Our friends at Dartblog cover the hypocrisies of “no loan” financial aid.
Please. Don’t make more of this “no loans” thing. It’s very misleading. Princeton is very generous, but even then many of the students take out loans. According to Princeton’s own literature, 18% graduate with debt.
How is that possible? The literature says no loans! Some borrow to fund study abroad or other adventures. Some skip a paying summer job and need to borrow to cover the lost money. There are probably many reasons.
The point is that “no loans” is pretty much a fraud. They still get to make up a number and insist that the kid can afford to pay it. At Princeton, 18% can’t. Remember, it’s their definition of ability to pay, not the kids and not the parents.
And it’s worth noting that we’re just talking about student loans. Parental loans are a completely different ball of wax. No college is making a “no loans” pledge to parents.
The schools are also free to pull a number out of thin air and say this is your expected family contribution. I’m told by a savvy number cruncher that anyone making more than $120k is expected to contribute $60k. Note the $120k is pretax and the $60k is post tax.
As you might imagine, many parents need to borrow from home equity or other sources.
Even at the richest schools, these promises are hollow and some of the most misleading propaganda put out by the college industrial complex.
I used to rail against the College’s ending of its “no loans” financial policy a decade ago. And Williams does continue to spend too little money on students and too much on other stuff. But, former Provost Will Dudley shared* some interesting results a few years ago highlighting that total borrowing by Williams students seemed about the same during the loans and no-loans period. Why? It is unclear but many poorer students come from families with debt, especially expensive credit card debt. Taking out student loans — even if the Williams aid package is so generous you don’t “need” to — and paying off those debts can make perfect sense from the point of view of the entire family’s finances.
*Note that Will, unlike current provost Dukes Love, refused to make those findings public. So, unless you were an insider — a rich and/or engaged alum — you never got to see them.