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Williams Ends No-Loans Financial Aid Policy

As predicted here, interim President Bill Wagner sent out a letter about decisions made at last week’s trustee meeting. The entire letter is below the break. Biggest news:

Williams is ending its no-loan policy.

It now seems prudent to reintroduce modest loans for some aided students, beginning with the class that enters in the fall of 2011. No current students will be affected; neither will those who enter this fall. As before, families below a certain income, and with typical assets, will not be expected to borrow at all. Others will be offered loans on a sliding scale up to a maximum size that will again be among the lowest in the country. After four classes have entered through this program, it will make available about $2 million per year.

Shocking and depressing news. Comments:

1) Note how the College buys off current students. If there really are any students interested in demonstrating some leadership when it comes to economic equality, they should fight this issue hard. Contact me if you want advice on how to challenge the powers-that-be. Williams could/should still cut millions of dollars from its budget. Why not make those cuts first before making this change?

2) If there are about 1,000 Williams students on financial aid, then this would suggest that each of them is taking out a loan of $2,000 each year, for $8,000 total over the course of their education. But some (many?) students will not be expected to take out loans. So, I expect the number to be closer to $2,500. Before Williams went no-loans, I think that the maximum expected amount over four years was around $12,000. So, this represents an improvement.

3) Now that Williams has made this change, you can bet that Amherst (and other schools?) will follow. Indeed, do you think that there were any discussions across schools ahead of time? Overlap anyone . . .

4) I am shocked that Williams would make such a change for such a (relatively) small dollar payback. $2 million per year is not a lot, in the context of the College’s total budget. And it sure seems that reversing this policy sends an unfortunate signal about what Williams really cares about. It would not be hard to gather stories from the graduates of 5 or 10 years ago about how having thousands of dollars of debt after Williams shaped, in unfortunate ways, their career choices.

5) Who is to blame? The faculty. When push comes to shove, they would rather maintain their various boondoggles like the Bolin Fellowships instead of allowing all Williams students to graduate debt free. On the good side: At least the rich kids will still graduate without any debt!

6) Sending this letter out in the middle of Dead Week, and a week after the Trustee meeting ended, is interesting. Had the Trustees not really decided everything as of last Sunday? I doubt it took a skilled writer like Bill Wagner a week to write this. I also doubt that it was specifically released while most students were away.

7) Running against this change would provide an interesting platform a two College Council co-president candidates, especially ones campaigning as outsiders.

Entire letter below. Full commentary later.

To the Williams Community,

I would like to bring you up to date on the process, both on campus and with the Board of Trustees, of determining the College’s next financial steps.

We are operating in unsettled and, for us all, unsettling times. I admire and thank all of you who have been rising to the occasion by adjusting to new ways of doing things and planning creatively how Williams can best adapt to these new circumstances.

Our situation, described in detail at http://provost.williams.edu/?page_id=182 , is best summed up in the conclusion that “Williams is in a strong financial situation by virtually any comparison—except with the Williams of three years ago.”

Over that time, the value of our endowment dropped by $500 million and there is no reason to believe that it will grow at anything like the unprecedented rate that it did in the fifteen years before the market crisis. Meanwhile the annual cost of financial aid increased by $16.2 million and gifts slowed, as expected in a recession.

The College’s focus is on adjusting to this new reality in ways that protect our core academic mission for the long run, keep Williams widely affordable and accessible, and value the great dedication of our faculty and staff.

As we move toward that goal, here is where things stand on several issues.

Construction Projects

The Trustees have re-affirmed both the importance of the Library and Weston Field projects and their current programs. Since prudence dictates not starting them in 2010, we will use the extra time to advance the projects’ financing and the resulting structures’ sustainability and adaptability for possible future changes in patterns of use, with the goal of beginning construction in the 2011-12 academic year.

Financial Aid

Making a Williams education available to students from all financial backgrounds has long been among our deepest values. That is why our expenditures on financial aid have tripled in the last ten years (from $14.6 million in 2000-01 to $43.7 million in 2009-10) and why financial aid was the only item in our budget to increase this year as it will be in the next. The continuous review of our aid policies is among the most careful of the College’s long-term deliberations. In recent years a focus of those discussions has been on determining appropriate loan levels.

