Cap to Limit Student Loan Debt

Cap to Limit Student Loan Debt
RICE NEWS OFFICE
March 19, 1998

Rice University, already widely known for using its endowment to provide for
relatively low tuition and generous financial aid, is doing more to limit student
indebtedness from a university education.

First, Rice has announced a decision to cap student loan debt at $2,400 a year.
Rice admissions will continue to be fully need-blind, meeting full need of students
receiving aid.

The new policy ensures that the most an entering student on need-based financial
aid would owe after four years at Rice would be $9,600, a figure well below
the national average.

Second, Rice will maintain student "self-help" at levels well below
other selective private schools. Students awarded financial aid receive a "package"
comprised of a direct grant from the institution and student "self-help,"
a combination of loans and work-study expectations, which, with family contributions,
pays the bills.

Rice’s current stated expectation for self-help is a maximum of $4,100 (the
average at Rice in 1997 was $2,813), compared with $6,000 or more at other selective
institutions.

When students receive funds from outside sources, such as federal Pell grants
or Rotary scholarships, Rice will count these funds toward the self-help portion
of the package, thus effectively reducing the amount a student must borrow or
earn.

Third, Rice will take steps to ensure that families will receive the full benefits
of the recently enacted HOPE scholarships and the lifetime-learning tax credits.
This will be done by excluding these tax credits in the calculation of financial
aid from Rice’s institutional funds.

"These enhancements in financial aid policies build squarely upon Rice’s
historic commitment to provide an outstanding education at an affordable cost,"
said Rice President Malcolm Gillis. "Placing a cap on the amount of student
loan debt is especially important for Rice. This is because a very high proportion
of our seniors go on to top-echelon Ph.D. programs and professional schools;
most of these will incur substantial debts in the process of completing their
graduate and professional degrees. We intend to ensure that they begin their
post-graduate careers carrying a minimum of debt burden."

Rice’s average tuition is less than that of Ivy League and other competing
schools–$12,688 in 1997-98, compared with more than $20,000 elsewhere. In addition,
85 percent of Rice’s students receive some form of financial or merit aid, with
university awards reducing the cost of attending Rice by about 40 percent.

Since 1994, tuition increases for continuing students have been tied to the
Consumer Price Index, avoiding the larger-than-inflation jumps that have been
the norm at many other institutions and played havoc with family financial planning.

"For prospective students, a cap on student loan debt demonstrates the
university’s commitment to keeping their education affordable," said Dick
Stabell, dean of Admission and Records at Rice. "This makes the university
even more attractive to a wide range of outstanding students from all economic
backgrounds."

This is in keeping with the intentions of Rice’s initial benefactor, William
Marsh Rice, who stated at the turn of the century his desire to fund a university
for young men and women of slender means. Until 1965, Rice University charged
no tuition at all.