Northwestern University has announced an adjustment to their current aid policy but is taking a different approach than many of its peers. They have announced that loans will be replaced with grants for “undergraduates with the greatest financial need” starting Fall 2008. What the phrase “greatest financial need” means is not defined. Northwestern’s position is that it is more equitable to keep the term undefined since there are some families with higher income that may have unusual expenses such as high medical bills or the need to care for grandparents. Northwestern will also be capping subsidized Stafford and Perkins loans at no more than $20,000 for 4 years.
I am uncertain how Northwestern’s policy will work since there seems to be an internal inconsistency. Most students who qualify for subsidized Stafford and Perkins loans qualify for such loans because of low family income. If these students don’t qualify for loan replacement, and they presumably won’t since their loans are capped at $20,000, then who exactly will qualify for Northwestern’s new loan elimination policy? Student’s with family income below $10,000 or $20,000? Frankly, as a counselor advising students on what colleges to consider, where financial aid is one of the considerations, I am not at all confident that this change at Northwestern will have any practical effect on financial aid for most students. Given the substantial size of Northwestern’s endowment, that is unfortunate.