College graduation is often associated with freedom. But with tuition costs at an all-time high, Bowdoin graduates often find themselves shackled by student loan debt years after receiving their degrees.
No more.
The College announced last week that it will replace all its loans with permanent grants beginning in the fall in an attempt to ease the amount of money students owe when they graduate.
"The student loan burden that we have imposed on students?that has grown over the last 10 years?is at a level that makes it very difficult for students at the College while they're here," said President Barry Mills in an online video released with the announcement. "It makes it very difficult for them as they think about their career options for the future."
Tuition and fees totaled $46,260 this year?almost $20,000 more than they did a decade ago. About 43 percent'734 students?receive some sort of financial assistance from the College, according to the Office of Institutional Research (OIR). The average financial aid package covers about half of the total costs.
Under the previous policy, borrowers from this year's entering class were projected to amass an average of $21,000 in debt by the time they graduate, according to Director of Financial Aid Stephen Joyce. Beginning in the fall, permanent grants will cover all of new students' calculated need, and current students will cease to accrue further debt.
Joyce said this will mean an average $5,000 boost for each student with a standard loan package.
Bowdoin already awards far more in grants than in loans. According to data from the OIR, Bowdoin students will receive $18.7 million in grants this year'90 percent through the College?and $3.1 million in loans.
Joyce said Bowdoin's financial aid budget will grow by $2.7 million next year to accommodate the new policy, and will likely increase in future years along with tuition.
Officials remain confident that the College will be able to fulfill the promises associated with the new policy without increasing its yearly endowment draw or interrupting any of its various capital projects.
"We feel confident that we haven't put the College at risk," Mills told the Orient.
Bowdoin determined that a no-loan policy would be affordable by estimating its capital needs and projecting endowment growth over the next decade. The endowment doubled over the last decade, and currently stands at $828 million after a 24.4 percent return on investment in the last fiscal year.
While the College's announcement coincided with some turbulence on Wall Street that left many fearing a recession, Senior Vice President for Investments Paula Volent said the economics of the new policy have not been jeopardized.
"We are long term investors," she told the Orient, "and the endowment portfolio is structured around that thesis."
Mills said there had been some concern over whether expanding grants to middle-income students would divert funds away from low-income students who receive larger aid packages. While Bowdoin has pledged to prevent this effect by increasing its overall aid budget, Mills said he worries that other, less well-endowed colleges might attempt to institute similar policies without safeguarding against such side effects.
"If schools begin to do this off the backs of the poor, that would be unfortunate," he said.
Joyce echoed this concern, but emphasized Bowdoin's continued commitment to less privileged applicants.
"There is absolutely no intent to change the demographic of our student body such that we have fewer low-income or middle-income families represented at Bowdoin," he said. "I think one of the concerns nationally is that colleges without the resources try to follow suit in this...for public relations and marketing purposes that they'll do so by admitting wealthier students and having fewer poor and middle-income families on aid."
Unfortunately, Mills said, more modestly-endowed institutions that act responsibly by not overreaching in an attempt to match the policies being adopted by their richer counterparts may suffer a competitive disadvantage.
"I think this might devalue some colleges out there that can't afford to do this," he said. This would be unfortunate, he continued, because the intellectual returns of going to a small, liberal arts school?even one with fewer resources than Bowdoin?are usually worth the investment.
At $828 million, Bowdoin has the second-smallest endowment among colleges which have eliminated loans, ahead of Colby College, which unveiled its own plan to replace loans with grants a day after Bowdoin's announcement. Williams College and Amherst College made similar commitments last fall.
Some might say this is just another arms race between elite schools competing for the same talent pool, Mills said. But "access and affordability is where the arms race should be."