Student Loan Blog : Yale

Davidson College Sees Positive Results After Eliminating Student Loans

Student Loan Girl — Thu, 10 Jul 2008 03:44:00 GMT

While Princeton was the first university to completely eliminate student loans from its financial aid packages in 2001, it was Harvard’s announcement to follow in Princeton’s footsteps this fall that garnered national media attention as no-loan financial aid policies for 2008–09 began to turn up at elite colleges and universities across the country: Amherst, Columbia, Dartmouth, Stanford, Swarthmore, Yale.

So far, some 50 institutions across the country have implemented no-loan and loan-cap financial aid policies, according to the Project on Student Debt, a nonprofit advocacy group — in some cases for all students; in others, only for students whose families fall below a certain income cutoff, although that cutoff runs as high as $150,000 a year at some schools.

After stinging rebukes from legislators critical of yearly tuition-hikes that have outstripped inflation and the proliferation of costly private student loans in undergraduate debt loads, many of the nation’s richest schools have moved to reduce student dependency on college loans and to entice greater numbers of low- and middle-income students to enroll at their institutions.

But it’s a small, selective liberal arts institution in North Carolina — Davidson College — that’s already seeing the results of eliminating student loans from its financial aid packages (“At Davidson, Getting Rid of Loans Shows Early Signs of Success,” The Chronicle of Higher Education, July 11, 2008).

While the long-term, broader nationwide impact of these new financial aid policies may not be seen for a few years, Davidson — which got a head start over the rest of the Ivy Leagues by instituting its no-loan policy a year earlier, in the fall of 2007 — has already experienced a three-percent jump this year in the number of incoming students who demonstrate financial need.

Although Davidson’s endowment of $489 million is much smaller than the multibillion-dollar endowments of its Ivy League competitors, the school has set a goal to have 40 percent of its incoming students receiving only need-based aid by 2011 — a plan that Davidson’s dean of admissions and financial aid, Christopher Gruber, says will cost $3.5 million to implement.

"We're moving in the right direction with a year to promote it," Gruber says.

Davidson’s early results aren’t surprising, says Jonathan Epstein, from the education consulting firm Maguire Associates. But families shouldn’t expect no-loan policies to become the norm. “My take is, it’s not something that, as announced policy, is going to spread across the country.”

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Oxford to Raise $2.5 Billion to Compete with U.S. Ivy Leagues

Student Loan Girl — Tue, 03 Jun 2008 02:34:00 GMT

In an effort to keep up its better-funded Ivy League competition in the United States, the University of Oxford in London has embarked on the largest fundraising campaign in European academic history, reports The Christian Science Monitor (“Oxford Shakes Up British Higher Education with Fundraising Drive,” May 29, 2008).

Instead of raising tuition, which is currently capped at £3,000 (roughly $6,000) a year, and at the behest of the British government, which is urging British institutions to “become as useful as their U.S. counterparts,” Oxford announced a plan to raise a target $2.5 billion in endowments and alumni support. The school has already received commitments for an approximate $1.15 billion during the campaign’s pre-launch phase.

The money will go toward recruiting top academic talent from around the world, toward supporting Oxford’s unique one-on-one tutorial system, and toward keeping up with the school’s U.S. rivals.

“We want to stay world class; we want to be the best in the world,” said university chancellor Chris Patten, noting that Oxford lags well behind at least three Ivies — Harvard, Yale, and Princeton — in terms of funding. “We want to compete in the world economy for the best academics.”

The combined endowments of all British universities total less than half of Harvard’s $34 billion endowment, according to numbers from the Sutton Trust, an educational charity.

“The extent of endowments in the U.K. is minuscule in terms of what U.S. universities are receiving,” said Alan Smithers, director of the Centre for Education at the University of Buckingham.

Oxford and the University of Cambridge together account for 80 percent of the British endowment total, with the other more than 100 British universities barely reaching a collective $3.8 billion. Cambridge, for its part, launched a fundraising campaign of its own three years ago, raising over $1.3 billion.

“The U.S. is a long way ahead,” Cambridge spokesman Gregory Hayman told The Monitor, “but our view is that the reason there hasn’t been a culture of giving in the U.K. is that there hasn’t been a culture of asking.”

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University of Washington Plans Largest Environmental College in the World

Student Loan Girl — Thu, 22 May 2008 22:43:00 GMT

Earlier this month, the University of Washington released a report detailing plans to create an environmental college that would rival similar colleges at Duke University, Stanford University, Yale University, and Western Washington University, according to an article in The Seattle Times (“UW Plan Merges Forestry School, 5 Others,” May 15, 2008).

"Certainly, higher education in general has a responsibility to tackle challenges that threaten the well-being of the planet," the UW report states. "The UW is strongly positioned to truly advance the contributions of academia to the very concrete problems of the world around us."

UW’s proposed College of the Environment would be the largest such institution in the world, with a $60 million budget, 97 faculty members and 1,135 students. It would merge six of the school’s existing academic disciplines, including those that focus on the oceans, the atmosphere, and forests.

