On Wednesday, the University of Chicago announced its plan to eliminate student loans from their aid packages. According to the school it is part of an effort to increase economic diversity and to enroll more low-income students.
In addition to eliminating student loans from the need-based aid packages, the school announced the following:
- More than 100 free, nationwide information sessions on the college application and financial aid process
- No application fees for all families seeking financial aid
- Additional merit based and minority scholarships
The school also expanded upon one if its scholarship programs for families with limited income. Students qualifying for the Odyssey Scholarship are now guaranteed paid summer internships or research opportunities after their first year of college. Additionally, these students to not have to work on the federal work-study program, allowing them to dedicate their time to their studies.
In short, the University of Chicago is leveraging its over 6 billion dollar endowment to ensure that every family can afford to sent their child to the school.
Why is this big news?
Chicago joins a growing list of schools that have programs aimed at limiting or eliminating student loans. At present many of the premier institutions in the United States have similar programs. Perhaps the best part about this development is that there is now no truth in the statement that, “a good college education is expensive”.
The announcement of the nationwide information sessions is also huge for any student considering college. Regardless of the college you think you can afford or get into, these sessions will provide an opportunity to get advice and input from financial aid professionals who know many ways to make school affordable.
This announcement also shows a growing recognition among top institutions that student loans can be a major burden on graduates. If the ivy league schools are offering no student loan aid packages, hopefully many more schools will follow suit to remain competitive. This race to eliminate student debt benefits allow future borrowers.
Cause for concern?
University of Chicago specifically created this program to increase representation from lower income families at the school. As more colleges enact such programs, we hope in the future that families will begin to expect them from their schools.
The only potential downside here would be the danger of schools limiting the number of students with low expected family contributions. However, this risk is likely very low. First, many schools have aid-blind applications processes. Admission is based upon grades, ACT, an other factors… income is not listed. Secondly, the purpose behind these programs is to recruit lower income students to the school. To penalize an applicant for having a lower income would defeat the purpose of the program.
The Bottom Line
Graduating with student loans is a huge burden, and many schools now recognize that fact. Even if you don’t have University of Chicago or Harvard grades and test scores, there is an important lesson here. If they don’t make their students take out over 100k in student loans, why should you take out that much debt to attend any other school?