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Haverford’s student loan debt payment

As we begin the new year, it is a good time to consider some initiatives in higher education that deserve more attention and wider adoption. Colleges have recently introduced creative policies in areas such as financial aid, college programs, and student success. This month, I plan to highlight a few of those efforts in the hope that they will be seen as models for testing in other institutions. The first is the Haverford College student loan repayment program.

Haverford College introduced a new financial aid program, which pays the first year of loan obligations for students in its class of 2019. According to report by Inside higher education (IHE), under the new program, 12 Haverford graduates (out of a total of 318) will be the first to receive debt relief, ranging from $ 900 to $ 1,500 each. They will also be able to request two additional years of loan repayment.

Here is the institutional context of the Haverford initiative. It follows earlier college decisions to 1) waive the promise that its students would not have to take out loans to pay for their education and 2) end its unnecessarily admissions policy and admit a small number of students in part according to their abilities. to pay.

The college still promises students from families earning less than $ 60,000 a year that they won’t have to take out loans to pay for their education. Those who earn more may need to take out loans, but they should still be less than what is allowed within federal limits. According to IHE, Haverford borrowers average about $ 13,600 in loans.

The end of the no-loan policy went into effect for first-year students enrolling in 2015, expecting to graduate in 2019. In the breach came Steven M. Jaharis, a board member of Haverford administration, whose family foundation donated $ 2 million to endow a fund that would help pay off graduate debt.

Cited in IHE, Jaharis said, “Everyone on the board was disappointed when we couldn’t maintain the no-loan policy. I felt we needed to let the students know that we care about this issue and that it is a big deal.

Haverford’s reimbursement program has several requirements.

  • Recipients must be eligible for financial assistance based on need.
  • They may not have access to other loan deferral options, and they must be unemployed or on a “low income trajectory due to choice of occupation”.
  • The new endowment will cover loan payments only up to the amount a student could borrow under Haverford’s financial aid policies. In other words, repayments are capped – if students borrow more than what the college recommends, they won’t be covered for the “excess” amount.

The Haverford program could become a form of financial aid to emulate for other institutions, albeit with adjustments tailored to the unique circumstances encountered in specific schools. As the most obvious example of the importance of the institutional context, the average debt of Haverford graduates in 2019 was just under $ 14,000, less than half the obligation of the typical bachelor who takes out student loans.

However, the benefits of the program are manifold.

  • Loan repayments are only made for graduate students, thus providing – unlike scholarships – a strong incentive for college completion;
  • Annual reimbursement amounts can be funded from small endowments, making program subscription accessible to more donors;
  • Limiting repayments is a useful constraint for students who borrow more than they need to cover their studies;
  • The criteria are of particular benefit to students who wish to enter occupations which may not be highly remunerative but which serve an important public interest.
  • The possibility of extending loan repayments for a second and third year is part of a process of permanent contact between the alumni and the college.

It remains to be seen to what extent other institutions will adopt the Haverford model, but the idea has several clear merits as a complement, if not a substitute, for institutional support. This is another example of how even relatively small amounts of aid can make a big difference when based on financial need and available at the right time.

Then, in Part 2, the University of Rhode Island faces budget cuts by investing heavily in student success.

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