Dartmouth undergraduate students will never again have student loans — or at least that’s what you’d think reading last month’s headlines.
Associated Press: “Dartmouth to eliminate loans for undergraduate students.”
Bloomberg: “Dartmouth is getting rid of student loans for undergraduates.”
NBC News: “Dartmouth College is eliminating student loans and replacing them with scholarships.”
ABC News: “Dartmouth to eliminate loans for undergraduate students.”
CNN: “Dartmouth College eliminates undergraduate student loans and replaces them with scholarship grants.”
New York Post: “Dartmouth to eliminate loans for undergraduate students.”
The Dartmouth used the same language: “Dartmouth to eliminate loans for undergraduate students.”
The problem with these headlines is that they are extremely misleading — incorrect even. Some Dartmouth students will still have loans this year. Some Dartmouth students will have loans next year. The Class of 2026 will have student loans. Under the announced policy, every class that will ever graduate from the College will still have hundreds of students graduating with student loans.
According to Dartmouth’s most recent figures, 34% of the Class of 2021 took out student loans, with an average loan amount of $23,217. That puts the total debt of the graduating class of 1,144 students at $9,030,484 from the 384 students who took out loans.
According to the College’s joyful announcement of its new policy, “approximately 450 Dartmouth undergraduates have financial aid offers for the upcoming 2022–23 academic year that include loans. Replacing federal and institutional loans with larger grant awards will eliminate as much as $5,500 in required borrowing for each student per year.”
Mathematically, 450 undergraduates who must take out loans equals around 113 students per class. “As much as $5,500” per student per year is as much as $22,000 for each of those students by graduation. In total, 113 students having up to $22,000 less debt is a total debt reduction of $2,475,000 for each graduating class.
To put it all together with the $9 million of student debt from the Class of 2021, this change in Dartmouth policy, hailed as “eliminat[ing] loans for undergraduate students” actually eliminated only about a quarter — 27.4% to be exact — of student loans for undergraduate students. So, while Dartmouth gets glowing coverage in news publications across the country, 72.6% of the debt it saddles its students with remains.
Dartmouth did not eliminate student debt for undergraduates. What Dartmouth actually did was announce that students would no longer get loans in their financial aid packages, and those would be replaced by scholarship grants.
But most student loans at Dartmouth are not taken out because the student is instructed to by their financial aid award. Most student loans are taken out because they cannot afford the amount of money Dartmouth makes them pay. This is a key distinction.
Starting this fall, it will cost $83,802 to attend a single year of Dartmouth College — approximately 124% of the median income in America. If a student is eligible for $50,000 in financial aid, that student and their family are expected to cough up the other $33,802. If they can’t because, for example, nobody’s mortgage changes when their kids get into college, they will take out loans. That is how students end up with the vast majority of their student loans, not through “required borrowing.”
Because the College is need-blind, economically speaking, the Class of 2026 should be similar to the Class of 2021, except with no loans on their financial aid awards. Therefore, the Class of 2026 will graduate with 27.4 percent less debt than the Class of 2021: about $6,555,484 for the Class of 2026 vs. $9,030,484 for the Class of 2021. Given the trend of the endowment’s growth, they’ll likely graduate with millions of dollars of debt from a school with an endowment greater than $10 billion. If that sounds ridiculous to you, that’s because it is. The problem of student loan debt is easy to solve, and even easier to pay for. The issue is that the Dartmouth administration has no interest in solving it.
First, Dartmouth needs to stop obsessing over its perception of “demonstrated need,” which is clearly not accurate if hundreds of students are demonstrating they have more need by taking out loans. There is no reason to take out loans that is anything else but “need.” Nobody takes out loans for fun.
The College should institute a policy in which a family that cannot pay for the difference between $83,802 and their financial aid can appeal to get more aid. These appeals should be encouraged. Then, upon receiving these appeals, Dartmouth should simply give out more aid to those families.
The cynics and skeptics among you might be wondering: won’t some parents just take advantage of this and pretend they cannot pay? I am not so sure, but the College will know if it has been too generous in this regard if the total amount they give out after appeals far exceeds $6,555,484, the amount of debt the Class of 2021 had minus the amount of “required borrowing” that is being eliminated by the policy change. They’ll know if they were too stingy if they give out far less. Admissions is need-blind, so each class should have roughly the same additional need every year, which we know is around $6,555,484 after loans in financial aid packages are eliminated.
Here are a few ways you could pay for that $6,555,484:
Increase the College’s $1,126,000,000 annual budget by 0.58%.
Decrease administration and development salaries and benefits by less than 10%. Those salaries and benefits already dropped 6.3% this year, and I didn’t notice the administration getting a lot worse (that would be a hard thing to notice!).
Take it out of the $8.5 billion endowment, optimistically assuming Dartmouth could survive with an endowment that is 0.07% smaller.
Make a new fundraising campaign specifically for this. Dartmouth raised over $276 million last year — just use 2.4% of it so that Dartmouth students do not have debt anymore. Multiple people gave more than $6 million individually last year. Next year, call one of them the Glorious Debt-Canceler or whatever and give them a big plaque in the Class of 1953 Commons. Donors like that!
I don’t really care which of these solutions Dartmouth chooses. Here’s the important part: nobody should be graduating in debt from a school with $8.5 billion lying around. Perhaps incoming College President Sian Leah Beilock can accomplish this miniscule and easy goal in her first year. If she cannot, then we should let some randomly selected students run the school for a change — they’d do a better job than the current administration.
Marc Novicoff is a member of the Class of 2022.
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