Shirley M. Tilghman, president of Princeton University, has a challenge most chief executives would envy: so much prestige and money that she's looking for ways to expand the school's mission.

While Princeton once lagged behind Harvard and Yale in the competition for top students, it now holds its own. For the past six years, it has taken the top spot in the U.S. News & World Report rankings, either on its own or tied with Harvard. Its $12.5 billion endowment amounts to $1.9 million a student, making it richer by that measure than any other major university.

Now, Ms. Tilghman is leading Princeton's first big enrollment expansion since the 1970s, after the school started admitting women. By 2012, Princeton will have added 500 undergraduates, an 11 percent increase. She is also launching an alternative to the school's famed eating clubs. Seventy percent of Princeton's juniors and seniors eat their meals and do most of their socializing in the clubs, but some critics consider them bastions of elitism and discrimination.

Ms. Tilghman, 59 years old, is a rarity among top college presidents: a woman and a scientist. She often speaks of the challenge of raising her two children while pursuing a career as a molecular biologist. She broke ranks with the clubby Ivy League to publicly criticize former Harvard President Lawrence Summers for suggesting that innate gender differences might explain the relative scarcity of women with high-level academic careers in science and math.

She and Princeton are also fighting a lawsuit alleging that the university misspent money donated in 1961 to Princeton's Woodrow Wilson School of Public and International Affairs. The gift is now valued at $750 million, and the university could lose 6 percent of its endowment if the family that donated the money wins the right to spend it elsewhere.

In a recent interview, Ms. Tilghman spoke about Princeton's plans, making the university more family friendly and whether she would consider a job as Mr. Summers's successor. Excerpts:

WSJ: Why are you increasing the number of undergraduates at Princeton?

Ms. Tilghman: We should be educating as many students as we can, consistent with the nature of education that we have always espoused, which is very close interaction between the students and faculty. So we couldn't suddenly open the floodgates and have 40,000 students. But we were absolutely persuaded we were in a position to accommodate 11 percent more. We are turning away students who we know would be absolutely stellar Princeton students, and it's just because of our lack of spaces in the class.

WSJ: You changed your financial aid policy so that no Princeton students will be stuck with loans after graduation. Why are Princeton students still overwhelmingly affluent?

Ms. Tilghman: It's not overwhelmingly, but it reflects a reality in this country, which is that the best predictor of SAT scores is family income. Affluent families can enrich their children's high-school experience, providing private schools where class sizes are much smaller, summer programs in Spain and so on. These children come to us having been exceedingly well prepared for college -- and prepared for the really hard work that we ask of our students.

If you look at the other end of the income scale, you see exactly the opposite. These kids are going to the local family store and working until 11 at night. And I think the greatest challenge for all of us is to look for the lower-income student who has not excelled at the same level in terms of standardized tests but has been able to excel despite all the things that were put in his path.

WSJ: Why does Princeton give admissions preference to alumni children, who tend to be from wealthier families?

Ms. Tilghman: We are deeply dependent on the generosity of our alumni each and every year. They not only give, but they act as volunteers in the annual giving campaign. They are extremely important to the financial well-being of this university.

WSJ: And wouldn't they continue to be even if you didn't give their children the preference?

Ms. Tilghman: We've never done the experiment.

WSJ: Princeton and other selective schools have been criticized for accepting many students under early-admission programs, which tend to attract affluent students. Why not have one admission deadline?

Ms. Tilghman: If all of our peers were to go to April admission, I would be very comfortable with that. It is very difficult for a single university to abandon early admission.

WSJ: Some schools have asked the Antitrust Division of the Justice Department whether they could agree to eliminate the early decision programs as a group.

Ms. Tilghman: We were told that we could not have that discussion.

WSJ: You're developing four-year residential colleges to give juniors and seniors an alternative to Princeton's eating clubs, starting in the fall of 2007. Why?

Ms. Tilghman: The residential system at Princeton has been evolving probably since the day the university opened for business. When I arrived here in 1986, there were still eating clubs that were all male. Now half the eating clubs are sign-in clubs, which means if you want to join the club you just sign up. But there are still five that are selective, and they don't for me represent the spirit of Princeton. They tend to select more homogeneously than I would like.

WSJ: You were outspoken in your criticism of Mr. Summers's comments about women in the sciences. Why did you speak out?

