Davidson College announced last Monday it plans to eliminate loans from its financial aid packages next August in favor of more grant and federal work-study money, The Chronicle of Higher Education reported. AU interim Provost Ivy E. Broder said AU was not considering a similar move at this time.
With an endowment of nearly $422 million as of June 2006, Davidson College, located in North Carolina, will join a growing number of schools, including Princeton, the University of Virginia and the University of North Carolina at Chapel Hill, dedicated to using more gift-based aid to lessen the burden of student debt at graduation, the Chronicle reported.
The first college of its kind to eliminate loans altogether, Davidson will need an estimated $3.5 million per year to fund the program, school officials told CNN. While soliciting donations, Davidson hopes to front the costs with its reserves and private trustee donations, the Chronicle reported.
Christopher Gruber, vice president and dean of admissions and financial aid at Davidson, said the goal was to cover 100 percent of a family's financial need with grant money and work-study. Citing the school's nearly $30,000 tuition cost, Gruber said he believed students made their college and career decisions with their financial situation in mind.
He added, along with the trustees, that he was very confident in Davidson's ability to raise the funds needed to endow the estimated $70 million program.
"We've had multiple fundraising campaigns over the last few years for a variety of programs and 85 percent [of the funds] came from graduates and college families," Gruber said. "It's the first group we're going to consider."
Broder said in an e-mail that attempting a similar program at AU would be financially unfeasible, considering AU is triple the size of Davidson and already provides an estimated $80 million in institutional need-based aid.
"The loan commitment for AU undergraduate students would be over $14 million annually," Broder said in an e-mail. "We would have to divert that amount from our existing budget or raise tuition even higher to cover it"
Broder also said fundraising for a program similar to Davidson's would complicate AU's campaign to renovate the School of Communication and rebuild the School of International Service.
Broder did say that reforms to AU's need-based aid system were in the works.
"For the [2007-2008 school year], we are committing an additional $1.4 million annually to support the neediest of our students," Broder said. "We will provide these additional need based grants from income we generated in our School as Lender program," a policy, Broder explained, that "returns loan proceeds to students in the form of need based grants and loan fee reductions."
Yet, Rachel Monnin, a freshman in the School of International Service, said she thinks the school could do more.
"I think increasing grants and work-studies is a fantastic idea," Monnin said. "I wouldn't be here if I didn't receive a generous financial aid package. I think AU could definitely up its fundraising and [ask] alumni for more."
Brenda Lipton, a freshman in the College of Arts and Sciences, said she felt any program that helped students reduce their debts would increase the amount of students able to attend AU.
"I think it would be good for AU to try a program [like Davidson's] because people spend their whole lives paying off loans," Lipton said. "A lot of people I know really wanted to come to American and couldn't because it cost so much. I don't think AU is doing a good job helping students currently in debt."
Of the students at AU who received need-based aid in the 2005-2006 school year, AU Financial Aid met 75 percent of those students' financial needs, according to AU's Office of Institutional Research and Assessment's Web site. The average need-based package in 2005-2006 was $24,563, the Web site also reported.
