Amherst Becomes Third College to Eliminate Student Loans From Financial Aid Packages
In a press release issued last Thursday, Amherst College announced that it would eliminate all loans from student financial aid packages, replacing them with grants—which do not need to be repaid—beginning with the 2008–09 academic year (“Amherst College Will Replace Loans With Scholarships in Financial Aid Packages for All Students Beginning in 2008–09; Move Expected to Aid Middle-Income Families,” July 19, 2007).
In 1999, Amherst became the first college in the country to eliminate loans for low-income students when it dropped loans from the financial aid packages for students from families with yearly incomes of less than $40,000 (the charges for tuition, room and board, and mandatory fees at Amherst are $45,000 a year). But a significant number of students still faced loans as part of their required contribution: In the 2006–07 year, nearly one-third of Amherst’s 1,600 students received financial aid packages that included loans. Not only does the new policy eliminate loans for all students, regardless of income, but once it becomes effective, the policy will apply to current Amherst students as well as the incoming class of 2012.
With this blanket approach, Amherst becomes the third U.S. postsecondary institution to eliminate loans for undergraduates. Princeton University replaced all undergraduate loans with grants beginning in the fall of 2001, and in March of this year, Davidson College announced it would be undertaking the same change.
Widening the Doors for Middle-Income Students
In the Amherst press release, Anthony W. Marx, Amherst’s president, characterizes the new policy as one that “broadens” Amherst’s commitment to make higher education more accessible to disadvantaged students “by eliminating barriers for middle-income families who want to ensure that their children receive an excellent education.”
Currently, many of Amherst’s middle-income students take out federal and college loans as part of their financial aid packages that may also include scholarships, grants and expected contributions from savings and work-study opportunities. Beginning with the 2008–09 academic year, according to the press release, “the loan component of this financial aid package will be replaced with scholarships; no Amherst student will be required to take out loans in order to come to Amherst.” However, students, as well as parents, will still have the option of borrowing if they so choose, in order to finance educational expenses that aren’t part of the standard student budget, to replace a shortfall in earnings, or to meet their expected contributions.
In his coverage of the Amherst announcement, Eric Hoover at The Chronicle of Higher Education writes that this financial aid initiative “is part of the college's effort to broaden the socioeconomic diversity of its students. Recently, it has increased the proportion of lower-income students in its entering classes” (“Hoping to Attract More Middle-Income Students, Amherst College Replaces Loans With Grants,” July 20, 2007).
“Amherst believes it is our responsibility to ensure access to the best colleges for the best students,” says Marx in an interview that Hoover quotes in his article. “We are concerned that middle-class families have been scared away by our sticker price and that we may be losing great students we want as a result.”
Freeing Graduates From the Burdens of Debt
According to Hoover’s article, Amherst students typically graduate with around $10,000 in student loan debt, and concerns about that debt can affect students’ abilities to participate in different aspects of college life and, on a larger scale, their future career and academic decisions. For example, says Tom Parker, Amherst’s dean of admission and financial aid, “We're very concerned about the paucity of low-income students going on to do Ph.D. work. We don't want to do anything to exacerbate that.”
More generally, Parker says in the press release,
Too often, students who graduate from college with debt feel compelled to make career choices based in part on their need to pay off their student loans. Graduates from low- and middle-income families should have the same array of career options as graduates from upper-income families. They should be able to make career and life choices free of the specter of debt. This new program will allow our students to make such choices.
Amherst anticipates spending $1.6 million to finance the grants in the first year of the new initiative, writes Hoover, relying on alumni donations to help pay for the program.
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Student Loan Girl