Without a significant increase in fundraising, the University’s financial aid model will become unsustainable, University officials said last week.
Last year, the University announced a 10 percent increase in the amount of aid allotted to both current and future students for the next four to six years. But “without corresponding success on fundraising,” the current model will not be able to continue beyond that, said Robert Chernak, senior vice president for Student and Academic Support Services.
“Unless we’re successful in a corresponding way in improving our fundraising for student aid, then more is going to come out of the unrestrictive budget or out of reserves, which isn’t a good situation in terms of sustainability,” Chernak said.
According to the University’s budget for the 2009-10 school year, the cost of GW’s push to maintain affordability will be between $24 million and $47 million over the next four to six years.
To offset these costs, the University also announced last year it was increasing its goal of fundraising for financial aid from $10 million to $40 million. For the first year of that goal, the University set out to raise $14 million and reached $12 million. This year’s target is set at $18 million, Chernak said.
Executive Vice President and Treasurer Lou Katz said this increased fundraising for student aid will be necessary to relieve the strain on the operating budget.
“The idea of this is not just to increase this for five years and let it drop off,” Katz said. “The goal is to bring the level of fundraising up, and have it go from there, not to have it drop back down.”
He added, however, that if the economy continues to worsen, fundraising might begin to decline, which will then impact future student aid decisions.
“If this goes on for a decade, everything gets interconnected so it’s not just how long this lasts. If the economy begins to lag, it will affect overall fundraising too,” Katz said. “It hasn’t as of yet, but it remains to be seen.”
The lag in the economy has also altered the proportion of merit and need-based aid awarded to students. Both Chernak and Katz said the University has shifted from awarding more merit-based aid to a more need-based system.
Chernak explained that if a student receives a merit-based scholarship, but also receives an additional need-based award on top of it, then the student’s package is considered entirely need-based.
“The strategy is much more weighted toward need-based and meeting a higher percentage of the need,” Katz said.
Anthony Yezer, a professor of economics, said the University could easily continue to fund student aid – including increasing the number of merit-based awards – by simply slowing down construction.
He said that the University is dependent on tuition revenue to fund the millions of dollars in construction costs the school racks up across Foggy Bottom.
“If they want a secure operating budget, they can slow down construction,” Yezer said. “But it looks like they have no intention of slowing down construction, so we have a trade-off.”
Yezer said he and his colleagues would like to see more merit-based aid awarded to students, rather than an increase in construction projects across campus.
“I would like to have a lot more basically merit aid, because I think the faculty essentially believes that if you can get enough really strong scholars in the undergraduate student body, then they will lift everybody,” Yezer said. “The quality of the classroom goes up if you have more students who are stronger.”
Donald Parsons, a professor of economics and a member of the Faculty Senate special committee on financial and operational planning for the Science and Engineering Complex, said he is a big proponent of funding financial aid for students.
He said he hopes the University is able to raise the funds to continue to fund this level of aid for years to come, but said he is unsure if the administration can pull it off.
“I would say that to this point there is no evidence that the administration is particularly good at raising funds,” Parsons said. “So there is no concrete evidence that any of this is likely to happen. It’s a worthy goal. Relative to raising money for buildings, I find it delightfully attractive, to be honest, that there is more of an education focus than a building focus.”