• August 31, 2015

Williams College Nixes No-Loan Student-Aid Policy After Endowment Falls

Williams College is eliminating its no-loan student-aid program that began in the fall of 2008, saying that it can no longer afford the policy because of its battered endowment.

The college in Massachusetts, which has a sticker price of $49,880 a year, was one of more than 40 in the United States that have no-loan or limited-loan student-aid programs, which eliminate or cap loans for students with demonstrated financial need and replace them with institutional grants and scholarships.

It is one of a number of selective private colleges—at the time buoyed by swelling endowments—that announced no-loan policies in quick succession in 2007 and 2008. Then the bottom fell out of the financial markets, and colleges' endowments plummeted. Williams' dropped from $1.9-billion in June 2008 to $1.4 billion a year later.

Now, in a letter dated Sunday, the college's interim president announced that its no-loan program will end in the fall of 2011. "Williams is in a strong financial situation by virtually any comparison—except with that of the Williams of three years ago," William G. Wagner, the interim president, said in the letter.

Current students and those who enter next fall will not be affected by the policy change. For students enrolling after the new policy takes effect, Williams will still cap loans using a formula based on the income levels of their families. Most lower-income students will not be given loans as part of their aid packages, while others will be expected to take on a moderate amount of debt.

Jim Kolesar, the college's director of public affairs, said that about half of the financial-aid expenditures at Williams are covered by funds from the institution's endowment. Dropping the no-loan policy should reduce the college's institutional-aid budget by about $2-million. That money will be redirected "to protect educational programs," said Mr. Kolesar.

A Dream World Vanished

Dan Lundquist, vice president for marketing and enrollment management at the Sage Colleges and the founding principal of the Education Consultancy, said that the world where the no-loan push originated no longer exists.

He expects more colleges and universities will eliminate their no-loan or limited-loan programs as they weigh the costs of cutting back core academic programs against eliminating student-loan debt.

"Places that were more than riding high half a dozen years ago are able to ask themselves the question a lot of us ask ourselves in higher education all the time," he said: "Can we afford our values?"

Lauren J. Asher, president of the Institute for College Access & Success, which runs the Project on Student Debt, said that the no-loan and limited-loan pledges made by colleges like Williams sent a significant message to students about what it would really cost for them to attend a given institution. "These pledges are really welcome mats for lower and moderate-income students who might not otherwise see past the sticker price," Ms. Asher said.

She said that though institutions with no-loan programs are an easier sell to students, a moderate-loan program, like the one Williams is moving to, is the next best thing. "They are, in fact, limiting loan expectations, which is heartening," Ms. Asher said.

In his letter, Mr. Wagner said that Williams intends to remain affordable, but that there are new limits on what it can spend. "The college's focus is on adjusting to this new reality in ways that will protect our core academic mission for the long run, keep Williams widely affordable and accessible, and value the great dedication of our faculty and staff."


1. commserver - February 02, 2010 at 08:11 am

My daughter is a member of the class of 2013 at Williams COllege. Even though she won't be affected by the change, it makes me reflect on the repercussions. I have recently had my adjunct teaching assignments be reduced, thus reducing the income from that area. Unfortunately, the financial aid office says that my overall income is approximately the same (due to retroactive pay raise from regular job). Even though my net income is reduced, I will not see any benefit until next year.

The need for students to take on loans is troublesome. Evewn though my daughter didn't need to take on load, she did so to lighten the load on me. If she were to have to take on loans beyond the current amount the total will be burdensome in a period of uncertainty.

The resuolt would be my daughter might not have been able to go to Williams.

2. blue_state_academic - February 02, 2010 at 09:17 am

commserver: and if your daughter hadn't gone to Williams, I'm sure there were many other fine institutions around the country that she could have afforded, and would have received an excellent education at also. The point is that this policy change by Williams is unlikely to have any impact on college access or completion in the country; it may shuffle a small handful of students around a bit, but other than that, nobody is going to be hurt by it.

