$15 million Duke Endowment gift will help Davidson students avoid student loan debt
June 7, 2007–Durham, N.C.
The Duke Endowment has pledged $15 million to help Davidson College achieve its most significant reaffirmation of purpose in decades—eliminating loans from student financial aid packages.
Beginning in August, Davidson will replace student loans with grants, an initiative that should lead to enrollment of more students from middle and lower income families, and make it possible for students to graduate debt-free. President Robert Vagt said it reaffirms a core value of the college—that a Davidson education should be affordable for all students, regardless of means. "The trustees of The Duke Endowment have consistently encouraged and supported Davidson at points of critical decisions," he said. "Our gratitude for their counsel and support knows no limits."
James B. Duke established The Duke Endowment in 1924, naming Davidson as one of four institutions of higher education to benefit annually from the foundation's philanthropy. Since 1924, The Duke Endowment has made gifts to Davidson of more than $110 million, making the foundation the college's largest single supporter.
"We believe that education must be made available to the most qualified students who seek it, regardless of their family's background or financial circumstances, and this program takes us one step closer to that ideal," said Russell M. Robinson II, chairman of The Duke Endowment. "This bold commitment by Davidson is at the heart of James B. Duke's vision to eliminate barriers and to make education available to all people."
Financial assistance has been a high priority at Davidson for decades, with more than $130 million raised toward this goal in the last two comprehensive campaigns. Those gifts made it possible for the college to steadily reduce the loan portion of the aid package beginning in 2001. In June 2006, with assistance from The Duke Endowment, loans were capped at $3,000 per year, which limited student debt to $12,000 upon graduation. But Davidson's trustees understood that they needed to do more to ensure access for all, and therefore pledged in February to eliminate loans altogether. The decision does not prevent families from taking out education loans as part of personal financing if they wish.
Davidson is the first national liberal arts college, and only one of a few institutions of higher education in the country, to completely eliminate student loans in its financial aid packages. Nationally, college students borrow $53.8 billion per year to cover college costs. In 2005, the average debt for a student graduating from a private, four-year institution was $29,000. A recent Davidson study found that the college's $40,000 comprehensive fee has dissuaded students from applying to the college without ever exploring the financial aid program, assuming their families couldn't afford it. In addition, demographic projections indicate that the makeup of the college-eligible population during the next decade will include an increasing number of students of color and students from low-income backgrounds, who traditionally need more financial aid.
Davidson officials believe that the elimination of student loans in financial aid packages will mean that all students accepted can afford to attend, and will position Davidson as an attractive college choice for top students nationwide as the student demographic evolves. In addition, the elimination of debt will allow Davidson students to follow their post-graduate dreams without worrying about the financial implications of their decisions.
Sarah M. Teo, Class of 2010, of Hudson, N.Y., said financial considerations prevented many of her friends from applying to schools like Davidson. "The concern was paying off loans when they get out of college," she said. "Would we have a good enough job to pay them off, or would we still be paying off loans when we're fifty or sixty?"
"Graduating with no debt does increase the possibility of graduate school for me, because I won't have the burden of undergraduate loans, and then graduate loans on top of that," Teo said.
Thirty-three percent of Davidson students currently receive need-based financial aid, with packages that have included grants, loans, and campus employment. It will cost Davidson $3.5 million annually over the next four years to replace loans with grants, and a total of $70 million to fully endow the initiative. In approving the policy, college trustees committed to lead the effort to raise the necessary funds, and pledged neither to raise tuition nor to reduce academic programming to meet the costs of the policy.
The Duke Endowment, headquartered in Charlotte, N.C. seeks to fulfill the legacy of James B. Duke by enriching lives and communities in the Carolinas through higher education, health care, rural churches and children’s services.
Davidson College is a highly selective independent liberal arts college for 1,700 students. Since its establishment in 1837 by Presbyterians, the college has graduated 23 Rhodes Scholars and is consistently ranked in the top ten liberal arts colleges in the country by U.S. News and World Report magazine.