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Davidson college dropping loans

PackMomPackMom 7650 replies17 threads Senior Member
edited March 2007 in Parents Forum
This was in our newspaper this morning:

"Davidson College will announce today that it will no longer offer loans in it's student financial aid packages, partly to attract students who shied away from applying to the school because of it's costs.

"Starting this fall, students eligible for aid will receive bigger grants to make up for lost loans. Families may still take out personal loans if they want, but the school won't require them."

"About 33 percent of Davidson students receive need-based aid, but officials said that number could grow under the no-loans policy if more lower-and middle-class students apply to the school. Students will pay $43,520 in 2007-2008 for tuition, fees,books, travel adn other costs."

"Davidson has worked in recent years to curb costs for families including capping loans to $3000 per year. But President Robert Vagt and others say the school is not as accessible now as in the past."

"I don't want to say that we looked at the student body and said 'Oh my gosh, this isn't the mixture we like,' Vagt said. "We said if we want to maintain the diversity of the student body, we need to be much more proactive."

"The program will cost roughly $1.8 million a year for the roughly 35 percent of students now on aid. Vagt says tuiton won't be raised for the program The school plans to cancel loans for current Davidson students who will be at the school this fall, as well as in-coming classes."

"But leaders expect the number of needy students to grow. Should 40 percent of students need aid, it would cost about $3.5 million a year, Vagt said."
edited March 2007
19 replies
Post edited by PackMom on
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Replies to: Davidson college dropping loans

  • asteriskeaasteriskea 938 replies272 threads Senior Member
    PackMom, could you kindly provide a link to the article? I also posted a link to the Inside Higher Ed. article on the Davidson forum as well as on the colleges rethinking aid thread - the article discusses the new financial aid policy in the wider context of Hamilton's decision to drop merit aid as well as demographic factors affecting application pools.

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  • PackMomPackMom 7650 replies17 threads Senior Member

    This is the link but when I tried it it didn't seem to work for me. If it doesn't work for you just try charlotteobserver.com
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  • asteriskeaasteriskea 938 replies272 threads Senior Member
    Thanks, PackMom. I found the article and this link works for me:

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  • MarathonMan88MarathonMan88 1269 replies52 threads Senior Member
    In addition to the benefits to the institution in drawing more applicants; and the immediate financial benefits to low- and mid-income students who receive the no-loan packages, there's an additional, significant angle to this that never entered my mind:
    Robert F. Vagt, Davidson’s president, said it was also important to send a message to those who enroll about their post-graduation options. In the last year, he said, he has heard from at least six seniors who told him that they wanted to be teachers or work for a nonprofit group or take some socially valuable, but financially not so lucrative, job. “They are telling me, ‘I can’t afford to do that,’ ” Vagt said. “Debt is affecting students’ choice of careers,” he said.

    By combining the need to attract low-income students with the goal of encouraging all students to consider service-oriented jobs, Vagt said, “this is the right thing to do.”
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  • northeastmomnortheastmom 11939 replies440 threads Senior Member
    If they were limiting the loans to 3,000 per year (as indicated from the articl in post #1) for a total of 12,000 in debt, graduates could not go into teaching? Hmmmm, I think that they must have had more debt, or this does not make sense to me. It is interesting, now no loans is the right thing to do. Last year, many parents and schools stated that loans meant taking responsibility for one's education. I guess that I am still a cynic. I did see the president of Davidson on TV this morning. They are getting some very nice press. I think that they will receive record apps next year.
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  • standrewsstandrews 1343 replies22 threads Senior Member
    "I think that they must have had more debt, or this does not make sense to me."

    The article states the $3000 limit was for last year only. Prior to that it was $4000 freshman year increasing $500 per year after, meaning that a graduate had up to $19,000 (including intestest?) upon graduation. Here's an email sent to alumni.
    Throughout Davidson’s history, alumni have demonstrated their conviction that the educational experience they cherish should be within the grasp of any qualified student. This has never been more evident than in the last twenty years, when nearly 400 new scholarship funds were created, most of them by alumni. Nevertheless, as costs have increased, a major barrier for students and their families continues to be the burden of debt they must incur to cover college expenses.

    I am writing to tell you that students of Davidson College will have their demonstrated financial need funded entirely by grants and student employment, beginning in August 2007. The Trustees of the college unanimously adopted this new financial aid policy, which eliminates loans from all financial aid packages. Davidson will maintain its strict commitment to practicing need-blind admission.

