Stanford drops tuition for some students

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PALO ALTO, Calif. -- In a radical change to its financial aid program, Stanford University will no longer charge tuition to students whose families earn less than $100,000 a year, and will waive room and board fees for students whose families earn less than $60,000 a year. The university is making the change in the wake of published reports last month that its endowment had grown almost 22 percent last year, to $17.1 billion. That sum had begun to attract attention from lawmakers who want wealthy institutions to do more to reduce tuition costs.Financial aid also will increase to families that make more than $100,000 a year."Thanks to our increasingly generous financial aid program ... attending Stanford will cost less than most private and many public universities," university Provost John Etchemendy said.To pay for the new tuition assistance, the university said it will increase its annual endowment payout to 5.5 percent. The new plan, which begins in the 2008-09 academic year, eliminates the need for student loans for qualifying students."We are committed to ensuring that Stanford asks parents and students to contribute only what they can afford," University President John Hennessy said. "No high school senior should rule out applying to Stanford because of cost."Stanford is among dozens of high-end colleges and universities where tuition has grown faster than the rate of inflation and where tax-exempt endowments have increased by more than 10 percent annually. Last month, after a report from the National Association of College and University Business Officers called attention to the swollen tax-exempt endowments, a prominent U.S. senator began to question the practice."They're supposed to offer public benefit in return for the privilege of tax exemption," said Sen. Chuck Grassley of Iowa, the ranking Republican on the Senate Finance Committee. "If endowments increase by double digits from one year to the next, it raises the idea that maybe these schools aren't using enough of their endowments to help students afford college."Stanford's endowment is the third largest of any university in the country, behind only Harvard and Yale. In the past 10 years, tuition alone at Stanford increased from $21,3000 to $34,800 -- roughly $7,200 more than if it had held to the rate of inflation during the decade.The university said three out of four students currently get some financial aid. The new program is expected to reduce the average bill paid by a student's family by 16 percent.The university said it would continue to take into account a family's assets and overall situation, in addition to earnings, in determining the financial aid it could receive. The university said it would continue its "need-blind" admission policy, guaranteeing that students will be accepted to the university regardless of their ability to pay.(E-mail Steve Rubenstein at srubenstein(at)sfchronicle.com. For more stories visit scrippsnews.com)