Around 4pm yesterday, CMC President Pamela Gann announced in an e-mail to the student body that the CMC Board of Trustees has ended the college’s “No Packaged Loan” financial aid policy.
Need-based students who enter CMC in fall 2014 will be given “reasonable loan amounts of up to $4,000 per year in the financial aid package.” Students up to the Class of 2017 will not be affected by the policy change.
In 2008, the College instituted the No Packaged Loan policy to work towards implementing no-loan financial aid programs. At the time, the College analyzed that replacing loans with grants or scholarship would be possible, if the College simultaneously reduced merit aid dollars and reallocated unrestricted endowment funds previously supporting 0% interest loans.
In light of the recent financial collapse and economic recession, however, the Board of Trustees met to reevaluate the sustainability of the No Packaged Loan policy. At the March 9, 2013 meeting of the Board, members engaged in discussion to come up with the most effective strategies “to ensure CMC remains accessible and affordable to all qualified students, regardless of need,” said the email. The Board’s decision was aided by insight from the Admission and Financial Aid Committee, who had previously conducted qualitative and quantitative research on the effects of the No Packaged Loan financial aid policy for low-income and minority applicants over the past five years.
In spite of the annulment of the No Packaged Loan policy, the Board is committed to preserving need-blind admission. In the email, Gann explained that the Board plans to uphold the following four tenants to ensure affordability of college education:
- Provide access to qualified students based on academic talent, instead of on financial need.
- Strengthen need-blind admission and meet full-need policies with additional fundraising.
- Ensure loan levels are reasonable and affordable.
- Sustain the current financial aid budget, with periodic evaluation of said budget in the next five years.
To sustain financial aid money in the future, the Board has developed a plan to fundraise specifically to secure additional support for financial aid.
Gann explains in the letter that this was in no means a light decision, since the College identifies “need-blind admission as one of our most important values.” Gann says that the College will continue it’s “long-standing commitment to need-blind admission and to [meet] the financially demonstrated need of all admitted, domestic freshman students.”
In closing her e-mail, Gann commented about the possibility of similar evaluations of financial aid policies in educational institutions around the world.
Said Gann, “It is important for each institution to develop a strategy that assists students and their families to afford higher education with a program that is financially sustainable for the institution. I believe that is what we have done here.”
The college’s financial aid website has not been updated to reflect these changes.
The full version of Gann’s email is reprinted below:
March 14, 2013
Dear Members of the Claremont McKenna College Community,
I am writing to update you on an important action taken by the Board of Trustees at its meeting on March 9, 2013. In particular, the Board acted to end the College’s “No Packaged Loan” financial aid policy. Beginning with the fall 2014 entering freshman class, the College will reinstate its former practice of including reasonable loan amounts of up to $4,000 per year in the financial aid package for need-based students. This policy change will not affect any current students during their remaining time at CMC, nor will it affect new students enrolling in fall 2013.
This decision was not taken lightly, as we know that there are challenges and pressures that some families face regarding the affordability of a college education. However, our current situation is best understood in view of the College’s long-standing commitment to need-blind admission and to meeting the financially demonstrated need of all admitted, domestic freshman students. The College’s Strategic Plan identifies need-blind admission as one of our most important values, and highlights the importance of insuring our need-blind policy is financially sustainable over the long term. Therefore, I wanted to take this opportunity to briefly discuss the background of the No Packaged Loan policy, and the reasons why the Board determined it was necessary to end the policy at this time.
The College adopted the No Packaged Loan policy in the spring of 2008, just prior to the global financial crisis, at a time when a number of CMC’s peer colleges and universities were implementing various forms of no-loan or reduced-loan policies. At that time, the College completed an extensive financial analysis of the cost of a no packaged loan policy. The financial projections indicated that the College could replace loans with grants within its existing financial aid resources through a combination of actions, including reductions in the amount of merit aid and, most significantly, a reallocation of unrestricted endowment funds that were then being used to support a 0% interest institutional loan fund.
The financial collapse that caused the recent economic recession soon followed. As with most colleges and universities, the economic conditions of the past several years have placed significant pressure on the College’s operating budget. The College has worked to navigate through this period, which has included increasing our commitment to institutional financial aid at almost twice the rate of tuition increases. But we have had concerns about the sustainability of the No Packaged Loan policy, as we have focused on doing everything we can to ensure CMC remains accessible and affordable to all qualified students, regardless of need.
It is within this context that the Board has been engaged this year in a number of important discussions related to the costs and funding of a CMC education, and about the No Packaged Loan policy in particular. This discussion has also included valuable insight and analysis from the faculty, particularly from the faculty’s Admission and Financial Aid Committee (AFAC), who examined the effects of the No Packaged Loan policy on lower-income and minority applicants since the program’s inception five years ago. The Board weighed the AFAC’s findings in their decision and is appreciative of this research.
Through these discussions and careful analysis, the Board decided that, although the No Packaged Loan policy was important to preserve, if feasible, the College’s overarching priority should be to preserve and protect the College’s need-blind admission policies.
In making the decision to eliminate the No Packaged Loan policy, the Board reaffirmed several important commitments:
- That the College is committed to providing access to all qualified students based on academic talent and not on financial need;
- That the College is committed to securing and strengthening its need-blind admission and to meeting full-need policies by making fundraising for financial aid a priority;
- That the College is committed to ensuring that packaged loan levels are reasonable and affordable;
- That the College’s financial aid budget will not be reduced by this decision, and ongoing evaluation of the financial aid budget should take place during the next five years.
To help meet these goals, the Board authorized the administration to develop a plan for a targeted fundraising initiative that will focus on securing additional support for financial aid.
It seems probable that many colleges and universities across the country will soon be conducting similar evaluations of their financial aid policies and making changes. It is important for each institution to develop a strategy that assists students and their families to afford higher education with a program that is financially sustainable for the institution. I believe that is what we have done here.