A number of top universities, including Harvard, have tantalized parents of college-bound students in recent weeks with their decisions to eliminate loans from financial aid packages and replace them with grants. But the majority of the nation's more than 3,000 colleges do not have the resources to be so generous, say financial aid experts and officials from a variety of schools.
Most of the colleges doing away with loans belong to an exclusive group of roughly three dozen schools with sizable endowments - $35 billion, in Harvard's case. Their shift is increasing pressure on less-affluent colleges to come up with new strategies to sweeten financial aid for a wider group of students, some of whose families have been calling admissions officers asking whether they would be offering no-loan aid deals, too.
"If I worked at a college that had all of the money in the world, and could give plenty of money to the poorest people, and still give money away, I wouldn't have any problem going up the income scale and making it easier for them," said Eileen O'Leary, director of student financial services at Stonehill College in Easton. "Most colleges don't have the endowment of Harvard, Yale, Duke, Princeton, etc."
Yet, even if all colleges could afford to eliminate loans, several admissions and financial aid directors say they would be reluctant to change a long-held tradition of holding students and their families responsible for part of college costs if they can afford to contribute.
"Philosophically, one of the dangers is we've made debt a four-letter word," said Lee Coffin, the dean of admissions at Tufts, which this fall eliminated loans for students from families making less than $40,000 a year and will not extend the offer to higher-income families. "I wonder what it will do to a generation that will go to college without any personal sacrifice. You start taking loans away, and you start saying, 'Here's a free ride.' "
During the past decade, loans became a larger part of financial aid as the cost of college rose sharply. While the national spotlight has been on Harvard since its sweeping announcement on Dec. 10 that it will provide more aid for wealthier families, Princeton University started the trend of loan elimination among elite schools in 2001.
By eliminating loans, Harvard, Princeton, Haverford College, the University of Pennsylvania, and other schools are sending the right message about the need to reduce debt, said David Hawkins, director of public policy and research for the National Association for College Admission Counseling. In the 1960s, a national Higher Education Act created scholarships for the neediest students, and the government emphasized the importance of helping poor students avoid debt.
"We've gone from that to, 'Well, gee, maybe the government can help you get a cheaper loan,' " Hawkins said. "Harvard is trying to say, 'Let's try to put the brakes on a little, and not have our students graduate with so much debt.' "
The standard practice nationally for colleges has been to award a financial aid package that includes direct aid from the school; a federal, need-based loan; and student earnings from a campus work-study job. The suggested loan amount varies, depending on the school and its resources for financial aid.
Harvard, for example, previously required every financial aid recipient to annually contribute a minimum of $3,850, a combination of a $1,000 federal loan and $2,850 in work-study earnings. Other schools say they recommend as much as $4,000 a year in loans.
"Harvard in some ways is taking away the necessity for somebody who probably could afford to borrow that need-based loan," said O'Leary, the former chair of the National Direct Student Loan Coalition, a grass-roots group of financial aid directors. "It's very nice, but is it necessary? Should you be saving that money for people who are destitute?"
Stonehill, with an annual $42,000 cost and limited resources, includes loans in its financial aid package and directs the bulk of its aid to the neediest students.
With a little more than a $1 billion endowment, Boston University is still working to reach as many needy students as it can with grant aid and has no plans to eliminate loans, said Laurie Pohl, BU's vice president for enrollment and student affairs. BU students, who now pay about $48,000 a year for tuition, room, board, and other costs, finish on average with about $24,000 in debt, she said.
"Loans aren't necessarily a bad thing, like everything, in moderation," she said. "It's some investment that they are making in their education."
The Massachusetts Institute of Technology includes loans in financial aid packages and has not made a decision about changes in financial aid for next school year. It has, though, been steadily reducing the amount of money students are expected to contribute, MIT President Susan Hockfield said. About half of MIT's students graduate with loans, and their average debt is $15,000 for the four years, she said.
With a $10 billion endowment, MIT cannot offer as much as Harvard in financial aid, and MIT also has set a priority of spending more money on the rising costs of science and engineering education, she said.
Tufts is not ignoring the middle class, but does not believe it is asking too much of most students to take out a loan, Coffin said. The typical Tufts undergraduate will finish with $20,000 in total debt.
"That's saying to students, 'You're coming to a high-quality college,' " he said.
Patricia Reilly, Tufts' director of financial aid, said that for Tufts and other universities, the main question is whether it is the best use of resources to spread the money out so widely among different income levels. Tufts, she said, will always focus the most on the lowest-income students.
Officials at Harvard and other colleges going the furthest with no-loan offerings said they are not diminishing families' responsibility, but are recognizing that it is getting tougher for middle- and higher-income families to afford the nearly $50,000 annual cost of many colleges.
A decade ago, the typical Harvard student on financial aid owed $16,000 to $17,000 in loans upon graduation. Now, the average debt is $6,700, said William R. Fitzsimmons, Harvard's dean of admissions and financial aid. Aid recipients will still be expected to take on a work-study job, he said.
"No college covers all costs," Fitzsimmons said. "We would agree with the philosophy of shared responsibility. It's very clear when you get into the people who are extremely wealthy, we believe they should pay the full amount."
Haverford College eliminated loans from financial aid packages, beginning with next fall's entering freshmen, and discussed how students still could bear part of the responsibility for college costs, said Jess Lord, the Philadelphia-area college's dean of admissions and financial aid. As a result, Haverford created a Next Generation Fund, a separate endowment, to pay for the no-loan initiative, and decided to ask students to donate to the fund as alumni when they have more financial resources, Lord said. Haverford still expects parents to contribute to the college cost, he said.
"Just taking away loans is not going to make this a free education for anybody, and students will still bear some of the burden for this, even at Harvard," Lord said.
Linda Wertheimer can be reached at email@example.com.