The University of Chicago plans to scrap student loans from all needs-based financial aid packages, and replace them with grants.
The grant money will be partly taken from a university funding campaign, which has raised $2 billion so far. The university could also use part of its hefty $6.7 billion endowment.
Additionally, the school is expanding a scholarship program first implemented in 2007, “Odyssey Scholarships,” which provides students from families with “limited incomes” paid summer internships and funding for things like study abroad.
Families seeking financial aid will also be automatically exempted from application fees.
Some schools have similar loan-cutting programs for especially needy students, but they tend to be capped at particular income levels. In 2008, for example, Brown University announced that they would cut student loans for families with incomes less than $100,000.
But so far no other school beats out the College of the Ozarks as the ultimate example of shunning student loan debt. The college forbids all students from taking out loans. Instead, students with financial need are required to work at one of the college “work stations” for 20 hours per week during the year, and 40 hours a week during the summer.
Questions remain about the logistics of programs like the University of Chicago’s, since they must rely on accurate estimations of how much families can realistically contribute to the cost of education. But with student loan debt soaring and Americans souring on the value of college, more schools may be forced to come up with alternative funding programs.
