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Financial aid cap helps A&S

Provost Peter Lange has placed a cap on financial aid expenditures by Arts and Sciences for the next five years, a move that somewhat alleviates the multi-faceted financial aid crunch that has been hampering the A&S budget this year.

 The financial aid cost to Arts and Sciences has been increasing at twice the rate of tuition, said William Chafe, dean of the faculty of Arts and Sciences. The cap will limit financial aid expenditures to 1.5 times the rate of tuition, which has historically been the standard contribution from Arts and Sciences--though in recent years, Chafe said, the ratio was closer to one-to-one.

 Lange called the cap "the appropriate thing to do" at a time when Arts and Sciences is cutting faculty searches and raising tuition to try to avoid significant budget deficits that show no sign of abating in the near future. According to a letter Chafe sent to department chairs in August, Arts and Sciences has had to allocate $1.5 million more to financial aid in this year's budget.

 A confluence of financial aid factors have contributed to make this year tough on the University, especially Arts and Sciences. Director of Undergraduate Financial Aid James Belvin said the University has increasingly needed to assume financial aid costs that might have previously fallen to students.

 "As the cost of attendance goes up each year--as tuition goes up--there was a time that part of that burden was assumed by students through increases in work study and loan: self-help aspects of awards," he said. "In recent years that has not been the case; what has happened is the University has picked up those costs."

 Lange said he believed the main reason for the increasing cost of financial aid is the sluggish national economy, which has put more families in need of more aid.

 This fall also marks the first year of a new formulation for dispensing financial aid for the University and 30 other schools, which together comprised a consortium called the 568 Presidents' Working Group. The new formulation is more generous, Belvin said, as the group reassessed student assets and home equity in a way that can benefit students.

 The new home equity valuation will cap home equity considered at 2.4 times a household's income, whereas the entire value of the home could be considered before the change. Belvin said the new formulation is designed to recognize that home value is often inflationary and out of proportion to a family's ability to pay.

 For a time earlier this summer, the University was looking at a far worse scenario because of yet another financial aid-related crunch. State and federal support for financial aid programs to Duke this year were considerably less than expected, and Duke faced $1.5 million to $2.5 million in extra costs. A University appeal, however, won back some of that money.

 The University is not currently considering "need-aware" admissions or reducing its financial aid generosity, despite the stress it places on the budget, Lange said. Several years ago the issue came under consideration, but President Nan Keohane strongly affirmed the University's commitment to need-blind admissions at that time.


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