Davidson Replaces Loans with Work Study and Grants

Paying for College
1

<p>"RALEIGH, North Carolina (AP) -- Davidson College announced Monday it will eliminate loans from its need-based financial aid packages and replace them with grants and work study, a move school officials said would allow students to graduate debt-free.</p>

<p>The liberal arts college had capped loan amounts in recent years to reduce student debt, but higher education experts said it's the only college of its kind to halt loan handouts in need-based aid packages....</p>

<p>The announcement comes as education leaders across the country debate ways to prevent college campuses from welcoming only rich students.</p>

<p>Elite universities such as Princeton and Columbia have eliminated or significantly reduced loans by awarding more grant money.</p>

<p>Others, such as Harvard and Yale, have stopped requiring lower-income families to contribute to the cost of attending -- an amount of money usually expected based on federal financial aid calculations. And even public universities, such as the University of North Carolina at Chapel Hill, have stopped forcing loans upon the neediest students....</p>

<p>The cost of eliminating need-based loans in the future is expected to reach $3.5 million a year as the number of high school graduates from low-income families increases, Gruber said."
<a href="http://www.cnn.com/2007/EDUCATION/03/19/financialaid.loans.ap/index.html%5B/url%5D"&gt;http://www.cnn.com/2007/EDUCATION/03/19/financialaid.loans.ap/index.html&lt;/a&gt;&lt;/p>

2

<p>Great news! It always appeared to me that if your family was really in want, a loan wasn't going to help the situation much.</p>

3

<p>Bravo. Had I known this, I might've thought about applying.</p>

4

<p>Same here, I should have applied.</p>

<p>Not that it really matters, but why does it say "RALEIGH, North Carolina"?</p>

5

<p>That's pretty neat... it sets an example for some of the schools with much bigger endowments and donor bases.</p>

6

<p>Hopefully more schools will follow suit...</p>

7

<p>From Davidson's website:</p>

<p>Davidson’s New Financial Aid Policy Eliminates Student Loan Debt </p>

<p>March 19, 2007</p>

<p>Contact: Bill Giduz</p>

<p>In an effort to make a Davidson education affordable for all students, the Board of Trustees has approved a new policy that will eliminate loans from financial aid packages. Beginning in August, Davidson students will have their demonstrated financial need funded entirely through grants and student employment, and can graduate debt-free. </p>

<p>“We believe this new policy is the necessary response to the financial situation facing many applicants and their families,” said President Robert F. Vagt, “and we know it is consistent with a core value of the college. A Davidson education should be affordable for all students, regardless of means. With the support of the college family, we are confident this bold initiative will make a significant difference for our students, our institution, and our community.”</p>

<p>Davidson is the first national liberal arts college, and only one of a couple of institutions of higher education nationwide, to eliminate student loan debt. Students across the country currently borrow $53.8 billion per year to cover college costs.</p>

<p>Davidson will maintain its commitment to practicing need-blind admissions, meaning the family’s ability to pay for a Davidson education has no bearing on whether or not the student is admitted. But loans will no longer be included in a student’s financial aid package. Of course, families may still choose to take out education loans as part of their personal financing decision.</p>

<p>“The trustees are deeply committed to this new policy, and it will be funded entirely with new monies,” said John F. McCartney, chair of Davidson’s Board of Trustees. He said the trustees have identified and committed the immediate funding to initiate the policy, and have formally committed to a strategy for raising funds to permanently endow it. He also noted that tuition increases will be applied solely to improve the educational and residential experience of Davidson students, and will not fund financial aid. </p>

<p>Affordability has long been a concern at Davidson, and financial assistance has been a high priority. The college’s last two comprehensive campaigns raised more than $130 million in student financial assistance. Gifts from alumni, parents, and friends have created not only hundreds of new scholarship endowments, but have made it possible for the college to make steady reductions in the loan portion of the aid package. </p>

<p>Last spring the college was able to cap loans at $3,000 per year. Prior to that, loans could total as much as $19,000 during a student’s four-year enrollment at Davidson.</p>

<p>The trustees have been concerned about the situation for some time. Christopher J. Gruber, vice president and dean of admission and financial aid, led a study revealing that many students needing financial aid never apply to Davidson because of the “sticker shock” of its tuition cost. “We know that efforts to increase diversity on Davidson’s campus have been thwarted by financial realities facing families across the nation,” Gruber said. “And we know that these students often graduate with a burden of debt that limits their choices in career and post-graduate education."</p>

<p>McCartney added, “The economic barrier is the hardest to overcome – it intensifies any other challenge a student faces when making a college choice.” </p>

<p>Beverly S. Hance, past chair of the trustee admission and financial aid committee—and parent of two Davidson alumnae—said the admission study was the focus of a recent Board of Trustees retreat. “The board discussed things such as financial challenges, who comes to Davidson, who is Davidson, what has the college been, and what role will it play in the future,” she said. “For Davidson to remain the institution we think it is, we decided we needed to be more proactive.” </p>

<p>The policy is anticipated to cost $3.5 million annually, depending on the percentage of students in future classes with financial need. Currently, 33 percent of Davidson students receive need-based financial aid, but Gruber expects that elimination of loans will increase that number to about 40 percent. Under these forecasts, $70 million will need to be raised to endow the policy permanently.</p>

<p>Davidson is a highly selective independent liberal arts college for 1,700 students. Since its establishment in 1837 by Presbyterians, the college has graduated 23 Rhodes Scholars and is consistently ranked in the top ten liberal arts colleges in the country by U.S. News and World Report.</p>

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<p>Let's hope this becomes a trend. Brings balance to the way monies have been distributed at colleges. While there would be very few arguments that merit aid based on skills be it either athletic or academic was warranted the other uses of school grants merely based on financial need was being distributed in a biased manner. Not only does the current system of grants and aid re-distribute wealth across economic classes unfairly ,I believe it was creating a sort of collective depression/apathy among parents as well as students.</p>

9

<p>The next step will be to get the formula for determining demonstrated need fixed.</p>

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<p>Yes, this is generally a good thing for the poorest of the poor, but those considered middle class will always be screwed. My parents are considered middle class but they don't actually get to keep the money that's calculated into the EFC so it looks like they can afford to pay for the full cost, they can't afford much over about $5k/year......for that reason for undergrad I had to take out loans to fund everything. Man if my mom didn't work, we'd be well below the income req to attend elite schools for free....lol. Oh well, undergrad's over!!! This could certainly help the youngsters though.</p>