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F&M launches Student Loan Relief Program to aid families in middle bracket

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As part of efforts to help families confront the challenges of college affordability and rising student loan debt, Franklin & Marshall College is launching a two-year pilot program in financial aid packaging to learn if the prospect of reduced indebtedness affects college choice.

Through the Student Loan Relief Program, F&M pledges to cap federal loans packaged for qualifying entering students in the middle bracket -- those receiving institutional grants from $1 to $30,000 -- over their four years at a total of $10,000. The College will replace previously packaged loan amounts above the cap with College grants that do not have to be repaid for these students.

"The College's generous financial aid packages and significant expansion of our aid budget over the past four years has made F&M more accessible to low-income students, including the 17 percent of entering students eligible for Pell Grants," F&M President Daniel R. Porterfield said. "But the declining enrollments nationwide of middle-class students make it clear that this group needs more support. We want to help these families."

It's important for students and families to invest in their education, Porterfield said, but knowing they can obtain an empowering liberal arts education with manageable student loans can help students avail themselves of the lifelong lessons they'll learn at F&M, which will open many doors for them in the future.

"Helping families in the middle bracket helps build an academic community that gathers together students from all walks of life," Porterfield said. "This is essential to the quality of education we offer."

F&M explored this approach for a representative portion of the Class of 2016 that enrolled this fall and was successful in increasing the percentage of students from this middle bracket in the pilot group who accepted the College's offer of admission. Piloting the program for two entering cohorts will benefit all qualifying students in this bracket in the classes of 2017 and 2018, allowing the College to determine with broader application of the program whether such students who are offered loan relief are more likely to pursue an F&M education.

"F&M joins most highly selective private colleges and universities nationwide in being concerned about a significant decline in the proportion of students drawn from middle-income families," said Daniel Lugo, vice president and dean of admission and financial aid. "We're taking action on a national issue because we want those students to know that F&M is accessible to them."

Students in the middle bracket increasingly are facing the perception that a high-quality college education is not affordable, Lugo explained. They often fall into an unintentional gap in financial aid programs between those students who have no need for aid and those who have high need and therefore receive significant aid.

"These families are straining against their family's resources and often incurring substantial debt to benefit from the type of education that F&M offers," Lugo said. "We undertook an analysis of our aided students that showed that these students graduate with higher levels of debt than low-income students. The College is excited to be able to explore ways to further help families in this middle bracket."

Last year, the College promoted the four-year, $10,000 loan cap to admitted students who applied through the regular-decision cycle whose demonstrated need through F&M's need-based financial aid assessment would qualify them for an aid grant in the range of $1 to $30,000.

Students benefitting from the loan-relief program learned that F&M had reduced the required federal loan component of their financial aid package to just $1,250 in their first year -- an estimated $2,250 less in loans than they would have been asked to incur. The College pledged to increase these students' F&M Trustee Grant by $2,250 for each of their four years of study, provided that the students continue to demonstrate a need for financial aid. 

The enhanced financial aid package could save each of the qualifying students in this year's freshman class an estimated $12,400 in additional loan principal and interest payments over a typical 10-year repayment period. The increased need-based grant and reduced packaged federal loan affords families the opportunity to take on additional federal loans, though only if they choose to do so.

This will apply to all F&M students in the middle bracket who receive financial aid grants from the College amounting to $1 to $30,000 per year and who enter over the next two years, whether they apply Early Decision or Regular Decision. It also will apply to qualifying students in the class of 2016 who applied Early Decision and entered this year but weren't part of the original pilot.

The College expects the Student Loan Relief Program to cost up to $1.8 million to provide the loan-relief for the two new classes of students in the pilot over their next four years and is seeking external funding as part of its considerations for expanding the program for additional classes of students.

The College hopes to build on early indicators of success in increasing the number of students in 2012 who enrolled at F&M from the middle bracket. These students represent 19 percent of this year's first-year class, up from 14 percent of the entering class before the loan-relief program.

"We hope that continued targeted action will provide middle-class families the support they need to take advantage of opportunities for our excellent education," Lugo said.