Our loan expectations were already among the lowest in the country (and zero for the lowest-income students) when we eliminated them for all aided students beginning in 2008-09. It now seems prudent to reintroduce modest loans for some aided students, beginning with the class that enters in the fall of 2011. No current students will be affected; neither will those who enter this fall. As before, families below a certain income, and with typical assets, will not be expected to borrow at all. Others will be offered loans on a sliding scale up to a maximum size that will again be among the lowest in the country. After four classes have entered through this program, it will make available about $2 million per year.

Our financial aid program will continue to be one of the most generous anywhere, as it should be, and we are convinced that Williams will remain financially attractive to aided students at all levels of income.

Structural Reorganization

The College has no plans to reduce the salaries of current faculty and staff. To hit our spending targets for the coming years, we will, however, have to spend less on compensation, which currently accounts for 62.5% of our spending outside of financial aid. As the College’s financial strength grew substantially over the decade leading up to the global economic crisis, so did our number of faculty and staff, to levels among the highest compared with similar colleges. The challenge is to reduce these numbers somewhat, in a way that honors the commitment of our remarkable faculty and staff.

We have realized savings by not filling many open positions, and while that process will continue, it will not by itself bring us to sustainable levels. We therefore anticipate offering to faculty and staff some form of retirement incentives, the details of which will be worked out in the coming months. Operating with somewhat fewer faculty and staff will require further thoughtful planning on what departments, programs, and offices can and cannot do and how we can reorganize to maximize efficiency. That planning will engage representatives of the whole campus community.

The key to the College’s current planning is adaptability, a trait that has served Williams well through its history. In our current situation, this means reducing our spending so that we can return as soon as possible to where, if capital markets remain steady, our operations can stabilize and rebuild momentum from their new, smaller base.

I know how hard it is to hit challenging spending targets and to alter how we work (and even how much we work) because of faculty and staff positions left unfilled. Thank you for your dedication and flexibility. I am grateful to the Trustees for their wise counsel and for the patience that enables us to plan thoughtfully. I appreciate the sacrifices that families make to pay for their children’s Williams education. And I am encouraged by the engagement and ongoing support of our alumni, parents, and friends, especially at this key moment.

For these reasons and more I am confident that this period will be looked back on as another in which Williams adapted to its times with care, foresight, and a shared sense of purpose.

With regards,
Bill Wagner
Interim President

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#1 Comment By Brandi ’07 On January 31, 2010 @ 7:32 pm

This is neither shocking nor depressing.

I suggested this a long time ago. Like the day after it was announced.

They’re federal loans. They have pretty low-interest and they are incredibly flexible about allowing you to defer or make reduced payments.

Welcome back to the the real world of most college alumni on financial aid, kids.

This won’t really hurt the college that much in the long run. It’s still a sweet bargain for financial aid.

#2 Comment By Ronit On January 31, 2010 @ 8:02 pm

@Brandi – they’re not all federal loans. My student loans from Williams are private.

I would hope that Williams would put a hard cap on the max amount any student would be expected to borrow. This cap should be not much higher than $10,000

I would also hope that other top tier loan-free schools are not going to follow suit, and that this decision puts Williams at a competitive disadvantage.

#3 Comment By JeffZ On January 31, 2010 @ 8:31 pm

The continued reduction in staff and faculty is also big news. I would HOPE this would come more from staff than faculty … it seems like there is probably some administrative bloat that could gradually be phased out, but each professor eliminated = fewer class offering / bigger class sizes. Williams has a slightly lower student:faculty ratio than its peers right now, so it’s not as if it would be at a disadvantage to pare back faculty a little, but frankly, I’d rather see almost anything else cut.

I was also encouraged to hear the creative rethinking of the construction (including library) projects, to me multipurpose use sounds like, we realize all this space may not always be needed to house huge amounts of books on campus, so, if things change in 10-20 years, let’s make sure the space is easily convertible to other uses … and I’m also glad to hear they are planning to start them in 2011-12. It’s actually nice that the college has had a few years breather from all the construction, but at the same time, both of these projects are crucial to the college’s future and need to move forward. By that time, the college SHOULD be in the quiet phase of the next fundraising drive (I believe) so there exists a good prospect of getting some big donations to help spur the projects forward ..

#4 Comment By Parent ’12 On January 31, 2010 @ 8:35 pm

It’s really too early to say much about the change.

I would think the main issue is how easily the alumni can repay their loans and the types of loans that will be offered, e.g. is principal deferred (or forgiven) and under what conditions.

