With concerns abounding about the fiscal viability of the University’s significant financial aid commitments, Stanford announced new changes in its 2010-11 budget designed to ensure that the program can continue to meet the “demonstrated financial needs” of all admitted undergraduates.

Projections for next year forecast a drop in the overall amount spent on undergraduate financial aid to $124.3 million, the first decrease in well over a decade.

According to Karen Cooper, the director of financial aid, the Office of Financial Aid is “essentially using the same formula” to calculate a family’s expected contribution to the cost of a student’s education. However, the budget did outline several changes to the financial aid strategy. These include increases in expected student contributions and in the contributions from families with annual incomes above $200,000. According to the budget, these changes will save $2.5 million in scholarship funds next year.

As of next year, the expected contribution for both new and returning students is set to rise by $250 per year, to a total of $4,750, that must be contributed before students can be considered for scholarship eligibility. Students meet this requirement through summer and academic-year earnings.

In addition, Cooper said that the Office of Financial Aid has increased the campus minimum wage by two percent, to about $12 per hour.

“We think students will be able to handle that $250 increase without any major impact,” she added.

Families making above $200,000 can also expect to see a bigger bill from the University in the fall.

“In some situations, at those upper income levels, our formulas were perhaps more generous than would be equitable for families,” Cooper said. “There are some cases at the highest income levels of eligibility, where there is more than one family member in college, a new applicant might see a higher expectation.”

While Cooper said that the formulas were not changing, financial aid officers, who have been generous in the past when making allowances for family assets and obligations, would be stricter in awarding aid to families at higher income levels.

Adjustments are not being made to the financial aid program for international students, which is distinct from the program for U.S. citizens and residents. While domestic admissions are need-blind, admission decisions for international students do factor in financial needs, and the University only admits a “limited number” of international students who qualify for financial aid.

These changes are certainly significant to students currently receiving financial aid; however, the projected savings are not enough to cover the budgetary shortfall from reduced endowment payouts. At its peak in the 2008-09 academic year, as the global recession was beginning to take its toll, the endowment contributed $80.4 million to financial aid, representing 69 percent of the total aid budget. Projections for the upcoming year put the endowment’s contribution at $66.3 million, making up 53 percent of the overall budget.

To overcome this shortfall, the University is dipping into the General Fund, with $10 million pledged to financial aid next year. It will mark the first time these funds are being used for aid since the 2006-07 year. Stanford is also making use of money from the Stanford Fund and the Tier II Buffer, collectively known as President’s funds, to contribute $32.7 million, well above pre-recessionary levels.

“We’re hoping to be able to [use these funds] until the endowment rebounds,” Cooper said.

Stanford’s Capital Campaign has also increased its expected contribution to financial aid.

Lastly, the budget predicts a three-percent drop in the number of students requiring need-based financial aid, from 3,350 students to 3,250 in the upcoming academic year. The University is therefore expecting that, as the economy recovers, family finances will rebound and students will need less support in paying the full cost of tuition, room and board.

The recession hit financial aid hard in two ways last year — just as the value of the endowment plummeted, the number of students requiring financial aid increased as their families also lost income due to the crisis.

However, Cooper said the Office of Financial Aid is prepared in case the planned decrease fails to materialize.

“The University will give the financial aid office more money,” Cooper said. “We monitor how much we need for the financial aid program, and if we need more, they find more.”