000 students across all the campuses, it doesn't solve the problem for the lion's share -- or should I say the Nittany Lion's share -- of students."

The most important variable in the equation, Spanier explained, is for the University to maintain a high level of quality in the education it provides.

"The quality of education has to drive the formula, not the cost of education," he said. But Spanier warned that tuition can be kept at a reasonable level only with increased appropriations from the state Legislature.

Gov. Tom Ridge's proposed budget fell $23 million short of what Penn State requested for the 1995-96 fiscal year. And even if the University does not raise in-state tuition by more than 4.5 percent, it will only receive half of what the state gave it last year through the Tuition Challenge Grant.

Current USG President Mike King shares Spanier's belief that outside help is a key part of the financial aid equation. Without additional government resources, King said, Penn State inevitably finds itself trapped between a rock and a hard place with no room to move.

"If I were a University administrator, I would have as difficult a time dealing with financial aid," King said. "I'm not very optimistic, because the state does not put enough emphasis on student aid. The University has no place to go. I don't think we have any options."

Not necessarily so, Saunders contends.

Although he said the ultimate solution rests with higher education subsidies from the government, Saunders is not so quick to absolve the University of its responsibility and ability to cultivate financial aid resources.

"We can make the non-education sector (of the University) more efficient," he said. By cutting waste and eliminating duplicated programs, Saunders said, Penn State could find more money for financial aid.

"When I walk into an office and I see, like, five secretaries talking to each other -- why do you need so many people?"

But reducing unnecessary spending should be accompanied by creative educational activities that could also serve as financial boosters for the University. For instance, Saunders suggested the Smeal College of Business Administration could purchase the Penn State Bookstore on Campus and let students run it, providing educational entrepreneurial experiences and innovative money saving at the same time.

"Set up a program like that and lots of people will want to go to your business school," he said.

The need for scholarship endowments funded by private corporations is also a vital element in closing the University's financial aid gap, Saunders said.

"I find it somewhat distasteful in a way, but given the financial constraints we're under, I find it's an option with incredible potential," he said. "If you have a responsible scholarship program, the money will come back to the University. You have to run the University like a business -- it's all about return."

What goes around may come around

That return will be an important tool for Penn State's financial aid program to build upon in order to ensure long-term success, said David E. Roth, associate professor of engineering at Penn State Erie and a member of the Committee on Admissions, Records, Scheduling and Student Aid.

"What goes around comes around," Roth said, explaining that students who receive financial aid will be thankful for the help and will return the favor to the University some day. "Penn State needs to do this for the benefit of Penn State and the student.

"We have a huge gap in the country between the haves and the have-nots that has never existed before. If Penn State can help at all by offering more to the have-nots, then we can help bridge that situation a little."

But efforts to help the have-nots are sometimes complicated by the University's desire to maintain a scholarly, diverse and competitive student body. Although the Office of Student Aid was unable to find the resources to meet $63.1 million in demonstrated student need in 1992-93, $15 million in scholarships and grants was awarded to students who did not apply for need-based assistance. Most of that $15 million came from private and University-related grants and scholarships, Griswold said.

Less than $2 million of Penn State's approximately $25 million direct contribution toward financial aid went to students solely on the basis of financial need.

Need-based aid necessary to compete

However, it would be impossible for the University to survive if it only awarded need-based scholarships to its students and eliminated all merit-based gifts, said James Rambeau, associate dean of undergraduate education and director of the University Scholars Program, which gives merit-based awards to some participants.

"Competitively speaking, you can't live in that world," Rambeau said. "Nobody can do it anymore. What we've found at Penn State is you better work at it if you want to attract students of quality."

But as debates pitting merit vs. need and cost-cutting vs. fund raising continue, so does an impending sense of urgency for results. According to the Faculty Senate's committee:

-- Low- and middle-income families are feeling the crunch as Penn State's costs outpace inflation rates.

-- The number of Penn State financial aid applicants has risen 11 percent in five years.

-- Penn State students are taking out student loans at twice the national rate.

-- Students of lower socio-economic levels may be perceiving the University as more unaffordable, and thus not applying for admission.

And one year later, Saunders still has a frustrated look on his face as he tries to sort through the complexities of financial aid in search of a solution.

"The change is really going to have to come from within on this one," Saunders said. "The only people that have the continuity and organization to do that are a consortium of every institution in the country. We're students. We're still learning how to do some of this. We're the ones who are the biggest advocates for the change, but we don't have the knowledge to do all this."