Also, the college might be able to put a positive spin on this. For example, my guess is that the upper income range for families eligible for aid is much higher than the last time loans were offered. It could be that for a family at the upper range with a small aid offer, say less than $2000 per year, the $2000 would be in the form of a loan. It might also mean that financial aid only in the form of a relatively small loan would be offered to families with incomes higher than the current upper limit, so that the college could say that they offer aid to families with incomes over $200,000 or some other amount higher than the present one.

#5 Comment By Brandi ’07 On January 31, 2010 @ 8:57 pm

Okay, well, I’m guessing the majority of American students on financial aid are getting federal. And it’s still a good deal even if they are private.

Even if other top schools don’t do it, I don’t think it’s going to put Williams at as big of a disadvantage as people seem to think. There aren’t that many spots and a lot of great students.

We’ll be fine.

#6 Comment By Parent ’12 On January 31, 2010 @ 10:09 pm

@Brandi ’07:

It’s really hard to predict about disadvantage in relation to schools with no loan policies. I would guess the group it would impact the most are the families in the middle. Assuming peer schools, as far as entrance statistics (GPA, SATs, etc.), and one has a choice between some debt vs no debt, the student and family have to weigh what they’re getting by incurring debt. Who knows what the sliding scale will be for the loans.

#7 Comment By Brandi ’07 On January 31, 2010 @ 10:52 pm

Okay, there aren’t that many elite colleges and there are a ton of kids. Really, the impacts aren’t going to be that bad.

#8 Comment By Parent ’12 On January 31, 2010 @ 11:05 pm

@Brandi ’07:

Yes, there are a ton of kids that Williams and other schools would want, both who apply for financial aid and those who don’t. Again, it’s hard to predict what will happen. For example, if someone offered financial aid with a loan chooses to go elsewhere, will that person be replaced by someone not requesting financial aid.

#9 Comment By frank uible On January 31, 2010 @ 11:05 pm

Old subject – predictable and indicated action of small effect – stale comments – done deal – ho,hum – what was the ball score yesterday?

#10 Comment By Ronit On January 31, 2010 @ 11:53 pm

@frank uible: small effect for the college’s budget, not a small effect for the students.

#11 Comment By ce On February 1, 2010 @ 12:45 am

Parent ’12–

1. How many schools are no loan right now?

2. How many of those do you think will be no loan next year?

3. How many of these, even with no loans, offer comparable financial aid packages to Williams? –Remember that simply being “no loan” doesn’t mean that you’re more generous than a school that gives out loans.

4. Now, how many cross admits between Williams and those schools choose to go to Williams every year? Keep in mind that these schools we’re talking about are likely Harvard, Yale, Princeton…etc.

My guess is that given all of the above, Williams will lose a handful (5, 10 at most) of students to Harvard/Yale/Princeton a year given the change in policy. While this is unfortunate, I can’t say that 5 would-be-Ephs now at Harvard every year replaced by 5 new admits who would otherwise be at Middlebury/Wesleyan/Brown/etc is a huge loss–it’s certainly not worth 2 million/year to keep those students.

Now, is it worth 2 million a year to reduce the debt burden of Williams grads? Maybe…I personally don’t think so, but that’s a stronger argument.

#12 Comment By frank uible On February 1, 2010 @ 12:53 am

As an alum, I’m interested in preserving and advancing the College as a whole. As far as I’m concerned, each student will have to find his own momma.

#13 Comment By David On February 1, 2010 @ 8:39 am

1) Inside Higher Ed mentions this story, but with no link to their source. Unprofessional! The letter is still not up at the College’s site, so where did Inside Higher Ed get this information if not from EphBlog?

2) Can anyone clarify exactly how loans worked just 3 years ago, right before Williams instituted the no-loan policy? Were most loans from the Federal Government or from Williams or some combination? I would like to understand the details here.

3) Will Slack ’11 has also posted the letter, but with no commentary. Come on, Will! Give us the inside scoop . . .

#14 Comment By rory On February 1, 2010 @ 9:42 am

If this is a targeted loans-policy (that is, only those on the upper extreme of the aid pool are receiving loans), then this seems like a reasonable policy change. Replacing five or ten students who opt to go to one of the few no-loans schools (or giving them a no-loan package when they call to negotiate…) is not hard for williams. And those no loan schools are pretty damn good, so it’s not like those students are hurt.

