What has changed in 2 years since Grinnell said it would seek financial help with no credit – Higher Ed Dive | Team Cansler

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In November 2020, colleges and their millions of students were suffering from the economic sting of the coronavirus pandemic.

Colleges slashed costs after campus closures, prompting many to reimburse additional fees for services like dormitories and restaurants that support their budgets. They paid for costly COVID-19 testing and protection and provided more financial aid to students.

The budget crisis often meant it was time for austerity. But this month, Grinnell College, a private liberal arts institution in central Iowa, bucked the trend. It announced plans to provide $5 million a year to pay off loans from the participants’ financial aid packages, so that they can only rely on grants, scholarships and funds from student employment. The changes are scheduled to go into effect in fall 2021 for all applicants who are eligible for needs-based assistance.

Grinnell President Anne Harris — who joined as chief executive in 2020 after joining the college as top administrator in 2019 — formulated the policy at the time as one that would significantly reduce student debt, averaging $20,000 by the time they graduate would .

Students can still borrow if they want, and two years after the college’s announcement, the average debt load of Grinnell grads is still about $20,000, Harris said in a recent interview. The college also did not make past loans to those who had borrowed under previous financial assistance packages.

But Harris doesn’t think the no-loan approach is a failure. Instead, she said, it has reduced the need for students to work while studying at Grinnell and greatly simplified the financial aid process – winning them over as reasons to keep the policy.

Higher education experts also see value in non-credit financial assistance, which studies show can encourage enrollment for low-income students. Only a small subset of wealthy institutions can practicably enact it, however, and even then it requires careful financial management and planning, which Grinnell said is applied.

An idea from Princeton

In 2001, Princeton University pioneered observers referred to as a “radical” admissions strategy: a multi-million dollar commitment Eliminate credit from the granting of grants.

Senior executives praised Princeton, one of the nation’s wealthiest institutions, for using its foundation to steer the no-loan approach.

In the follow-the-leader trend of higher education, other institutions—first Princeton’s wealthy private peers and later prominent public colleges—began to adopt similar policies.

Now at least 20 colleges are offering financial aid packages to students that allow them to avoid debt, said Princeton last year. Many other institutions are cutting loans for students and families under certain income limits.

The benefits of credit-free policies for Princeton and these other colleges are well documented.

More than 80% of Princeton students graduated with no debt, the Ivy League institution said.

More broadly, the introduction of a no-loan program can result in an approximately 3 to 6 percentage point increase in low-income student enrollment at institutions that offer no-loan admissions. found a study from 2013.

It can also help attract applicants and reduce barriers for families who are finding it difficult to go through a stressful financial aid process, said Jill Desjean, senior policy analyst at the National Association of Student Financial Aid Administrators.

Often, many types of funding include financial assistance packages — state and federal loans, scholarships, benefit assistance and need-based assistance, Desjean said.

“For some students, it’s their first experience of debt,” she said. “Terms that you get used to as an adult – interest rates, repayment schedules, things like that – can be hard to understand, so not having credit makes things a lot easier.”

At Grinnell, administrators realized during the pandemic that they were already pumping funds into several different relief initiatives, Harris said. Grinnell paid for the students’ computers and their travel home. The college covered the costs of those suffering from food insecurity, she said.

“And then we started to realize that if we consolidate this into one big step, like we weren’t a loan, we could really make a difference,” Harris said.

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