Davidson’s New Financial Aid Policy Eliminates Student Loan Debt
March 19, 2007
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.
Check out the ongoing Davidson blog on the choice to free college students from debt, and post your responses.
“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.”
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.
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.
“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.
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.
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.
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."
McCartney added, “The economic barrier is the hardest to overcome – it intensifies any other challenge a student faces when making a college choice.”
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.”
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.
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.