It’s only a student who doesn’t have a no-loan school + gets hit with these 2000 in loans that might seem to be really hurt…but how many are there and how much does that family need?

Anyway, considering David’s continuing claim that he respects and admires the williams faculty, lines like this seem to show a very different side of David’s actual views of the faculty: “Who is to blame? The faculty. When push comes to shove, they would rather maintain their various boondoggles like the Bolin Fellowships instead of allowing all Williams students to graduate debt free. On the good side: At least the rich kids will still graduate without any debt!”

I’m not sure which seemed more disingenuous when I read it, his comments about the faculty or his sudden turn into a class warrior?

#15 Comment By David On February 1, 2010 @ 9:54 am

If this is a targeted loans-policy (that is, only those on the upper extreme of the aid pool are receiving loans), then this seems like a reasonable policy change.

It’s not. Did you read the post? There is no way to raise $2 million per year without a) Forcing hundreds of Williams students to take out loans and b) Having those loans be for thousands of dollars.

Replacing five or ten students who opt to go to one of the few no-loans schools (or giving them a no-loan package when they call to negotiate…) is not hard for williams. And those no loan schools are pretty damn good, so it’s not like those students are hurt.

Huh? The main issue is that, come 2019, about half the graduating class will owe $10,000 or more in loans. The issue of what effect this will have, if any, on who chooses Williams is secondary.

but how many are there and how much does that family need?

Do the math. To raise $2 million per year, we must be talking about hundreds of Williams students, the vast majority of whom do not have a no-loan option.

lines like this seem to show a very different side of David’s actual views of the faculty

Are you familiar with the concept of nuance? It is possible to believe that a) the Williams faculty is wonderful and does some amazing teaching and b) the Williams faculty is less concerned than it ought to be with saddling hundreds of students with thousands of dollars in debt.

#16 Comment By Jay On February 1, 2010 @ 9:55 am

I graduated just before the no-loans policy went into effect – a year before, I believe.

During my college years, my parents made somewhere around 45k combined. With a standard work-study job and one study-abroad semester, I graduated with around $4,900 in loans, which were very low interest federal loans.

Working a standard “professional” (not finance) job in a big city, with pricey, but not the priciest rent, I was able to pay that off in a year.

This really wasn’t a burdensome amount of loans. On a philosophical level, I’m happy to pay for part of my education. Compared to the loans that some drop-outs from low level state schools can get saddled with, I’m tremendously fortunate. $4,900 is a pittance compared to what some people graduate with.

But everything is relative, of course, and while that isn’t a lot of money, someone who graduates with no loans is slightly better off than me. I don’t have financial support from my parents, so my loans are my loans, and it would have been nice not to pay them.

I hope this policy just affects those at the upper-end of the finaid spectrum, but even if it doesn’t, thankfully whatever loans students are forced to take at Williams are still incredibly low.

#17 Comment By David On February 1, 2010 @ 10:00 am

Jay,

Thanks for the details. Could you tell us a little bit more about the process, both for you and your peers? I am especially curious if virtually everyone had the same standard set of federal loans and which loan programs exactly were used? I am also curious about how loans are handled for international students.

Also, was Williams, at that time, making any direct loans to students?

#18 Comment By JeffZ On February 1, 2010 @ 10:01 am

David, re: the citation issue, didn’t hundreds (if not thousands) of people receive this letter? isn’t it more plausible that one of them (or equally plausibly, someone in the administration who wants to maintain good relations with an influential publication) passed on that letter to someone who workes for the Chronicle than the Chronicle trolling Ephblog on an hourly basis looking for material?

#19 Comment By David On February 1, 2010 @ 10:07 am

Jeff: Yes, two thousand people or so got the e-mail. But Inside Higher Ed still has a responsibility to report how it got the memo, even if it just said “Forwarded to us by a Williams student” or whatever. Also, I bet that no one at Williams forwarded Inside Higher Ed the e-mail.

#20 Comment By Ronit On February 1, 2010 @ 10:10 am

@frank uible: I didn’t realize being a financial aid student was equivalent to needing the College to be your momma.

#21 Comment By rory On February 1, 2010 @ 10:23 am

@David: the word “if” means little to you, does it? also, my comment about 5 or 10 was in response to ce’s comment. not everything is about you.

