Financial stress reliever
Dec. 17, 2020 — Grinnell College’s recent announcement that it would eliminate loans from need-based financial aid packages beginning in fall 2021 was made to preserve academic continuity and equal access to education during a tenuous period.
One of the many benefits of the decision comes in the form of stress relief. When students take out a loan, they often also take on the worrisome burden of post-graduate debt. The pandemic has amplified anxiety as graduates face an uncertain job market.
Grinnell’s Task Force on Student Financial Support and Success was convened in 2019 to study the College’s financial support from both institutional and student perspectives. One issue that was clearly identified by the task force both through the results of a student survey and direct comments by students, faculty, and staff were fears about borrowing.
“We worry about the many talented students that Grinnell has not been able to reach because of a fear of debt,” said Angela Onwuachi-Willig ’94, Grinnell Trustee and Task Force chair, in the below video about the no-loan initiative. “The fear of debt is one that overshadows possibility. To a young adult that comes from a low-income family and who is working a minimum wage job, the thought of digging themselves out of thousands of dollars of debt after graduation is incomprehensible. Grinnell recognizes that far too many students and families have been forced to let their fear of debt dictate their paths.”
Though Grinnell students graduate with less debt on average than many counterparts in Iowa and other states, loan tension is still mentioned frequently when students talk with their academic advisers. Instead of loans, the College will commit to meeting 100% of demonstrated need with the use of grants/scholarships and student employment. For most students, this represents a $3,500-$5,500 annual increase in their grant assistance, depending on their year in college.
The removal of loans will affect as many as 1,050 students. More than 60% of enrolled students are currently offered student loans as part of a need-based financial aid package. New and continuing students – both domestic and international – will be eligible for the no-loan program.
Brad Lindberg
“The no loan initiative’s impact is both immediate, by offering additional grants to every student on need-based aid, and long term by reducing overall cumulative debt and allowing students the freedom to potentially graduate from Grinnell with low or no debt – freeing them to consider many options post-graduation,” says Brad Lindberg, assistant vice president for enrollment and director of financial aid.
While the loan removal program was implemented in response to the financial hardship that many families are experiencing during the pandemic, the program will continue after the pandemic ends. All students enrolled under the no-loan initiative can expect to continue under the program until they graduate.
“With careful stewardship of the College’s resources, continued strong performance of the endowment, and importantly gifts from alumni and donors, it’s my sincere hope that the no loan program is a part of the fabric of the financial aid program at Grinnell for decades to come,” Lindberg says.
It is estimated that the College will spend $5 million annually on the initiative. Grinnell will fund it through a reallocation of its operating budget, which is supported by tuition revenue, endowment returns, and philanthropy. Over the past year, the College has contributed more than $10 million to support a variety of unanticipated student needs that have arisen out of the pandemic, including COVID-19 Response Grants for all students.
“We award over $60 million dollars in institutional gift aid annually,” Lindberg says. “Each dollar that we award is important to ensure access to Grinnell, but is also a dollar that won’t be spent on the academic program and other important strategic priorities identified by the board, faculty, and administration.
“This is why philanthropy, and the generosity of our alumni and donors is so important,” Lindberg adds. “Gifts in support of financial aid, including the no loan program, allow the College to meet and extend our financial obligations directly in the form of financial aid to students. They also allow the College to focus support to the academic program and priorities on campus that affect students every day. They help Grinnell offer top tier financial aid, top tier academics, and a world class experience to every admitted student.”
Beyond loans, students have utilized grants, student employment, and family financial contributions to pay for attending Grinnell. The College will continue to utilize the CSS Profile and FAFSA applications to calculate a family contribution and ultimately assess their need for financial aid. Families will continue to be responsible for covering their contribution, and some students may still choose to borrow money as part of their family’s financing plan.
“The most frequent question we have received is about whether or not loans will be offered as a financing option to families wishing to borrow to help with their remaining educational expenses. The answer is yes, they will be offered,” Lindberg says.
Since the news about the no-loan program change was made public on Nov. 17, the feedback has been overwhelmingly positive, Lindberg says. Including Grinnell, there are fewer than 20 colleges in the U.S. that are need blind, meet 100% of demonstrated need, and offer no loans.
“There is no question that supporting students from all socio-economic backgrounds is a primary focus of the College that is mission driven,” Lindberg says. “Our commitment to financial aid to students, when measured against the operational budget, is second to no college in the United States. As a member of the financial aid team, I strongly support any initiative that is equitable, sustainable, and benefits the student directly in both the long and short term. The no-loan initiative meets all three of these benchmarks.”
—by Jeremy Shapiro