- A growing number of colleges are removing student loans from financial aid packages, offering grants instead.
- Colgate University, for example, is offering grants to students with family incomes under $ 150,000.
- Only a small number of schools have taken those steps as the student debt crisis continues to grow.
A growing number of colleges are taking the $ 1.7 trillion student debt crisis into their own hands by making it impossible for students to take out loans in the first place.
Colgate University, a private college in New York, recently announced it’s using its $ 1.3 billion endowment to make a four-year education significantly more affordable for students. The university launched an initiative that would make Colgate tuition-free for students with an annual family income of less than $ 80,000, and for students with family incomes of up to $ 15o, 000, they will not have to take out student loans to pay for their education – they will be offered grants, instead.
“We have a $ 1.3 billion endowment for a relatively small school,” said Colgate University President Brian Casey told Yahoo Finance. “We have very strong alumni support. So we went to our alumni and said: ‘We want to start taking away student loans.'”
Smith College, a private school in Massachusetts, announced last week an initiative to eliminate student loans from its undergraduate financial aid packages for students receiving need-based grants. And for students with expected family contributions of less than $ 7,000, they will receive one-time “start-up grants” of $ 1,000, along with their financial aid packages.
“Eliminating loans from our aid packages also aligns strongly with our institutional commitment to racial justice and equity — given that, on average, Black and Latina / o students, at Smith and across the nation, graduate with more student debt than their peers,” Smith College President Kathleen McCartney wrote in a letter.
Princeton became the first university in the US to replace loans with grants that do not need to be repaid in 2001, with schools like Amherst, Harvardand Yale launching similar initiatives in the following years.
While these actions are a promising sign for college affordability, only a small number of schools are eliminating student loans from their financial aid packages as the student debt crisis continues to grow nationwide. Insider previously reported on college’s using President Joe Biden’s stimulus money to wipe out student debt for their students, but that is only a temporary fix. Many borrowers are still trapped with student debt for decades after graduating, with some fearing they will die with their loans.
In the meantime, lawmakers are calling for Biden to cancel student debt broadly. Biden has so far canceled $ 11.5 billion in student debt for targeted groups of people, like borrowers with disabilities and those defrauded by for-profit schools, but he has yet to fulfill his campaign promise of $ 10,000 in debt cancellation per borrower.
Meanwhile, some Democrats, like Massachusetts Sen. Elizabeth Warren, want the president to go even further and cancel at least $ 50,000 in debt per borrower.
“Cancelling $ 50,000 in student debt would completely wipe out student loans for 84% of borrowers, including more than 3 million borrowers who have been repaying their loans for more than 20 years,” Warren told Insider. “This is the single most effective executive action President Biden could take to jumpstart our economy and begin to narrow the racial wealth gap.”