2 million at 10000 is 800 students (200 per class) getting loans (assuming they predict exactly 2 mil in savings. What if its actually 1.7 and they rounded up? That’s now only 170 students per class). So how many of those 200 students per class are upper middle class students and how many aren’t? Do you know? If half of each class gets aid, then that’s about 75% of all people getting aid. What percent of people getting financial aid are going to be significantly burdened by these loans? I don’t know. Do you?

As hwc’s noted many times, no-loans policies mostly prop up the financial aid given to the upper-tier of the financial aid recipients. While I generally support helping them, it’s not my #1 priority*.

as for this: “Are you familiar with the concept of nuance?”

well, this line lacks nuance: “Who is to blame? The faculty. When push comes to shove, they would rather maintain their various boondoggles like the Bolin Fellowships instead of allowing all Williams students to graduate debt free. On the good side: At least the rich kids will still graduate without any debt!”

the rich, rich irony**.

*random tangent: that amazing winter study from the BSU? Supported and fostered by a bolin fellow/ex-bolin fellow who stayed for extra years (i’m not sure if she did). calling the bolin fellows a boondoggle is your opinion, certainly not mine or many other people’s.

*note: i know, that wasn’t technically irony, tho my incorrect use of the term irony to describe that might be deemed ironic in nature. what was that about nuance?

#22 Comment By Jay On February 1, 2010 @ 10:38 am

@David:

Re the loan process, basically, very soon after arriving on campus freshman year, I went to an office in Hopkins Hall, told someone my name, they handed me a file with various paperwork in it, they told it me it was for my loans, and they asked me to sign it. So I did.

I knew absolutely nothing about this sort of thing at the time, and I had no idea what I was signing, but I knew I needed to so I did. I have a vague memory that when I was signing the forms, there were check-boxes for me to select what kind of loans I would be taking, and as I had no idea, I just asked the attendant which one I was supposed to check, and they told me.

I’m sure plenty of students knew exactly what they were signing, and perhaps even had parental guidance on the process, but I did not, and was clueless about the process.

I didn’t then and don’t now have any reason to think I wasn’t guided correctly.

According to an old email I found from the Bursar, I had “Direct Stafford Subsidized and Unsubsidized loans. Direct Loan is your lender, but you received the loans through Williams College.”

I know someone who’s parental income was a bit higher than mine, who graduated with around 8 or 9k in loans. Those were a different kind of loan, however (don’t know what), but they were paid through a private company, while mine were done through the US DOE’s Direct Loan Servicing website.

#23 Comment By Whitney Wilson ’90 On February 1, 2010 @ 10:47 am

I wonder how many students (or their families) not on financial aid borrow money to go to Williams? In other words, how many of the 1000 or so “full pay” students are simply able to write a check, and how many have to borrow against their house or other assets to come up with $50,000 per year. From my perspective, requiring financial aid packages to include some (relatively) small amount of loans doesn’t seem unfair. I do think it may put Williams at something of a competitive disadvantage relative to other schools, but I can’t really judge the magnitude of it.

I have a vague recollection that for a number of years some of the trustees were against a no-loan policy on philosophical grounds (something along the lines of “we want every student to have some skin in the game”). If my memory is right and the reports were accurate, I wonder if those beliefs are playing a role in this decision, which is saving a fairly small amount of money.

#24 Comment By midprof On February 1, 2010 @ 11:01 am

I’m with Rory.

Just out of curiosity,David, what’s your acceptable level of loan burden for faculty? My graduate school nut is 39K, which works out to $450 each month until I’m 60-something. So perhaps you’ll forgive me and others in the boondoggle group for not subsidizing comparatively wealthy students (as Rory points out, these no-loan policies tend to serve that tier) ?

#25 Comment By David On February 1, 2010 @ 11:16 am

Midprof writes:

Just out of curiosity,David, what’s your acceptable level of loan burden for faculty?

Not sure I understand this question. It’s a free country. Take out as many loans as you like. And the same applies to Williams faculty. Some show up at Williams with no loans. Some show up with lots of loans. I don’t care.

My general advice (and lots of people agree) is that you should not go to graduate school if doing so involves any debt. I am glad that things worked out for you. The tenure prospects of most people with such debts are bleak.

So perhaps you’ll forgive me and others in the boondoggle group for not subsidizing comparatively wealthy students (as Rory points out, these no-loan policies tend to serve that tier) ?

Just keep in mind the cost that you are paying in terms of the students who choose Williams.

