College Goes No-Loans

When acceptance letters went out for the class of 2012 earlier this week, Swarthmore did not ask a single student to take on loans. And next year, one third of Swarthmore’s population will receive much higher grants. Swarthmore has decided to do away with loans for students on financial aid.

“The decision was made this past weekend,” said College Vice President Maurice Eldridge ’61. “We didn’t go into the meeting expecting to make the decision, but it just happened. We leapfrogged our planning.”

It is a massive change to Swarthmore’s financial aid program. Dropping all loans will cost the College roughly $1.7 million every year, which amounts to a 8.5% increase in financial aid spending. The College currently spends $20 million every year on financial aid.

The last change of similar magnitude was in 1998, according to Dean of Admissions and Financial Aid Jim Bock ’90. It was then that the College made the Swarthmore Scholars program no-loan. This new decision is still unique in its sheer size. “There hasn’t been another change that has affected this many people,” said Bock.

The change will affect the 2/3 of the students receiving financial aid who currently receive loans—a total of nearly 500 students. On average, these students have loans of roughly $12,000 according to Bock.

“Our cap on loans is going from $15,000 to 0,” said Bock with a big smile.

It is not clear why the Board decided 2007 was the year to make the change, but it was probably a combination of pressure from other peer schools–Davidson, Amherst, and Williams all have gone no-loan in the past year, and Harvard went no-loan on Monday–and a strong feeling among Board members that the change was simply the right thing to do.

“We’ve always been one of the leaders in how we give out need-based aid,” explained Bock. Swarthmore will be the sixth college to have eliminated loans–Princeton was the first, followed by the four mentioned above.

Eldridge mirrored Bock’s comments. “The Board was motivated by its principles, and the fact that Swarthmore has always tried to be really accessible,” he said. “There is a perception that [Swarthmore] is impossible to afford or that debt is very scary.”

The ongoing planning process helped set the stage for the change, as the College is still engaged in the Middle States Review process.

The next big question is how to raise the estimated $40 million required to endow this change in perpetuity. Eldridge thought it would be a challenge, but noted that financial aid is a relatively easy program to raise money for.

“Among all the things the college raises funds for, financial aid is the most popular, along with faculty chairs,” he said.

After this monumental decision, where does Swarthmore go next? Bock is clear what his next target would be: “We aren’t need blind for internationals.” Still, he is heartened to know that the decision to go no-loan will have a big impact on current international students. “Few internationals are in the current group of no-loan students,” he revealed.

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0 comments

  1. 0
    Aaron Schwartz '09 says:

    Williams went no loans on November 1st and Amherst went earlier on July 19th. I just don’t think there’s any way we could have maintained equal footing in the “top three” without making the change. We would have stuck out. Harvard’s changes were more comprehensive, and not only about loans.

  2. 0
    Mark Lewis '10 says:

    Dear Bemused,

    In response to your question about returning students, here’s information from the new section of the Financial Aid website explaining the change:

    I’m already at Swarthmore and receiving financial aid. Will my 2008-09 aid award be loan-free?

    Yes. All aided students will receive this benefit, our incoming students as well as our continuing students, beginning with the 2008-09 academic year.”

  3. 0
    George says:

    Harvard is somewhat of a competitor I think. I know I was trying to decide between Harvard and Swarthmore at the end. Although you are right that Williams and Amherst probably are more in direct competition.

  4. 0
    Admissions? says:

    Actually….

    Our applications overlap with Harvard more often than they overlap with Williams/Amherst, despite the fact that they’re liberal arts.

  5. 0
    Alex says:

    Great article. Keep up the good work! I think it’s a great step for the school to take. I’m interested to see how the fundraising for this works out.

  6. 0
    Miles Skorpen ( User Karma: 6 ) says:

    I don’t think this was in response to Harvard, since both decisions were probably made this past weekend. More, it may have been partially in response to Williams/Amherst, since they are more of our competitors than Harvard is.

  7. 0
    Lauren Stokes ( User Karma: -1 ) says:

    Of course, the question on my mind is: does this mean that I will not be expected to take on loans in the time that I have left at Swarthmore.

    That is indeed what it means, bemused.

    Other schools, besides Harvard, that made big financial aid policy announcements over the past weekend include Duke, Cal Tech, and Pomona. And the Yale student newspaper is flipping out about the fact that they got beat to the punch, and promises to “up the ante.”

  8. 0
    Bemused says:

    It is patently obvious that this is a response to Harvard’s decision to make its expected contributions much lower for all but the wealthiest students. There would have been no competition for Harvard from Swarthmore without this move. This is not about the closest peer schools; it’s about Swarthmore’s delusions of grandeur.

    Of course, the question on my mind is: does this mean that I will not be expected to take on loans in the time that I have left at Swarthmore. It would certainly seem inequitable, or at least rather arbitrary, to do this for new but not returning students.

    Also, this certainly lends credibility to last year’s propaganda about already overwhelming budgetary pressure, particularly in light of the impending recession, which will reduce the return on the endowment.(-;

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