While many colleges have worked to reduce student costs and debt, Amherst joins two others, Princeton and Davidson, in removing loans [..]

Amherst will count on increased donations by alumni to come up with the estimated $1.6 million required annually to fund the program in addition to the $1.4 million the school now spends per year on scholarships, she said.

[...] Tom Parker, dean of admission and financial aid. “Graduates from low- and middle-income families should have the same array of career options as graduates from upper-income families.”

About a third of Amherst’s 1,600 students last year received some sort of financial aid package that included school or federal loans.

The loan components of those packages will be replaced by scholarships.

True story, from when Princeton eliminated loans. I called a Williams trustee I’d known for 25 years. Why did Princeton beat Williams to this? Williams can afford it.

“Oh, we talked about this,” said Trustee. “We think it’s wrong to give something away that’s worth $50,000 a year (cost, not price, of Williams back then) without any obligation, without ’skin in the game.’”

I sought clarification. I’m paraphrasing, but the answer was that it’s wrong to give anyone a Williams education for nothing. Students need to feel the investment, hence ’skin in the game.’ Trustee agree that whether Williams could eliminate loans was not a financial problem, given the endowment. The issue the board debated was whether “giving” a Williams education was the right move from a moral, not a financial, perspective. Several others at this trustee discussion, verified the use of the term ’skin in the game’ and the substance of the decision not to follow Princeton.

“Wait a minute, Trustee,” I said. “Your entire education, Williams and all, was a gift outright from your parents, as was mine. No one required us to have ’skin in the game.’ You mean that wealthy students don’t need skin in the game but poor students do?”

Thus was a friendship incinerated. Trustee had no answer.

Now, as far as the philosophy of following Princeton and Amherst goes, many people will have many views on the right move. I hope and pray that the current trustee debate is on more honorable ground. I am sure the presidents of Williams and of Amherst do all they can, but this isn’t their call and after the decisions, the presidents’ job is to support the trustees.

I think “maximum debt” is a relative term. Perhaps that’s maximum debt in the the student’s name. It sure doesn’t reflect the family debt.

Fingers crossed for a better application of a Williams education in whatever discussion the trustees are now having on this issue.

So young and filled with surliness.

Not filled with surliness, hopefully. Just occasional touches.

Everyone knows that these decisions have tradeoffs, and one might have hoped that this discussion would include some intelligent analysis of those tradeoffs instead of just stating the obvious, that they exist. I do get a little offended when those presumably older and wiser than myself choose to make insulting pronouncements about elementary-school economics instead of contributing to substantive discussion.

Amherst going loan-free gets a lot of free publicity and possibly a reputation boost: if Amherst grads five years from now are going into teaching, humanitarian work or grad school while Williams grads are still becoming bankers at an alarming rate, that doesn’t look very good for Williams. And any improvement to financial aid, including eliminating loans, also enhances reputation by helping to attract more high-caliber students, which of course have other benefits: good students help attract other good students, who attract good profs, which boosts reputation further, etc. The question is whether the benefits to Amherst or Williams of going-loan free will be worth the considerable cost (for Williams, estimate $4500/yr/student for 1000 students = $4.5 million per year). Marx apparently thinks that, for Amherst, they will.

And, on second thought, there may not even be any trade-offs here, at least as far as Amherst and Williams are concerned. As Jeff Z. pointed out, this is exactly the sort of thing that can drive a capital campaign. Going loan-free would give Williams an excuse to demand more money from our rich alums, thus diminishing or even eliminating any monetary trade-offs whatsoever. That’s the magic of running a college instead of a business.

Really? Thanks, Frank; I’m sure the rest of us were too stupid to realize that.

So young and filled with surliness.

Money is not manna. Its allocation involves trade offs.

Really? Thanks, Frank; I’m sure the rest of us were too stupid to realize that.

Could it be that the burden of loans is actually what pushes some Williams and Amherst grads into investment banking? I know I’ll probably hesitate to take a low-paying job after graduation with $18k hanging over my head. Perhaps eliminating loan debt would give grads more freedom to seek out jobs they love and can be of service in.