The central dilemma is the same as always. There are hundreds of students who are accepted by Williams and by Harvard/Yale/Princeton/Stanford. We all want more of these students to choose Williams. We don’t want all of them to do so, of course. Many would be miserable at Williams. But many would be better off if they became Ephs. Yet, money does matter. I have no problem telling an applicant that she is better off at Williams than at Harvard, all else equal. But what if Williams is demanding $80,000 more in tuition from her family over the next four years? Is Williams that much better than Harvard? Perhaps.

And that is the central problem with Morty’s (and the Trustee’s) refusal to match the prices of competing schools. They are pricing themselves out of the market for the most outstanding students.

(Read that whole post for lots of background and links.)

A key issue is that, if Williams has loans and Harvard/Yale/Princeton do not, then could you ever recommend that a student who needs loans choose us over them? I am not sure that I could. But that would suggest that no “middle class” student would ever choose Williams over those schools. In other words, the intellectual elite at Williams would all be rich kids, i.e., those for whom loans are irrelevant. (The number of poor kids who choose Williams over HYPS is tiny and, depending on how the College sets the new limits, likely to get even smaller.)

#26 Comment By rory On February 1, 2010 @ 11:24 am

do you use a machine or just your bare hands to move those goalposts that far, david?

#27 Comment By midprof On February 1, 2010 @ 11:26 am

David, surely the 80,000 additional cost you imagine would not qualify as a “modest loan,” which is the language in the letter. Do you imagine that those making this decision to reintroduce loans don’t share your concerns?

#28 Comment By frank uible On February 1, 2010 @ 11:26 am

rory: Careful with the sarcasm! We don’t like that stuff around here.

#29 Comment By David On February 1, 2010 @ 11:32 am

“surely the 80,000 additional cost you imagine”

Please read more carefully. I said $8,000.

Do you imagine that those making this decision to reintroduce loans don’t share your concerns?

Well, obviously they don’t share them enough, otherwise they would not have made the change. Why not?

1) Rich people (like the trustees), as a rule of thumb, are not overly sympathetic to the plight of middle class people. The whole “skin in the game” meme is emblematic of a tendency to think that middle class students are not taking their Williams education as seriously as they should (perhaps true of all sorts of students) and that making them take our loans will change this attitude (highly doubtful).

2) Faculty members, as a rule of thumb, are not overly sympathetic to the plight of students from families who make as much money as (or more than) they do. I am ready to believe that this change was overwhelmingly popular, at least among the possible options, among the Williams faculty. (True?) In some theoretical sense they might “share” my/our “concerns,” but not enough to actually do something different.

#30 Comment By midprof On February 1, 2010 @ 12:00 pm

@David, forgive me — I was reading your post #25.

#31 Comment By rory On February 1, 2010 @ 12:01 pm

lol…david…you moved the goalposts so far, you forgot where they were!

#32 Comment By ce On February 1, 2010 @ 12:05 pm

Is $5,000 or $10,000 in debt really that much? It certainly is not enough to justify a rational decision on its basis between two very different schools (ie: Harvard and Williams). Personally, I’m going to be over $100,000 in debt after I graduate from law school, and I’m just fine with that. Obviously, it’s a little different…but not that much. If we were talking about $40,000-50,000 in debt, I would be in your boat, but I just don’t think <$10,000 is a career-changing amount of debt.

#33 Comment By David On February 1, 2010 @ 12:12 pm

ce:

Don’t think of it in terms of total dollars. Think of it in terms of percentage of family income. If your family makes $200,000, the extra $10,000 that Williams now demanding may not make you change your decision. If your family makes $50,000, then it might/would/should. That’s 20% of your family income!

Again, I agree with the analysis above that we are not talking about a large number of students, especially when most peer schools will follow suit. But those students are still important.

More importantly, there are still major cuts that Williams ought to make that it has, so far, refused to make. You could close the investment office or roll back the WCMA budget a few years and make this change unnecessary. That is my real beef.

If the S&P were still below 700 and Williams had made all those other cuts already, then I would go along with this change. My point is that this should be the last painful cut, not the first.

#34 Comment By Ronit On February 1, 2010 @ 12:25 pm

@frank uible: oh, were you being sarcastic when you mocked poorer students?

#35 Comment By ce On February 1, 2010 @ 2:01 pm

David–isn’t the more important figure debt as a percentage of the student’s future income? The question then turns to what the average Williams student makes following graduation. This is, in turn, complicated by the fact that the majority (?) of Williams students attend graduate school, and that most loans can be deferred through grad school.

