Add Williams College to the list of schools that have repealed pledges to instill “no loan” financing programs to students. While the pledge was an altruistic one — a record number of college students are delinquent on their student loans — the truth is, colleges can’t afford to cut loans out of the tuition payment equation.
Not a lot of news is made by Williams, a highbrow, low-profile school tucked away in the rural Western Massachusetts landscape. But the move to reinstate loan programs represents a growing move toward eliminating "Cadillac" college funding programs.
At an annual tuition rate of $49,880, Williams is one of the priciest college experiences in the country. To keep students from graduating into a mountain of student loan debt, Williams was one of 40 U.S. colleges that have no-loan, or at least low-loan financial aid programs.
In essence, such programs either ban or significantly reduce loans to “hardship” students who otherwise couldn’t afford to attend Williams. The school replaces those loan programs largely with education grants and scholarships, mostly funded by university endowments.
Williams says that no incoming freshman enrolling this autumn will be impacted by the new financial aid program, but after that, all bets are off. The school does expect to still help students who come from low-income backgrounds, with aid doled out on a new, tiered financial aid formula. But for students from moderate financial backgrounds, student loans will once again be part of the college life cycle.
By forcing more students into loans, the school can redirect an estimated $2 million to help save educational programs that may otherwise be on the chopping block due to the lousy economic climate.
Williams is hardly alone in bringing the student loan back to the student body. In recent months, Dartmouth, Swarthmore and Amherst also asked college students to take on a greater financial burden in paying for school. The shift from a “no loan” sentiment couldn’t come at a worst time for high school students and their financially beleaguered parents. According to the U.S. Department of Education, the U.S. government received 15.4 million applications for financial aid through September 2009 — a 20% spike from 2008.