From Business Insider · Ayelet Sheffey · · 1m 20s
Colleges are ditching student loans for grants
Carleton College joins a growing movement to replace loans with free money, funded by major donations.
In brief
Carleton College joins a growing movement to replace loans with free money, funded by major donations. More colleges are eliminating student loans from financial aid packages, offering grants instead, though this approach requires significant fundraising to sustain. Originally reported by Business Insider.
Carleton eliminates student loans
Carleton College in Minnesota is removing student loans from financial aid packages and replacing them with grants and scholarships that don't require repayment.
“Eliminating loans from our financial aid packages will expand opportunities for students.”
Middle-income students benefit most
One-third of Carleton's incoming classes over the past decade came from middle-income households, the group most helped by eliminating loan requirements.
Eighty million dollars funds the shift
Carleton is funding the change with eighty million dollars in donations and seeking an additional forty-eight million to keep the program running long-term.
Other schools are following suit
Asbury Theological Seminary in Kentucky announced it would phase out federal student loans and shift toward scholarships. Princeton started this trend in two thousand one.
Addressing a massive debt crisis
Over forty million Americans carry one point seven trillion dollars in student debt. Schools are trying to address this burden by reducing what students must borrow.
Students still have other options
Students can still borrow loans outside their college's financial aid package and remain responsible for their expected family contribution based on income.
The main idea
More colleges are eliminating student loans from financial aid packages, offering grants instead, though this approach requires significant fundraising to sustain.
