Colgate University is using its billion-dollar endowment to address the issue of college affordability, starting with 600 freshman students this fall.
To tackle the growing burden of student loan debt, the New York-based private liberal arts college earlier launched an initiative called the Colgate Commitment: An Initiative in Access and Affordability that will provide full tuition support for the lowest-income students and more, beginning with about 600 students in the class of 2026.
"We have a $1.3 billion endowment for a relatively small school," Colgate University President Brian Casey said on Yahoo Finance Live (video above). "We have very strong alumni support. So we went to our alumni and said: 'We want to start taking away student loans.'"
Casey added that the school was "able to do it very quickly. So we relied on our alumni to help make this possible and they did it."
'One of the greatest days in my life'
Casey explained that anyone attending Colgate from families making an income of less than $150,000 will not have to take federal student loans and instead receive grants.
On top of that, students with an annual family income of $80,000 or less will attend tuition-free.
"One of the greatest days in my life was the day we got to send out emails to all the sophomores, juniors, and seniors, and to tell them 'your loans just got taken away,'" Casey said. "600 students' lives were changed immediately. And so, I just have to thank our alumni who produced those resources for it right away. ... We're in a very fortunate position that we can do this, but I think any institution that can push this way really ought to, we have an obligation to the nation to do that."
Other highly selective schools are doing the same: Earlier this week, Smith College also announced that it was eliminating loans from its undergraduate financial aid packages starting in fall 2022, and replacing them with grants. Amherst's and Princeton's track records with no loans are far longer.
Amid a national conversation over the cost of college and whether it delivers an adequate return on investment, Casey stressed that education at a four-year college was more than just a degree.
"There's lots of ways you can measure the value of an education, and particularly our form of education," Casey said. "We teach the liberal arts, so we're explicitly not teaching them careers, but we're teaching them how to be thoughtful people in the world and empathetic people."
Plus, the goals the school sets for its students are broader and focuses on civic-mindedness, he added.
"We also want them to be educated citizens," Casey said. "We want them to be contributing members of their local communities in the state. We want them to be leaders. We want them to be thoughtful."
He continued: "Look at what's happening in the country with people are coming in all the time. Don't we want to make sure that we're educating thoughtful readers, thoughtful thinkers, people who know how the government runs... [and] people who know how to live with other people?"
Aarthi is a reporter for Yahoo Finance. She can be reached at firstname.lastname@example.org. Follow her on Twitter @aarthiswami.