Thus, I would argue that the pertinent number is student debt as a percentage of that student’s income following Williams OR following grad school.

My guess is that the average Williams student who does not enter grad school for the ~5 years following graduation makes something in the area of $70-80,000/year (a disproportionate number of students in this scenerio are in ibanking, consulting, or other super lucrative professions). I would wager that the average Williams student who enters grad school makes $100,000 or so following grad school.

Let’s just round this all down and assume that the average Williams student is making an average of $80,000/year and is single through the period when they are paying off their debt (I’m just going to go ahead and assume a 5 year repayment for the purpose of demonstrating just how little of a burden this is–general repayment terms are 10 years or more). At 6.8% fixed interest (I believe many of the federal loans are better, actually, and private loan rates are currently lower), this comes to $197/month in loan payments to pay off a $10,000 loan over 5 years. A single taxpayer making $80,000/year, keeps $60,000/year after taxes. That’s $5,000/month.

Thus, unless I’ve grievously screwed something up (likely–please let me know–most of these figures were determined using online calculators), the average Williams student with loans must live off of a mere $4,800/month after taxes and their loan repayments. This is all assuming they’re paying off their loans relatively quickly (5 years).

Probably the average Williams student makes substantially more than $80,000/year several years following either Williams or grad/professional school because the mean is likely scewed by the large number of Eph doctors, lawyers, bankers, and consultants. However, my bet is that the median Eph is probably earning something in this area–this was a big assumption I made here, so if people strongly disagree with that, let me know.

#36 Comment By Whitney Wilson ’90 On February 1, 2010 @ 2:06 pm

Well CE, I would wager than the average graduate school graduate, in something other than law or business school, is probably making considerably less than $80,000 per year. That would certainly be true (I think) for entry level academic jobs, even tenure-track ones.

#37 Comment By David On February 1, 2010 @ 2:26 pm

David–isn’t the more important figure debt as a percentage of the student’s future income?

Not really.

1) I am most concerned about the impact of this change on the decisions of students to attend Williams. That is the real issue. I think (citations welcome) that family income is the relevant metric by which 18 year olds measure how “big” $10,000 is.

2) Ignoring matriculation decisions, I am concerned about how this debt effects career choices. Again, I don’t see this as a big effect, but every student who switches from teaching to Wall Street because of her debt is a loss. So, how many Williams students will do job X rather than job Y because of the debt?

3) Am I concerned that an future (wants to be) Eph banker is taking on $10,000 in debt? No! Who would be?

#38 Comment By rory On February 1, 2010 @ 2:34 pm

@David: “The issue of what effect this will have, if any, on who chooses Williams is secondary.”

“I am most concerned about the impact of this change on the decisions of students to attend Williams. ”

it’d be funny if it weren’t tragic.

#39 Comment By Jay On February 1, 2010 @ 3:03 pm

@ce:
I would have thought your income estimates for recent grads are pretty high. Maybe not, but my salary in the “professional” world starting out was closer to half of what you described. But even so, I was still able to pay off $5000 in a year. I also didn’t have a car and live a frugal life, for what it’s worth.

#40 Comment By Derek On February 1, 2010 @ 3:04 pm

David —
While I agree that students who go to grad school should be wary of picking up loans to pay for school, many, many students in the humanities even with full funding need to take out loans from time to time.
But how on earth are someone’s tenure track prospects worse by taking out loans? There is no causation there. I even doubt there is causality. If they get their PhD is there any evidence whatsoever that their loan status has anything to do with success or failure on the job market or once they secure the job?

dcat

#41 Comment By ce On February 1, 2010 @ 3:05 pm

David–

Why is it the case that family income is the important number? This is debt that these students will pay back after graduating. Do a lot of people’s parents continue to help them after graduating from college?

Additionally, with regards to how the debt affects future careers, I’m still skeptical. If you do Teach For America or Americorps, you leave the program with roughly $9,000 grants that can used towards educational debt.

