Smith College will replace students’ loans with grants

NORTHAMPTON — On Friday, Smith College became the latest elite college to eliminate loans as part of its undergraduate financial aid packages, replacing them with grants from the college.

Smith College announced Friday that beginning next fall, all students receiving need-based institutional aid — more than 60% of students, the college said — will receive an increase in their grant from the school. In addition to replacing loans with grants, the school will also award one-time $1,000 “start-up” grants to entering students whose family contributions are expected to be less than $7,000, and $2,000 “launch grants” for seniors transitioning to life after college.

In a phone interview Friday, college President Kathleen McCartney said that the boost in financial aid — an annual increase of $7 million, bringing the college’s aid awarded next year to more than $90 million — will be a “game changer” for students.

“They’re going to be able to leave school without debt,” McCartney said. “And I think that means it’s going to be easier for them to start careers, to go to graduate school.”

McCartney added that the Black and Latino students tend to graduate with more student loan debt across the countryk and that offering these grants will allow the college to attract the best students from across all income levels.

“I think this sends a powerful signal about our commitment to racial justice and equity,” McCartney said.

The announcement came shortly after the college’s board of trustees voted on the change Friday morning. McCartney said the vote brought the board to its feet for applause, with some like her shedding tears at the announcement.

The money for the new financial aid grants will come from returns on the school’s endowment, which McCartney said has grown to $2.6 billion, as well as donations from alumnae of the school.

“Thanks to careful stewarding of those resources as well as our investment returns, we are able to do this,” she said.

Joanna May, the college’s vice president of enrollment, said that currently when students receive financial aid from the college, those funds are packaged with federal loans — or, for international students, loans from the college itself. Now, those students will receive grants instead, although they will still be able to take out federal or private loans to cover any other costs they have left, May said.

In making the move to eliminate loans from its financial aid packages, Smith joins Amherst College and a handful of elite institutions including Harvard University, Yale University and others that have taken a similar step.

In 2007, Amherst College announced it was replacing loans with scholarships. At the time, higher education officials applauded the move while noting that few institutions have the money to make that kind of commitment.

In 2006, Amherst College’s endowment stood at $1.15 billion. That number is now $3.7 billion. Earlier this week, Amherst College announced it was expanding its financial aid expenditures on those coming to the school from low- and middle-income families.

In a letter to campus Friday, McCartney noted that she was a first-generation college student who relied on financial aid.

“Higher education should be a right, not a privilege,” she wrote. “For this reason, I could not be more proud to share this great news with you.”