An additional 1,600-1,700 students at Emory University received grants and scholarships instead of loans in their financial aid packages this fall, the Atlanta-based institution announced recently, more than doubling the number of undergraduates expected to finish school with limited or no debt. The increase is due to the expansion of the university’s Emory Advantage program, which replaces loans with grants for students from low and middle-income families, to every student receiving need-based aid.
“We already attract really, really strong students,” said John Leach, associate vice provost for enrollment and university financial aid at Emory. “This allows us to enroll those students. We do not want a financial obligation to be a burden or a hurdle between a student being admitted and becoming enrolled and graduating.”
The additional grants, which averaged $4,700 for the current school year, cost the university approximately $7 million dollars, according to Leach. They are funded by growth in Emory’s endowment from the 2020-21 year. Although the replacement of loans with grants will not eliminate debt entirely (students may still take out loans to meet their estimated family contributions or for other reasons), Leach expects the benefits to be significant.
“We expect the debt of our undergraduate population to be cut roughly in half,” he said, “from about $19,000-$20,000 of need-based loan debt to about $10,000.”
Emory’s expansion of its no-loan policy is part of a trend towards replacing debt with grants, at least among wealthy schools. As of 2019, 54 institutions have some form of no-loan policy, according to a study by Dr. Chris Bennett, a research education analyst at RTI International. These schools include nearly all of the Ivy League.
Bennett believes that these programs can powerfully affect not only the students who receive grants but schools that are trying to change the economic makeup of their campuses.
“One of the main goals that institutions state is that they’re looking to diversify their student bodies,” he said. “I found that programs like this were the strongest design to increase students who are Pell Grant recipients. That really can change what it’s like to be on campus.”
Bennett’s study found that no-loan programs increase Pell Grant recipients by approximately 10-15%.
The motivation for creating no-loan problems has not always been strictly altruistic, however. The initial wave of no-loan programs took place starting around 2008, when there was talk within the government about taxing endowments or forcing schools to spend them down.
“I think institutions were trying to cut that off at the pass,” said Bennett, “or make a good faith show of what they can do with their large endowments.”
No-loan programs have also not had the expected effect of helping to diversify campuses ethnically and racially, at least at public institutions.
“Black, Latinx, Native American students at public institutions, these types of programs actually appear to lead to a decrease in those students,” said Bennett. “We hypothesize that if you’re focusing on a program based on someone’s socioeconomic status, you might not devote as many resources to increasing racially minoritized students.”
Nevertheless, no-loan programs have popped up at an increasing rate in recent years. In addition to Emory’s expansion, Smith, Colgate, and Bryn Mawr Colleges are just a few of the institutions that have announced the replacement of loans with grants, at least for some students.
Bennett and other experts attributed the upswing to the increasingly urgent country-wide conversation about college costs.
“It’s tying into that national narrative about affordability,” he said. “That makes it a competitive advantage for an institution to offer a no-loan program.”
Programs like the Emory Advantage also make the cost of college clearer.
“A no-loan program removes the guesswork for students,” said Bennett. “It makes the decision process much easier.”
Pressure from government programs that offer free tuition to state colleges might also be a factor, according to Dr. Kelly Rosinger, an associate professor at Penn State’s College of Education.
“More than 20 states have some type of state-wide free college program,” she said. “I think private institutions are realizing that they need to be able to offer more institutional aid to students to be able to compete.”
However wonderful the expansion of Emory Advantage may be for the students who benefit, programs like it may not be sufficient to address the difficulties that students with financial need face in applying to Emory and other elite schools.
"One financial aid program, while it certainly offers help to many students, isn’t going to dramatically change the landscape,” she said. “The barriers students face are really complex and extend beyond a simple fix.”
Still, Rosinger agreed that Emory’s action represented movement in the right direction.
“We’re not turning over the table. We’re not suddenly changing the game that students are playing,” she said. “But we are taking steps.”
Jon Edelman can be reached at JEdelman@DiverseEducation.com.