One college in Michigan has promised to pay the student loans of any of its graduates if they earn less than $37,000 per year.
In an interview on "Fox and Friends," Adrian College President Jeffrey Docking said that the college has decided to take out an insurance policy on every incoming freshman and transfer student with with student loans and at least two years of schooling remaining. The college has set up the policy of paying all or part of student loans for graduates making less than $37,000.
While the main concept has been around for awhile at schools like Yale Law School and through specific programs like seminary and social work degrees, Adrian has taken it one step further by looking at it as a solution to the rising cost of tuition and student loan defaults.
In order to qualify, graduates must find and maintain a job working at least 30 hours a week, which is not allowed to be a family business, reports Dan Cherry for The Daily Telegram. Full monthly payments will be made for graduates making less than $20,000 per year, and for those making more loan payments will be paid on a sliding scale.
The payment plan has no time limit, although there is a payment cap of $70,000 per student. Before financial aid, the annual cost of tuition, room and board at Adrian is $40,000.
"You never know when the economy is going to go south. In â08 and '09, so many of those kids made the right decision, and there wasn't a job waiting for them. And we're saying, âWe're going to take care of you, and we understand you don't want you to leave with a mortgage, and if you do, you're going to be OK if you can't find a job,'" he said.
Docking said the idea for the policy came after a conversation four years ago with Charles Webb, who at the time was president of nearby Spring Arbor Academy. Webb had told Docking that student enrollment was down due to fears of being unable to repay student loans without a high-paying job, especially for those students majoring in ministry.
"There was an insurance agency willing to insure kids like that, and he did it for a small number of students," Docking said. "I came back to my senior team and asked, âLook, if we did that for everyone, would it improve enrollment? Would this help kids and have coverage for their loans?' We talked about and decided to do it."
So far the plan has cost the college $575,000, or about $1,165 per student, for policies on its 495 students. In order to pay for the plan the college needed to bring in an additional 30 students, but has managed an extra 50. Docking said the results on the investment are "fantastic."
The school is home to 1,700 students.