The college will have the ability to grant degrees at the undergraduate, graduate and postdoctoral levels. And, according to the report, no existing environmental program would come close to the scope of the school.

"The UW is better positioned to meet these [environmental] challenges than any other university in the country or the world."

UW regents are set to discuss plans and vote on the proposal for the new college next month. If approved, the environmental college could open its doors as early as fall 2009.

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Stanford School of Medicine Won't Follow Harvard's or Yale's Financial Aid Initiatives

Student Loan Girl — Sat, 10 May 2008 18:04:00 GMT

Students at the Stanford School of Medicine will not be offered the same type of tuition breaks students attending rival medical schools Harvard and Yale will see next year.

Harvard Medical School and the Yale School of Medicine recently announced they are eliminating the expected family contribution for households that earn less $120,000 and $100,000, respectively.

Charles Prober, Stanford’s senior associate dean of medical student education, told The Stanford Daily that there are no plans to extend such an offer to Stanford medical students (“No Change in Store for Med School Aid,” May 5, 2008).

Stanford a Leader in Minimizing Medical Students Loan Debt

However, he pointed out that Stanford is already a leader in medical school affordability. Stanford graduates have less student loan debt than those who graduate from competing schools, he said. Stanford’s 2007 graduating class had a debt of $78,000 in student loans, compared to $98,953 at Harvard and $115,385 at Yale.

The median medical school debt is $140,000, according to the Association of American Medical Colleges.

Stanford also sets a cap on the amount of federal student loans that can be borrowed each year, which this year is $13,500. If students have remaining tuition costs after the estimated parental contribution is determined, the school covers up to $30,000 of a student’s remaining costs with a need-based grant.

Student Loans Aren’t the Only Option

Students must cover any remaining costs with private student loans or other sources but Stanford, Prober said, offers its students a number of alternatives to student loans.

Medical students can earn up to $72,000 in Stanford’s Medical Scholars research Program by doing health-related research projects. Students can also offset their tuition costs by working as teaching assistants, a job in which they can earn about $18,000 per quarter. After 13 quarters, Stanford drops its tuition costs by 80 percent.

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The New Financial Aid Landscape

Student Loan Girl — Sat, 26 Apr 2008 19:41:00 GMT

In the last few months, the media has been drawn to the potential student loan crisis, focusing on how students will be able to weather accessibility issues to get the funds they need for college next fall.

At the same time, many of the country’s top colleges and universities have been revamping their financial aid programs to better assist parents and students in covering their college costs.

Schools Modifying Financial Aid Programs

To date, about 50 schools have made substantial changes to their financial aid programs, writes Anne Marie Chaker of The Wall Street Journal (“The New Math of College Financing,” April 21, 2008).

Several schools have chosen to replace student loans with grant money that won’t need to be repaid, effectively lowering their tuition. Others have waived tuition costs altogether for families that fall below a specific income. Some have capped the amount of money a family is required to contribute toward college costs at a certain percentage of the family’s yearly income.

Student Loans Being Replaced with Grants

Undergraduates attending Stanford, Dartmouth, Harvard, M.I.T., Yale, or Cornell next fall now have a better chance of graduating with less debt from student loans, thanks to a significant shift in the financial aid programs at these schools.

Under pressure from Congress, with legislators questioning growing student debt levels and skyrocketing tuition costs that outpace inflation even as the wealthiest schools report endowments of $500 million or more, colleges and universities with sizeable endowments are tapping into those endowments to replace student loans with grants in their financial aid awards.

Although Harvard is using grant awards to eliminate student loans from its financial aid packages entirely, other schools are reserving these loan-replacement grants for families at qualifying income levels, Chaker notes.

Cornell, for example, in the 2009–10 academic year, will only replace student loans with grants for families making less than $75,000 annually. (The threshold was $60,000 for the current school year.) Students from families earning between $75,000 and $120,000 a year may still be awarded student loans, but those loans will be capped at $3,000 for 2009–10.

Tuition Waivers for Middle-Income Families

A handful of the nation’s top schools have also implemented programs that eliminate tuition charges completely for middle-income and even upper-middle-income families, with qualifying income levels as high as $100,000.

At M.I.T. and Dartmouth, families who make less than $75,000 a year will be able to send their children to college at zero tuition cost (although they may still have to cover room and board, books, and other living expenses). At Stanford, the income cutoff for a tuition waiver is $100,000 (with assets typical for that income level).

Family Contribution Capped Even for $100K+ Incomes

Last year, Harvard announced “one of the most ambitious [financial aid] plans out there,” writes Chaker, allowing families earning between $120,000 and $180,000 a year, with standard corresponding assets, to put just 10 percent of their annual income toward their child’s cost to attend — in other words, paying only between $12,000 and $18,000 of the 2008-09 sticker price of roughly $50,000.

Yale followed on Harvard’s heels with its own 10-percent policy that went even further up the income bracket, applying to families who make up to $200,000 a year.

As part of these new financial aid plans, both Yale and Harvard require that students contribute between $2,500 and $4,000 of their own funds, earned through a part-time or summer job or both, in addition to their parents’ 10-percent contribution.

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