On Wednesday, the University of Chicago announced its intend to eliminate student education loans using their aid packages. ?Based on the school it is a part of an effort to improve economic diversity and also to enroll more low-income students.
In addition to eliminating student loans from the need-based aid packages, the college announced the following:
- More than 100 free, nationwide information sessions on the college application and educational funding process
- No application fees for all families seeking financial aid
- Additional merit based and minority?scholarships
The school also expanded upon one if it is scholarship grant programs for families with limited income. ?Students qualifying for the Odyssey Scholarship are actually guaranteed paid summer internships or research opportunities after their first year of college. ?Additionally, these students not to need to work on the government work-study program, allowing them to dedicate their time for you to their studies.
In short, the University of Chicago is leveraging its over 6 billion dollar endowment to make sure that every family are able to afford to sent their child to the school.
Why is this big news?
Chicago joins a growing listing of schools which have programs aimed at limiting or eliminating student loans. ?At the moment most of the premier institutions in the United States have similar programs. ?Perhaps the best benefit relating to this development is the fact that there is now no truth within the statement that, “a good college education is expensive”.
The announcement from the nationwide information sessions is also huge for any student considering college. ?Whatever the college you think you really can afford or get into, these sessions will give you an opportunity to get advice and input from educational funding professionals who know many different ways to make school affordable.
This announcement also shows a growing recognition among top institutions that student loans could be a major burden on graduates. ?If the ivy league schools are offering no education loan aid packages, hopefully a lot more schools will follow suit to remain competitive. ?This race to eliminate student debt benefits allow future borrowers.
Cause for concern?
University of Chicago specifically created the program to increase representation from lower income families in the school. ?As more colleges enact such programs, hopefully later on that families will begin to expect them using their schools.
The only potential downside here will be the danger of faculties limiting the number of students with low expected family contributions. ?However, this risk is likely really low. ?First, many schools have aid-blind applications processes. ?Admission relies upon grades, ACT, some other factors… earnings are unlisted. ?Secondly, the purpose behind these programs is to recruit lower income students towards the school. ?To penalize an applicant to have a lesser income would defeat the objective of this program.
The Bottom Line
Graduating with student education loans is a huge burden, and many schools now notice that fact. ?Even if you don’t have University of Chicago or Harvard grades and test scores, there is an important lesson here. ?If they don’t make their students take out over 100k in student loans, why should you remove much debt to go to any other school?