More colleges are reducing the burden of student loans after graduation.
Carleton College, a private liberal-arts college in Minnesota, recently joined the list of schools eliminating student loans from their financial aid packages, instead offering students grants and scholarships that do not need to be repaid.
In its announcement, Carleton said that one-third of every incoming class over the past decade has come from middle-income households, and those students will benefit most from eliminating student loans. The change will apply to both new and current students, the school said.
“Eliminating loans from our financial aid packages will expand opportunities for students,” Alison Byerly, Carleton’s president, said in a statement, adding that they’ll “be freed from the burden of student loan debt that might otherwise have impacted their professional decisions and ambitions.”
Students may still choose to borrow loans outside the college’s financial aid package, and they’re responsible for their expected family contribution based on their income. Carleton said the change is funded by $80 million in donations, and it’s seeking to raise an additional $48 million to sustain the program.
Ayelet Sheffey covers all things student debt, from the latest Education Department news to stories of borrowers navigating their loans. To stay up to date on her coverage, sign up to get email alerts for her new stories here.
Religious schools are following suit. On Tuesday, Asbury Theological Seminary in Kentucky announced it would phase out federal student loans and shift toward scholarships. This shift will allow students to “graduate with less debt and greater freedom to serve wherever they are called,” the press release said.
Princeton University became the first school in the US to replace student loans with grants in 2001. Schools, including Harvard and Yale, launched similar initiatives in the following years, in an attempt to address the $1.7 trillion student-debt burden affecting over 40 million Americans.
Business Insider has heard from thousands of student-loan borrowers over the past few years who have struggled to pay off their student loans due to a range of factors, including spiraling interest and difficulty finding gainful employment.
The Trump administration said it is working to address the issue through its sweeping repayment overhaul, which included new repayment plans and borrowing caps. While borrowers have said the changes have made their monthly bills higher, the Education Department has maintained that its changes are intended to simplify a complex lending system and compel colleges to lower their tuition.
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