A recent trend among New England universities cutting student loans from their aid packages may help struggling students pay off debts after graduation, but Boston University does not plan to adopt a similar policy anytime soon.
These colleges are replacing the loans with grants, which students do not have to repay.
Princeton University was the first school to remove its loans in 2001, and Northeast schools such as Amherst and Davidson colleges have recently followed suit. About two weeks ago, Williams College announced it is eliminating all loans from its financial aid packages, and said it will provide grants instead.
On Nov. 2, Wesleyan University also announced it will cut loans, but only for families with incomes of less than $40,000 a year.
Williams President Morton Schapiro wrote in an email that “there is empirical evidence that even modest loans affect career choice” and that the school can afford the change.
Williams, which has an endowment of more than $1.4 billion, accumulated enough aid in grants for its poorest students that they do not have to take out loans. The elimination of loans will cost Williams about $1.8 million annually in grants, which Schapiro said is a good investment in its student body.
BU’s endowment is around $1.1 billion. School spokesman Colin Riley said BU is a “very tuition-dependent” school and cannot afford to cut loans as a funding source. However, the administration tries to work toward reducing loans and tuition increases, he said.
“As much as we’d like to, we don’t have the luxury of eliminating loans,” he said. “[But] we’re always looking for ways to increase financial aid.”
There are three types of financial aid available to students – work study, grants and loans – and about 60 percent of students are offered at least one of those options. The average graduate will accumulate an average of $22,000 in debt after four years of education, Riley said.
Princeton’s average student debt in 2001 was $13,820, and now is only $2,700 after the elimination of student loans, according to its financial aid website.
Princeton spokeswoman Cass Cliatt said in an email that although loans were replaced with grants that do not need to be repaid, students have the option of taking out loans for personal expenses.