Neal Hutchins Lockhart is a business and finance executive and writes for many online publications. In the article below, Neal Hutchins Lockhart explains why and how some colleges are removing student loans from financial aid packages.
In a surprise turn of events, Dartmouth College has joined the ranks of several other public and private universities to do away with student loans says Neal Hutchins Lockhart. At first glance, it may seem as if this move will disenfranchise thousands of students unable to pay the steep fees to attend post-secondary school. However, Dartmouth’s decision comes at a time when millions of Americans are saddled with student loan debt.
By eliminating the possibility of student loans, Dartmouth hopes to help its student body by nullifying the burden of debt. Neal Hutchins Lockhart takes a moment to explore how this will work and learn what Dartmouth has up its sleeves to allow non-wealthy students to attend its prestigious institution.
What Really Happened?
With recent headlines reading “Dartmouth is Removing Student Loans”, it’s easy to assume that the Ivy League school is completely banning the practice. This isn’t entirely true explains Neal Hutchins Lockhart. What really happened is that Dartmouth released a statement announcing that they would remove student loans from undergraduate financial aid packages for students from families making more than $125,000 a year.
This announcement came after the university previously eliminated student loan requirements for families earning less than $125,000 a year. However, graduate, and post-graduate students will still have the option to access student loans, as will wealthier individuals with the means to pay them back explains Neal Hutchins Lockhart.
Dartmouth’s move is intended to protect all undergraduate students and it’s predicted to save graduates from roughly $5,500 of debt each year.
How Dartmouth Plans to Provide Financial Aid
Considering that the vast majority of university students take out loans to pay for their education, it begs the question then of how Dartmouth will provide financial aid for lower-income students. As part of its statement, Dartmouth explained that it will now begin expanding its scholarship program and has increased the income limit for full-ride scholarships to $125,000 explains Neal Hutchins Lockhart.
Their decision is backed by roughly $80 million provided by 65 donors. With this money, the university looks set to become one of the first to offer comprehensive scholarship programs to most of its students says Neal Hutchins Lockhart.
The Student Loan Crisis is Shifting Policy
Neal Hutchins Lockhart states that over the past two decades, the student loan crisis has become a major issue impacting the lives of millions of young Americans. To date, the average college student will graduate with roughly $33,000 worth of debt before starting their first job. With so much financial burden, the default rate on these loans has risen to 11%.
These student loans are creating more than just a debt crisis, according to Neal Hutchins Lockhart. For young earners at the start of their careers, owing such a crippling amount of debt has greatly impacted their ability to buy homes, start businesses, and save for retirement. Paired with rapidly rising inflation and housing prices, analysts predict that Millennials may never own a home.
According to Neal Hutchins Lockhart, Dartmouth’s decision to eliminate undergraduate student loans is designed to combat these effects. As one of the most prestigious universities in the world, it can set a new standard for what’s acceptable and shift policy away from crippling student loans toward donor-backed scholarships for all students.
Dartmouth is Just the Tip of the Iceberg
Although Dartmouth has received the most attention in recent days, it’s only the latest school to join a trend of universities eliminating student loans. Neal Hutchins Lockhart explains that small private schools, such as Williams College in Massachusetts, to larger state schools, such as Ohio State University, many upper educational institutions are making the tough decision to combat rising student loan debt.
Of course, there are some challenges to eliminating student loans explains Neal Hutchins Lockhart. Mainly, it’s expensive. Many of the schools that have decided to do so benefit from large endowments or can draw the attention of financial donors.
Whereas an Ivy League college, such as Princeton or Dartmouth, can attract millions of dollars of private funding, smaller regional schools may struggle states Neal Hutchins Lockhart.
In such cases, it will likely come down to a decision from the federal government before anything really changes. The Biden Administration came into office promising to tackle student debt, yet little has been done so far explains Neal Hutchins Lockhart. According to analysts, the president’s $25 billion campaign promise will likely come into play sometime in the next month or two but, for now, it remains unseen.
The Bottom Line
Dartmouth’s decision to remove student loans from its financial aid packages is a direct response to the student debt crisis in America. If successful, it could help contribute to a shift in policy and drive other institutions to offer more comprehensive scholarships to all students says Neal Hutchins Lockhart.