    The Trustees believe that this action is the necessary response to the financial situation facing many applicants and their families, and that it is consistent with a core value of the college—that a Davidson education should be affordable to all students, regardless of means. The college family’s longtime support of financial aid provided a platform of both leadership for and confidence in this historic change in policy.

    In order to allow students to graduate from Davidson debt-free, the Trustees identified and committed the immediate funding needed to initiate this policy, while formally committing to a strategy for raising new monies to endow the program. Tuition increases will continue to be reserved solely for the improvement of the educational and residential experience of Davidson students.

    In taking this stand for affordability, the Trustees considered the passion for accessibility that alumni have made clear. They extend their hand today in partnership with the entire college family to share the responsibility for opening Davidson’s doors to students who formerly would not have even dared to apply because of costs.

    This is an historic moment for Davidson. We are the first national liberal arts college in the nation to take such an action, but it is our hope that others will follow a similar course, making affordable to any qualified student the kind of educational experience that changes lives.

    Sincerely, Bobby Vagt
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  • northeastmomnortheastmom 11939 replies440 threads Senior Member
    standrews, thanks for explaining. I still don't understand why one could not go into teaching with 19,000 in student loans.
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  • kelsmomkelsmom 16159 replies99 threads Senior Member
    northeast mom, the cynic in me says, "Because I can't afford the big house, the fancy car, the hottest cellphone, the annual cruise, AND the loans on a teacher's salary!" However, the realist in me says that what is probably happening is that students are actually taking out more debt, such as private loans, than what is actually in the FA package (that is, to pay that oft-unpayable EFC). I could be wrong, but if I am not, that would drive up the "real" debt a student has. Or the kids may be like me ... I am financially conservative & would have a cow if I owed anyone that much!
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  • northeastmomnortheastmom 11939 replies440 threads Senior Member
    kelsmom, Borrowing to pay efc crossed my mind too. I think that you are probably right. If a student is taking on the private loan, in addition to loans offered in the financial aid package, that explains the problem.
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  • hoedownhoedown 3742 replies9 threads Senior Member
    It may have been a matter of a President taking one person's (or six students', in this case) anecdote and assuming that meant it was a widespread problem. I have no doubt that there are some students who do fret about their loans, and who do limit their own career choices because of it.

    Less than $20,000 in loans may sound like a small amount to us, but if the student involved was from a poor family with few resources, that student has no safety net. The student has no one to help buy a car, purchase a professional wardrobe (both of which are needed for that first job, even a teaching job), provide a security deposit on the apartment, any of that. And that student may have a strong desire to help out by sending money home to help with younger siblings. For all of those reasons, poorer students may feel a real budget pinch, one that makes loan payments on a modest salary more daunting. That modest salary could be teaching, or something even lower-paying, possibly with dicier benefits.

    How widespread this thinking was among students at Davidson, I don't know. I have noticed a tendency in higher education (and other realms, as well) to hear one good story (or, in this case, six) and assume it represents some larger subset of students.

    At any rate, I think this is a big help for some families, and I applaud it. I'm not sure about the rationale for upper middle class families.
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  • northeastmomnortheastmom 11939 replies440 threads Senior Member
    I acknowledge that 20,000 is a significant amount of money. I just don't think that one should give up their dream to be a teacher b/c of it. I do think that much of the hesitation is b/c of greater debt that is not part of the FA package.

    My H graduated with significant debt and had little in the way of a safety net. He never went right into his own apartment. He moved back with his parents while beginning his career. He moved out 4 years later. I am sure that some students have that option, and some don't have that option. I am sure that some families will require rent from a college graduate who moves back home, and that might be appropriate too.
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  • minimini 26167 replies259 threads Senior Member
    What it really is is a "merit aid" program for top 20% kids (as it is at Princeton). The majority of those receiving the grants in lieu of loans (which were not that large to begin with) will be those in the $100-$170k income range. The idea is to prevent at least some of the admittees from accepting much larger merit aid awards at the Vanderbilts and Emories of the world, and the difference to the college will be more than made up by raising list prices.

    ""About 33 percent of Davidson students receive need-based aid, but officials said that number could grow under the no-loans policy if more lower-and middle-class students apply to the school."

