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Starting next fall, Smith College will replace loans in undergraduate financial aid packages with grants, an effort to improve affordability for students. The Massachusetts liberal arts college also announced that it will issue one-time grants for certain students: “start-up grants” of $1,000 for new low-income students, to help cover costs associated with beginning college; and “launch grants” of $2,000 for some seniors graduating in 2022, to help with the transition to post-graduate life. The move amounts to a $7 million annual increase in the college’s financial aid spending.
Smith College is the first women’s college to do away with loans for students receiving need-based financial aid, and joins other “no-loan” institutions like Princeton University, Amherst College and Colgate University.
College President Kathleen McCartney said the move will allow more students to attend the school, regardless of financial background. Currently, the average Smith student graduates with $19,000 in debt.
“Black students as well as Latina students, at Smith and across the country, disproportionately take on debt. So we feel really strongly that this sends a signal that Smith is committed to equity and racial justice,” McCartney said in an interview with Marketplace’s David Brancaccio.
The following is an edited transcript of their conversation.
David Brancaccio: President McCartney, Smith has the money for this?
Kathleen McCartney: We do. Thanks to careful stewardship of our resources over the years and generous alumnae, we do. Last year, we received the largest gift in our history, a $50 million gift from an alumna, and she designated $40 million of it for financial aid. So that got me and the Board of Trustees thinking very seriously about whether or not we could do something bold and significant to enhance our financial aid packages. And that’s what we did.
Brancaccio: And not just for this next academic year. You’re going to try to keep doing this?
McCartney: We are going to try to keep doing this. Our endowment returns over the last 10 years have been very good, almost 10%. And of course, our returns last year were very good, like most colleges and universities. And so we want to take those returns and invest them in our students.
Brancaccio: Smith is the first women’s college to do this, but students were asked to live with debt for all these years. Tell me about the new thinking now about student debt, from your perspective.
McCartney: Well, I think there is a national debt crisis. It’s not as great at places like Smith, because we offer better financial aid packages, but our students were still graduating, on average, with $19,000 in debt. And we just decided to work hard so that we could do something about that.
Brancaccio: Yeah, I have to mention that tuition, if one paid the full freight at, for instance, Smith is nearly $56,000. Then there’s the rest, equals $78,000. You must encounter parents and students who say it’s just all getting too expensive.
McCartney: I think we do. But our packages are very generous. On average, we award about $55,000. But yes, every year, there are families that struggle, and this will help them.
Brancaccio: There’s also some extra little pieces of this that were quite interesting. For students with lower incomes, they can get an extra grant. How’s that work?
McCartney: Well, we’ve been trying to think beyond financial aid to something we call equalizing the student experience. You know, we have funds for emergency dental care — that kind of thing. But low-income students really struggle, I think, in the first year with the cost of college. Just yesterday, I received an email from a grateful alum who talked about going to the bookstore and really not having the money to buy books or a calculator or a computer. So there are a cost associated with starting college. and that’s what our startup grants are about. Those students who qualify will receive $1,000 that they can use to help them with college entry costs.
Brancaccio: And there’s another one, sort of a launch grant, if you get to graduation, and you meet certain requirements?
McCartney: Yes, this is a one-time for the class of 2022. They are missing out on our loan program, but we thought we could give them launch grants to really help them as they transition to first careers or graduate school.
Brancaccio: I see. What’s that, $2,000?
McCartney: $2,000, yes.
Brancaccio: You’re being very clear that this is about lowering the burdens of student debt, but it might also, I wonder, have the effect of maybe getting stronger students to apply.
McCartney: Yes. First and foremost, it is just the right thing to do. But it should improve our ability to attract, enroll and retain the best students. And a third point that we talked a lot about was that Black students as well as Latina students, at Smith and across the country, disproportionately take on debt. So we feel really strongly that this sends a signal that Smith is committed to equity and racial justice.
Brancaccio: So you’re not going to be upset if your competition follows your lead?
McCartney: I hope our competition follows our lead.
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