Personally, as a teacher making roughly $30,000/year, I paid off almost exactly $10,000 in (private) debt in under two years without any of the above assistance programs while maxing out both my SEP-IRA match and my Roth IRA. Sure, I wasn’t living in New York or LA, but I also wasn’t living off of Ramen for those two years–I was going out to eat, drinking good beer on the weekends, etc. Combine the fact that the average salary of a 2nd or 3rd year teacher is close to $40,000/year (http://www.payscale.com/research/US/All_K-12_Teachers/Salary/by_Years_Experience) with a 5 (or more commonly 10) year repayment schedule, and you’ll find that $10,000 in relatively low income loans SHOULDN’T deter most middle-class ephs from pursuing a career in teaching. I doubt that it does, either–I’m sure the $40,000/year pay does more than enough deterring on its own; the vast majority of ephs who become teachers are looking forward to a relatively modest life whether they start things out with loans or not.

Whitney–

That might be true, but a significant chunk (possibly even a majority) of ephs go to law, business, or med school (and many of the remaining ephs go to grad school in the sciences, which typically have >$80,000 average post-graduate salaries). The average graduate from the top law, business, and med schools in the country (I don’t think I need to convince anyone that Ephs largely end up at top programs) makes well over $80,000/year (for law schools, at least, $160,000 is the standard starting salary for the graduate of a top 15-or-so school, going up to over $200,000/year by the fifth year). Also, when I say $80,000/year, I don’t mean as a starting salary–I mean as a 5 year average, as that is the relevant consideration for someone paying off loans on a 5-year schedule.

#42 Comment By Anonyfac On February 1, 2010 @ 3:21 pm

The hidden news in Bill Wagner’s letter was that “the College has no plans to reduce the salaries of current faculty and staff.” I hope I’m wrong, but it seems to me that he wouldn’t have put things that way if the Trustees weren’t going to continue the freeze on faculty and staff salaries. I’m curious to know what effect, if any, a continuing salary freeze is likely to have on the quality of instruction and faculty-student interaction at Williams.

#43 Comment By frank uible On February 1, 2010 @ 3:51 pm

Rory: Are you hyper-sensitive? I mock everyone – because they are humans and consequently deserve it.

#44 Comment By rory On February 1, 2010 @ 3:51 pm

@frank uible: I’ve been mocking David, frank. I just got my wording confused. I meant to write it’d be tragic if it weren’t so damn funny.

#45 Comment By frank uible On February 1, 2010 @ 3:56 pm

And I meant to address post #43 to Ronit.

#46 Comment By Parent ’12 On February 1, 2010 @ 5:21 pm

@Anonyfac:

I, too, wondered about the choice of words for that sentence.

Is it possible that unfortunate news is being released during this interim period. Then, it gives Adam Falk the option of starting a process to initiate better news.

AND, for those who want to read others opinions:

Jacques Steinberg’s blog on NYT’s website:

http://thechoice.blogs.nytimes.com/2010/02/01/williams-2/

Plus, possibly HWC (didn’t I read here that he’s interesteddad?), and more parents:

http://talk.collegeconfidential.com/parents-forum/858799-williams-rescinds-no-loan-policy.html

#47 Comment By Brandi ’07 On February 1, 2010 @ 5:37 pm

Even if you factor out one year of financial aid (I’m not in the mood to get into reasons), I submitted a one page list of reasons why I needed an increase in my financial aid package including 500/mo COBRA payments (I was above the age to remain on my mom’s insurance, school insurance didn’t even begin to cover what I needed and I couldn’t get independent insurance) and my single parent paying off her student loans and not at all being able to contribute anywhere near what she was expected to contribute. This didn’t really seem to matter. Again, factoring out a year, I’m still sitting pretty at appromixately -45k. I had a decent paying job until November 08 and continued to pay off my loans as long as I could on unemployment and I still pay some down when I can. Whatever, the federal loans have been (I have a stafford and perkins) quite flexible and understanding and I’ve never had a late payment.

Granted, when I entered Williams there was not the student loan cap but it did occur at some point before I graduated.

I don’t think I had a point, just wanted to share.

#48 Comment By Parent ’12 On February 1, 2010 @ 5:43 pm

@Brandi ’07:

Do you still need the level of health insurance that you needed back then? And, more to the point, I hope you have it.

#49 Comment By Brandi ’07 On February 1, 2010 @ 7:14 pm

It was mainly just a matter of covering routine stuff both in MA and MN and medication. It’s fine, even though I am once again on COBRA.

#50 Comment By johnwesley On February 1, 2010 @ 7:28 pm

#51 Comment By johnwesley On February 1, 2010 @ 7:29 pm

#52 Comment By Alexander Woo On February 1, 2010 @ 7:53 pm

Any discussions about putting teaching loads back at 5 a year?