Claremont McKenna College, part of the Claremont consortium of colleges, has announced that they are eliminating all loans from financial aid packages and replacing them with grants. Claremont McKenna has a relatively small endowment of $475 million and it is further encouragement that the move to reduce or eliminate loans is working its way down to colleges with smaller endowments. Of course, $475 million is still a very substantial endowment but it only ranks Claremont McKenna at number 146 on the NACUBO list of 2007 endowments.

Congratulations to Claremont McKenna in making this decision even with the endowment they have.

Lehigh University in Pennsylvania has announced a new financial aid policy to help students afford the cost of and education at Lehigh. The new policy eliminates loans for students with family incomes below $50,000. For those families with incomes between $50,000 and $75,000, loans will be capped at a maximum of $3,000 each year. To help offset the decreased loan obligations those students who have loans eliminated or reduced will have their work study awards increased 25% to $2,200 per year. Finally, Lehigh will be making additional funds available for financial aid to international students with demonstrated need.

This new policy by Lehigh is exactly the sort of policy that I had hoped would start occurring after the most selective colleges starting announcing new financial aid policies. The pressure is mounting on those colleges, like Lehigh, that are just below this level of selectivity. The policy of Lehigh acknowledges that having a certain level of loan obligation on graduation is not terrible as long as the amount of the loan is not too great. I hope more colleges will continue this trend of improving financial aid for their students.

Vassar College has announced that they are eliminating all loans for students from families making less than $60,000 a year and replacing them with grants. This will effect new as well as continuing students effective this fall.

This is particularly encouraging news since Vassar, while having a substantial endowment, has less of an endowment than many of the other colleges that have recently announced new financial aid policies.

Columbia announced today that they are revising their financial aid policy. Students attending Columbia College and the Fu Foundation School of Engineering and Applied Science whose families have annual income below $60,000 will have no contribution requirement. For families with incomes between $60,000 and $100,000 families will have their expected contribution reduced. The announcement does not make clear how the contribution is to be determined for this range of incomes. Columbia also announced that they will eliminate loans from all financial aid packages.

Columbia is now the final member of the Ivy League to announce revised financial aid policies.

MIT is the latest college to announce a new financial aid policy aimed at helping students from lower income families. MIT’s new policy will provide that families earning less than $75,000 will not pay any thing for tuition. Also, students from families earning less than $75,000 a year will have all loans eliminated and replaced with grants. This new policy also provides that families with less than $100,000 annual income will not have home equity considered in awarding financial aid and all students with work study with have the number of required hours lowered.
br>MIT has historically had strong financial aid and it is good to see them further strengthening their support for making an MIT education affordable for all students.

Carleton College has announced a new scholarship program aimed at reducing the loan obligation for its neediest students. The Access Scholarship program is targeted at families with incomes less than $75,000. Under this new program, families with annual income of less than $40,000 will get an additional scholarship of $4,000 annually, families with incomes between $40,000 and $60,000 will get an additional scholarship of $3,000 annually, and families with income between $60,000 and $75,000 will get an additional $2,000 annual scholarship. Carleton meets 100% of the need for all students so this additional scholarship will go directly to reducing loan obligations.

This new program is good news for Carleton students but is less generous than the programs that have recently been announced by many of its peer colleges. Carleton is in the middle of a $300 million fund raising effort and they will hopefully be able to consider the elimination of loans once these additional funds are raised.

The March 2008 issue of University Business has an article about the 2007 Survey of Parents of College Bound Freshman which was released by Sallie Mae. What is interesting is that 35% of parents thought the college financial aid office was their best source of information on paying for college.

College financial aid offices can be a wonderful source of information on how that college handles a particular financial aid issue. For instance, when a student receives an outside scholarship does the college reduce grant aid or self help aid. However, as well meaning as many financial aid officers are, their job is to allocate limited financial resources to the students of their college. It is not to make sure that any particular student pays as little as possible.

Parents and students need to educate themselves on how college financial aid works as part of the process of choosing a college. This is not an issue to be left to the end of the process after you receive your financial aid award. And it is not an issue that they should rely on the colleges to get the critical information they need. One quick example will show the danger of relying on the colleges for your information. In this country there are around 100 colleges that state that they will meet 100% of the stated need on the FAFSA. Most of the web sites of those colleges talk about that because they know that is a strong selling point for their college. However, almost none of the other 2,900 four year colleges list their discount rate because it is not something they wish to discuss. They might tell a parent what their typical discount rate is if asked but in my experience they will try to avoid answering the question.

Most colleges do try to be fair in their allocation of their limited resources but families should not rely on that in their effort to understand college financial aid. There are a number of resources on the web that discuss this including my web page on what families should know about financial aid. For a great presentation on the issues families should know check out Get College Funding’s video.

Brown University has announced that they are putting a new financial aid policy in place which will eliminate loans for families with income below $100,000, reduce loans for all students receiving financial aid and eliminate parental contributions for families with incomes less than $60,000. This new policy will apply to all current students as well as future students. This aid policy is very similar to that recently announced by Stanford University.

I am pleased to see that Brown has joined most of the other Ivy League universities with a revised financial aid policy benefiting students. It appears that Columbia is the only Ivy League university that has not yet announced a new aid policy.

Stanford University has announced their latest enhancement to their financial aid policy. The new policy provides that families with income less than $100,000 will not pay tuition and families with income less than $60,000 will also not be expected to provide any contribution to room, board and other expenses. Further, the new policy eliminates loans for all students which will presumably be replaced by grants. The report on the new policy also mentions “other significant enhancements” that have been made to their financial aid program but provides no details.

It is wonderful to see Stanford joining their competitors by revising their financial aid policy. As a counselor it would also be nice to know what those other “enhancements” are to financial aid to completely advise students who might be interested in Stanford.

Washington University in St. Louis has announced that they are joining other highly selective colleges in limiting loans for certain families. Specifically, the college will be eliminating all loans for families making less than $60,000 a year and replacing them with grants. This is good news from Wash U since their focus in the past has seemed to be on using merit money to buy high quality students rather than seeking an economically diverse student population. The number of students receiving Pell grants, those reserved for the lowest income students, has consistently been very low, even compared to their competitors. This despite having an endowment of over $5.5 billion.

I am a proud alumni of Wash U and I hope that they continue to use their substantial endowment to enhance their financial aid to gain a more diverse student population.