3. alexami - February 02, 2010 at 09:50 am

I believe this policy change is moving in a healthy direction. Given the high return on investment for a college education and especially a Williams degree, I think every student should personally bear some portion of the burden of the cost of that education. Even students from low income families should be required to take out a reasonable loan; with a Williams degree, they will certainly be able to pay it back (if they go into public service or teaching jobs, they will have reduced and/or forgiven payments). A better policy would be to require all students with need to take out small loans, and cap the amount of loans for all students at a manageable level (perhaps $5,000 per year). The real problem is when students and families run up loans of $60,000 or more by graduation (or worse without completing the degree). My suggestion applies only to loans taken out by the student, and to be paid back after graduation. We should do everything possible to avoid parents and relatives from low income families taking out loans.

4. bdr8y - February 02, 2010 at 09:55 am

I would imagine that if Williams, like other institutions, did not award aid to students who did not need it then they might have been able continue their no-loan policy for the lowest income students. Like many no-loan policies, Williams likely included families with annual incomes who could have paid near full price for Williams, but in attempting to attract high caliber students Williams offered them aid likely above need, which bankrupted the system so to speak. In the end, this isn't going to hurt the students at the upper-end of the no-loan policy income paramaters, but the students at the bottom. So, while student A will still go to Williams, maybe foregoing a summer in Aspen or Zurich, student B will need to go to a less resourced/selective institution or even a community college where statistics show that their liklihood of completing college is significantly reduced.

5. wendylove - February 02, 2010 at 10:08 am

In fairness to Williams, their "moderate" loan policies were pretty good -- I graduated from there in the mid-90s with a total debt load somewhere under $15K, all of it in Staffords.

6. bdr8y - February 02, 2010 at 01:41 pm

The fairness of William's loan debt for students, low-income or otherwise, isn't the real issue. While recent posts suggest that "some" loan debt, even for low-income students, is reasonable, the fact is that low-income students at Williams and other institutions will still have a larger portion of unmet need after all sources are considered. Also, rather than make or ask low-income families to take out loans, capped or otherwise, how about we transfer "merit" scholarships awarded to students whose families could pay more but feel as if they shouldn't to need based aid? The dirty little no so secret is that low-income students are expensive to subsidize and do not come with the academic and economic credentials of their high-income peers that can ultimately benefit Williams and institutions like it. Why give a low-income student 20 grand when you can give two stellar high-income students 10 grand each to keep them from going to Amherst?

7. fpscinto - February 02, 2010 at 01:52 pm

Agree with Alexami. Moderate loans (perhaps $20,000 for a four year degree) make sense on a number of levels.

8. bdr8y - February 02, 2010 at 05:00 pm

"Moderate" is relative and for some students can mean the difference between attending college or not attending college as well as persisting to graduation (Paulsen & St. John, 2002; St. John, 2001). Again, why should a low-income student be saddled with $20,000 of loan debt when some estimates suggest that families making more than $115,000 per year are awarded, on average, $17,000 beyond need? Conversely, at similarly prestigious publics, low-income families must find a way to meet roughly $10,000 in unmet need, which is tantamount to roughly 70 of their families annual income (The Education Trust, 2010). To be blunt, what this boils down to is our assumptions about who "deserves" or merits a place at the nation's finest institutions and who does not. In addition, it shows how we continue to collectively conflate intellect with social class and how the poor are continually blamed for the structural shortcomings of education. If I should be so bold, America loves to hate its poor.

9. commserver - February 03, 2010 at 03:02 pm

I wish to clarify a point: In order for my daughter to go to Williams College, I had to take a home equity loan on my home as part of my contribution. Under the monthly payment plan I woouuld make payments of $1100. I already have a short fall of several hundreds of dollars a month so I am just paying the interest with some principal, somehow. My wife who is sick is being forced to look for a job. She is now trying to be an insurance salesperson.

Believe or not, my daughter got the best financial aid package from Williams. The other institutions had ner taking out loans of about $10,000 a year. The school that she really wanted to go required that I contribute about $18,000 a year. This would have been a heavier burden on me, since the 2nd mortgage was only for the estimated amount that my contribution would be for Williams. is a heavy burden on me. I made the commitment to my daughter that she could go to Williams. I would just have to cope somehow.

Yes she could have gone to other schools, but at a greater total costs. And the educational experience wouldn't have been the same.

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