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WSJ: Colleges Cut Debt, Eliminate Loans
Colleges are moving to eliminate -- or at least ease -- student debt as pressure builds in Washington for them to spend more from their endowments to help families afford the rising cost of school.
This month, Williams College announced that it will eliminate loans from all financial-aid packages beginning next school year and replace them with grants. Amherst College recently announced a similar initiative. And Davidson College in Davidson, N.C., began this fall replacing loans with grants and student employment. Other schools are stopping short of getting rid of loans entirely, but are still finding new ways to minimize debt, at least for some students. Colby College, a private college in Waterville, Maine, announced this month that it will eliminate loans for Maine residents starting next fall. Beginning with next year's freshmen, Wesleyan University in Middletown, Conn., will eliminate loans for its neediest undergraduates and reduce debt by an average of 35% for all other students on aid.
One of the interesting points comes later, where the article suggests that this is a zero sum game at most colleges, describing how colleges are funding these no-loan FA packages:
To finance the new aid initiatives, some schools, such as Williams and Stanford, are reaching into their endowments. But plenty are hoping not to have to dig too deep: Wesleyan is curtailing nonacademic spending, cutting back on certain administrative positions, and raising new funds. Davidson is planning to raise $70 million from alumni and other benefactors. Colby received a sizable donation that allowed it to kick off the initiative, and plans on raising additional funds before having to reach into its endowment.
Some Colleges Cut, Eliminate Student Debt - WSJ.com
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