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Macalester Today: Loans, logic and access


The “Education Life” supplement to the New York Times of April 20, 2008, included a cover story on the steps being taken by a small number of extremely wealthy and highly selective colleges and universities to increase the affordability of their institutions. Fifteen colleges and universities, including Harvard, Yale, Stanford, Amherst, and Williams, have eliminated loans altogether from their financial aid packaging, and about 20 more have eliminated loans for students with family incomes below a designated level. A much smaller number—six, it appears—have eliminated all tuition for students whose family income falls below $60,000 per year, and an even smaller number have capped the amount paid by families with income levels as high as $180,000 per year.

There is no way to construe this increased commitment to financial aid by the wealthiest institutions as a bad thing. Neither, however, should we deceive ourselves into thinking that most colleges and universities have the resources to follow suit or that these changes will noticeably increase access to higher education in America.

There are more than 4,000 two- and four-year colleges and universities in the United States; collectively these institutions educate most of the post-secondary students in the country, and collectively they bear as much financial resemblance to Harvard or Amherst as do the St. Paul Saints to the New York Yankees. Educational economist Sandy Baum is quoted in the Times article as observing, rightly, that the changes I’ve described are “not going to make a dent in educational opportunity” in the United States. Let’s face it: The students who might now attend Harvard due to more generous aid policies would not otherwise have failed to attend college but would have attended instead, say, Brown or Vassar or perhaps the University of Minnesota. They are not among the millions of Americans who are unprepared for a wide variety of reasons to attend any college at all.

So, whither Macalester?

Macalester is fortunate in being better resourced than the vast majority of those 4,000 other colleges and universities. We are not, however, in the same position as the institutions that have eliminated loans, all of which fall into at least one of two categories: schools that have very high levels of endowment per student and/or relatively low percentages of students who receive need-based aid. According to data in the Times, the endowment per student ratio at Princeton in fiscal 2007 was about seven times that at Macalester; at the wealthiest liberal arts colleges such as Pomona, Grinnell, Amherst, and Williams, it was about three times that at Macalester.

Maybe more important, most of these schools enroll student bodies that are considerably more affluent, and therefore require considerably less need-based aid, than does Macalester. In announcing a change to its loan policy, Bowdoin College noted that about 40 percent of its students received financial aid. At Macalester the number is about 70 percent. Next year Colby College will spend about $22.5 million on financial aid after the change to its loan policy; Macalester, with a considerably smaller operating budget, will spend about $29.5 million.

So as we continue to evaluate our financial aid policies at the college, we are attempting to bear in mind and balance a number of factors. We continue to meet the full demonstrated need of each incoming student and to do so through packages that include far more dollars in the form of grants than in the form of loans. About 76 percent of the aid we provide comes in the form of outright grants, about 17 percent in the form of loans, and about 7 percent in the form of work-study. The total average indebtedness of Macalester students who borrow is about $18,800 after four years, including loans from all sources—a couple of thousand dollars less than the sticker price of a 2008 Kia Sportage. Given the high percentage of Macalester students receiving need-based aid, it would cost the college about $4.5 million per year to eliminate loans—or more than 5 percent of the total operating budget for 2008–09. I am fairly certain that the same could not be said for any of the colleges and universities that have eliminated loans.

The more interesting and challenging questions are less financial than practical and philosophical: Is eliminating loans the best and fairest way to increase economic access to any institution? And has the elimination of loans by a tiny subset of American colleges and universities fostered the belief—deeply mistaken, in my view—that there is something fundamentally wrong about borrowing for higher education, while we accept without question the logic of borrowing for a house, car, or boat? Does it make sense to eliminate loan expectations based on family income level rather than post-graduate plans, so that, for instance, some economics majors who go to work for investment banks will be loan-free while some history majors who join Teach for America will have loan burdens—based purely on the level of family income when they enrolled in college?

Given the enormous demonstrated return on the investment, I do not believe there is anything inappropriate about borrowing toward the costs of college, so long as that loan burden is kept within reasonable limits. Neither am I convinced that eliminating loans is the best way to increase access even to the most elite colleges and universities in the United States. I would be interested in seeing if some of the institutions that have eliminated loans for the relatively small percentage of students on aid, or for the even smaller percentage with family incomes below a designated level, could instead devise plans to increase those percentages substantially. Given the choice between eliminating loans for the 40 percent of students on aid or maintaining loans and providing aid to 70 percent of students, I would be inclined to choose the latter as the greater social and educational good.

This is not to say that we have ruled out the eventuality of altering aspects of our financial aid packaging, including our packaging of loans. It is simply to say that our approach to such changes, and to the broad challenge of balancing quality and access, is to be as thoughtful and as responsible as possible within the limits of our mission and means and not simply to play the game of follow the leader.

Brian Rosenberg, the president of Macalester College, writes a regular column for Macalester Today. He can be reached at

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