Although the country has bounced back since the economic downturn in 2008, demand for financial aid still remains high at Duke.
Following the recession, there was a significant increase in students applying for need-based financial aid as many families suffered the consequences of layoffs and a tough job market, said Alison Rabil, assistant vice provost and director of financial aid. Although the financial aid granted to students has increased, and student debt at graduation has decreased since the Financial Aid Initiative was launched in 2005, the University must still work to make financial aid accessible, especially to middle class families hurting after the financial crisis.
“There continues to be very high demand for financial aid although the economy has improved, and especially those families in the middle class are trying hard to catch up,” said Stephen Nowicki, dean and vice provost of undergraduate education. “[Demand] may never decrease.”
Recovering from a crisis
The University’s endowment took a major hit from the 2008 financial crisis, and the slow road to recovery has made providing financial aid difficult.
The Duke University Endowment experienced its biggest decrease in value in the last decade, going from a peak of $6.1 billion in the 2007-2008 fiscal year to $4.4 billion in the 2008-2009 fiscal year after the recession. As of June 30, 2012, the endowment was valued at approximately $5.6 billion, which is $500 million lower than the value before the recession.
All in all, the University experienced a $125 million budget shortfall in the three years following the financial crisis.
As a result of these financial constraints, University administrators had to look into ways to provide the same amount of financial aid with tighter purse strings. The Financial Aid Initiative—a capital campaign to raise $300 million by the end of 2008 for a financial aid endowment—helped in this regard. Although the Financial Aid Initiative fell $4 million short of its $230 million goal for undergraduate financial aid, the funds helped cushion the blow brought on by the recession.
The Financial Aid Initiative, however, was not created as a response to the recession but began before the crisis hit. Although it helped the University to provide financial aid in the aftermath of the crisis, Duke still needed to look at ways to save money without sacrificing aid commitments.
To do so, administrators temporarily provided incentives for employees to take early retirement and stopped providing salary raises, among other changes. Such changes allowed Duke to remain solvent in its overall operating budget and maintain its level of financial support to students.
“I think the key is how they didn’t change,” Rabil said. “We didn’t pull back on our policies when the bottom fell out of the economy or we lost money in the endowment. We made a commitment to our policies and the students that we said we would fund were still able to come, which is not what happened at a lot of other universities.”
In December 2007, the University announced several changes to its need-based financial aid policies that were intended to make undergraduate education more affordable for low and middle-income families. The policy changes eliminated loans for families with incomes less than $40,000, eliminated parental contribution for families with incomes less than $60,000, reduced loans for all students from families with incomes below $100,000, and capped loans at $5,000 a year for eligible families with incomes above $100,000. These commitments were made before the economic downturn, but they were maintained throughout the recession and are still in place.
Approximately 60 percent of Duke students apply for need-based financial aid every year, Rabil said. In the 2012-2013 school year, 47.5 percent of 6,763 enrolled undergraduates received financial aid, not including athletic scholarships.
This marks a 3.4 percent increase from the 2011-2012 academic year, where 44.1 percent of the 6,813 undergraduates received need-based financial aid.
An increasing tuition
The cost of attendance for the upcoming school year is $58,278 after the 3.9 percent increase in tuition approved by the Board of Trustees in February. With the tuition hike, funding for undergraduate financial aid for the 2013-2014 fiscal year was increased by 4.6 percent to $132 million.
Nowicki emphasized that at Duke, increases in tuition do not significantly burden students on financial aid or those from the economically advantaged families who do not qualify for need-based aid.
“Doughnut-hole families”—the middle class families who do not qualify for financial aid but are “barely making it”—are the families that are most affected by increases in tuition, he said.
Although some point to expenses on amenities, new buildings and sports programs as unnecessary uses of money that drive tuition up, the rise in the cost of education is mostly a result of rising salaries, Nowicki said.
“Even for students who pay full fare, they’re still being subsidized because if you do a calculation of everything it costs to experience Duke in and out of the classroom, tuition fees don’t cover it,” Nowicki said. “We pride ourselves on having 80 percent of our classes have 20 or fewer students in them.... So that’s highly trained professionals working with small groups of students—the costs start to add up.”
Once students enroll, it is a priority to ensure that opportunities are affordable for all students, Nowicki said. For example, financial aid packages are adjusted so students do not have to choose housing based on cost. In addition, programs such as DukeEngage and fellowships provide students with the same amount of funding regardless of income level. Areas where there is potential for improvement include expanding funding for study abroad programs as well as unpaid internships, which can be crucial to career development, Nowicki said.
“We’ll never be able to do everything we want for all of our students,” Nowicki said. “We want to think about the whole range of things we should be working on and prioritize. We can only do so much—sometimes, it’s a no-brainer, sometimes, not so much.”
A mixed bag
Senior Ahmed Alshareef said he chose Duke mainly because it offered the most generous financial package relative to schools of similar academic rigor.
“Other colleges gave me even just a little bit less than Duke, and that still wasn’t feasible,” he said.
Rabil emphasized that although counselors have conversations with families and become familiar with individual situations through the years, the financial aid office does its best to be straightforward about what it can and cannot provide.
“Sometimes families just have to decide what’s best for them, and sometimes that means not having that student come here,” Rabil said. “They know that you’ve really taken time to listen to what’s really going on and they understand you’re under institutional restraints, and you respect their decision.”
Although his experience with financial aid at Duke has been largely positive, Alshareef noted the process feels very automated.
Junior Noel Vera-Gonzalez, from Puerto Rico, said he felt there was poor communication surrounding the work-study program and declined it his first two years because he didn’t know what it was. Having learned what it meant from his friends last semester, in retrospect, he said he would have accepted because it simplifies finding a campus job.
Vera received unsubsidized loans but no grant aid his first year or second year, when his sister also enrolled in college at a private university with a similar price to Duke. He has received grant aid for the coming year and said it is probably because his sister is also in college, but he is unsure why the change happened this year and not earlier.
“We had to restructure a lot of things—we definitely saw changes around the household,” Vera said.
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