The College announced in a recent press release the implementation of a loan relief program directed at middle-income students. The College tested the program with members of the class of 2016 who applied to the College in the regular decision option, but is planning to expand the program over the next two years.
The College defines “middle-income” as students who receive between $1 and $30,000 in grants from the school as part of their financial-aid package.
In past years, the College has recommended students who need financial assistance take a maximum of $3,500 in federal loans as a first-year student, $4,500 as a sophomore, and $5,500 each as a junior and senior. This amounts to a total of $19,000 accrued in loans over the four years of undergraduate education.
Under the new program, the College will recommend students take out a maximum of only $10,000 in federal loans over the four years. The College will provide grants to students, which do not need to be repaid to make up the difference.
This initiative is being implemented because college officials have noticed a shift in the socioeconomic composition of each class in recent years. According to Daniel Lugo, vice president and dean of admissions and financial aid, approximately 25 percent of the class of 2009 came from middle-income families, whereas only 14 percent of the class of 2015 is part of this same bracket.
“A big part of our motivation to do this was because our community was becoming increasingly bimodal — they were either able to pay the whole cost of tuition or had substantial loan assistance,” Lugo said. Lugo referred to this phenomenon as “the barbell effect” because representation from the two financial extremes was amplified while the group in the middle was shrinking.
As college tuition becomes increasingly more expensive, many middle-income students are leaving school with an increased amount of debt, especially because there are few financial aid programs targeting this group of students. According to Lugo, colleges and universities across the country are also experiencing the barbell effect. However, F&M is one of the first institutions to implement a loan relief program.
“This is an entrepreneurial effort and I’m glad we haven’t sat and watched the situation deteriorate even more,” Lugo said.
Lugo also stressed the importance of the role middle-income students play in the F&M community.
“We want an incredibly deep pool of students to apply from around the country and the world,” Lugo said. “The middle-income group of students is an important part of the College’s socioeconomic mix and is a very talented group of students. We’re hoping this program will encourage students at this socioeconomic status to join the applicant pool and ultimately matriculate at Franklin & Marshall.”
So far, the program appears to be working, as the number of middle-income students increased to 19 percent with the class of 2016.
The College is testing the Student Loan Relief Program over the next two admission cycles, so the program will affect the classes of 2017 and 2018. According to the College’s recent press release on the new initiative, the program will likely cost approximately $1.8 million to support each of these classes over their four years at F&M. To continue the program beyond this period, the College is seeking external funding.
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