    Will make no difference whatsover unless Davidson ACCEPTS them. Note there is no commitment to "increasing economic diversity". At 40% (rather than 33%) receiving need-based aid, combined with extraordinarily low Pell Grant attendees, they would remain among the three least economic diverse prestige LACs in the country.
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  • carolyncarolyn 7242 replies193 threads Senior Member
    I will add another thought: In my work, I have found that Hispanic/Latino students, and often other ethnic groups, are very afraid of taking out ANY student debt. It is often a cultural issue.

    As a result, these students frequently will not apply to or choose any school where they feel they will need to take out loans, to the point where they sometimes will choose the local community college over a great four-year university because "I don't want loans." I typically have to work very hard to convince them, and their parents, that a certain amount of student debt can not only be managable, but also an investment in their future.

    So, in that regard, and having talked with Davidson's Admissions director myself recently about this issue (and Davidson IS very interested in admitting these students), I believe Davidson when they say they are hoping to increase diversity with this move. As with Hamilton, Davidson is looking down the road to the future and seeing how the demographics of potential students will be changing.

    Now, of course, as Mini suggests, Davidson's current lack of diversity, both economic and racial, might suggest that Davidson won't be losing much by this move (they admit it will cost them about $3.5 million a year), but I, for one, think it is great that they decided to extend it to all students with demonstrated need, not just those below a certain family threshold like Princeton and Harvard.
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  • minimini 26167 replies259 threads Senior Member
    I am sure they are hoping. But who the current beneficiaries are in their pattern of admissions is very clear (as it is at Princeton).
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  • hvccgolfhvccgolf 173 replies6 threads Junior Member
    I find it ironic that a private college, after driving the cost of attending to unimaginable heights (well in excess of inflation over many years), now backtracks to ease the burden on students and families somewhat.

    Sounds to me like they finallly realized that they have pushed the pain level perhaps one notch too far, and competition from non-private schools and honors colleges is pinching their pool of applicants . This is, it would seem, the free market finally impinging on the race to the $50K+ college experience. At least at one school.
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  • LukesterLukester 452 replies39 threads Member
    We visited Davidson a few years back when DS was college searching. Loved the school (DS ultimately did not apply). I was very concerned then about the COA. Now that we are starting the search process with DD, we might look at Davidson. However, knowing what our EFC will be, most likely Davidson (even IF she was admitted) will not make the list.
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  • minimini 26167 replies259 threads Senior Member
    "Now, of course, as Mini suggests, Davidson's current lack of diversity, both economic and racial, might suggest that Davidson won't be losing much by this move (they admit it will cost them about $3.5 million a year), but I, for one, think it is great that they decided to extend it to all students with demonstrated need, not just those below a certain family threshold like Princeton and Harvard."

    Princeton did it for all students as well. Indeed, the majority of beneficiaries at Princeton are those in the top quintile. From a competitive standpoint, that was the whole point.

    At COFHE schools in general, 70% of the student populations come from the top quntile in income, and roughly 50% from the top 3%. At Davidson, those numbers are substantially higher, with 67% from the top 3%. The main beneficiaries will be those, as it Princeton, who they hope to prevent from accepting merit awards elsewhere, by providing small (even very small) grants in lieu of loans.

    While I agree with Carolyn's characterization of loan-leeriness, my experience is somewhat different from hers. The low-income students I know are much more concerned about not being able to work to contribute to their family's income, and work-study at school or summer expectations as student contribution to cost of attendance is what prevents that from happening. This is one area where Brown University and Ruth Simmons got it right, and Princeton/Davidson got it wrong - actually they got it right, just not for low-income students. They know where their bread is buttered.
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  • bluebayoubluebayou 28066 replies209 threads Senior Member
    Davidson is particularly big on community service, and makes it a "Very Important" part of their eval. Of course, that by definition excludes many low income and lower income kids -- kinda hard to volunteer when one has to work at the local supermarket to help pay family bills or buy clothes.

    Concur with mini -- this is a way to offer upper middle class families a small discount so they won't matriculate to Richmond or Emory or Vandy or Wake.
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  • TheDadTheDad ! 9905 replies323 threads Senior Member
    I've seen the debt-averse issue in another thread but to expand upon Carolyn's point, there's a difference between $15-20K undergrad debt (reasonable) and $100K undergrad debt (insane). $20K is about what I think is a prudent upper limit though evaluation of career prospects could nudge that one way or the other.
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