Ms. Tilghman: There are 25 years of good social science that demonstrate the many cultural practices that act collectively to discourage women from entering and continuing careers in science and engineering. The research is overwhelming, and it is there for anybody to see. On the other hand, the data that would suggest there are innate differences in the abilities of men and women to succeed in the natural sciences are nonexistent.

WSJ: I keep hearing your name as a possible candidate to be president of Harvard. Are you interested?

Ms. Tilghman: I have the best job in higher education, and I have no intention of leaving it. I have also always understood that there was kind of an unwritten rule in the Ivy League that you don't poach each other's presidents.

WSJ: You once wrote that, "Tenure is no friend to women?" Why?

Ms. Tilghman: It comes at exactly the time when women who have gone through Ph.D. programs are most likely to be having children. So we extend the tenure clock a year for every child that you have while you're an assistant professor. (Princeton typically gives junior faculty six years to win a slot as a professor with lifetime job security.)

We do this in a gender-blind way. We think fathers should be taking time with small children, just as we believe mothers should be taking time with small children. We recently adapted that policy because we discovered that people were not taking advantage of the policy partly for fear that they would be perceived as asking for a benefit. So now we automatically extend the tenure clock. You don't ask for it. You get it.

WSJ: You've spoken a lot about your own struggles raising two children on your own. What lessons did you learn?

Ms. Tilghman: The first lesson is no guilt. We have to allow women to say that it is fully legitimate to be at work, it is fully legitimate to be at home -- and you shouldn't feel guilty when you're in either one of those places. You do what you can do. It's about balance.

I think a second part of it is recognizing that in order to do it, you're going to have to give up some things. You give up the pottery class on the weekends. You know you have limited time at each activity, whether it's at home or at work, and you make the most of those hours.

WSJ: You have appointed women to high-level positions here and have come under criticism from, among others, the student newspaper for practicing gender-based affirmative action.

Ms. Tilghman: Implied by such a criticism is an underlying assumption that there aren't talented women out there who would be extremely effective leaders in a university like Princeton. And given that 50 percent of our students are women, I would have thought this view would have disappeared from Princeton many, many years ago. In each of these searches, I appointed the best person in the pool.

WSJ: Why should someone who has, say, $100 give to a university like Princeton? Princeton has recently been spending 3 percent to 4 percent of its endowment annually and achieving double-digit investment returns. Don't you have more than enough for your needs for decades?

Ms. Tilghman: If we were prepared to stand still, if we were to declare today, 'We think we're perfect,' then what you just said would work perfectly. But we're constantly identifying new fields that we think are absolutely essential for us to be teaching the next generation. Just this past year, we announced big new initiatives, one in neuroscience and one in the creative and performing arts.

WSJ: If you were to bump up your spending just a small amount you could easily give free tuition to all students. Why don't you?

Ms. Tilghman: It's the wrong economic model. It would be a misallocation of our resources. For those who can afford to pay, a Princeton education is one of the best investments you can make in your child's future. I'm not sure that I could justify the use of our resources to make free something that I know roughly half the class can afford.

WSJ: What has Princeton learned from the lawsuit filed by the children of Charles and Marie Robertson challenging the way Princeton has spent their parents' gift to the Woodrow Wilson School?

Ms. Tilghman: When the gift was made as a result of negotiations with Charlie Robertson, it was a time when governance practices were much less formal. The meetings were handled in a very collegial and informal manner, and that approach continued after his death. It would have probably been better had we anticipated earlier that that kind of informality could be a disadvantage going forward. What we have done, needless to say, in the five years since our first discussions with (William Robertson, one of the plaintiffs) is to institute entirely new governance procedures for the foundation. Everything is done on an extremely thorough, careful, formal basis, so that all decisions, all discussions are documented very, very carefully. And I think that will serve my successors very well going forward.

WSJ: Congress is considering an "academic bill of rights," which supporters say is necessary because conservative viewpoints aren't always welcome on what they consider to be liberal campuses. The Princeton student body recently passed a similar measure. What do you think of these concerns?

Ms. Tilghman: I have never in five years had a student in my office complaining about this issue. The risk going forward is setting a precedent that could lead the Congress to begin to think about other ways to regulate the kind of material that is taught in universities. And I think going down that path is dangerous and a mistake.