Summary
In 2007, Davidson College became the first private liberal arts college to offer its students a financial aid package that meets 100% of their demonstrated need without any loan component. The Davidson Trust has increased the access to Davidson College of students from lower and middle-income families, contributing to a more economically diverse student body. Pre-Davidson Trust, need-based financial aid was accorded to approximately 33% of Davidson students; post-Davidson Trust, an average of 45% of entering students is qualifying for need-based aid. The best estimate of the annual incremental cost of The Davidson Trust is in the $7 to $8 million range over the near term. The current financial crisis will place heavy pressure on Davidson College and schools with similar financial aid packages to raise the funds needed to support their no-loan policies. A challenge for these schools will be to address their short-term financial shortfalls without compromising the longer-term goal of providing greater access. Possible temporary remedies could include a return to providing some loans, moving toward need-sensitive admission, or explicitly capping the total financial aid expenditure by the institution. Each institution will need to assess the relative desirability of such modification of policy.
