Doing Better: NC colleges look for better ways to manage student debt

As the cost of higher education continues to skyrocket and federal and state funding for it declines, America’s college students and their families are facing a well-publicized debt crisis.

In an article last month for, financial aid expert Mark Kantrowitz reported that two-thirds of students nationally who earned a bachelor’s degree in 2015 graduated with debt – and their average debt hit a new high of $35,000. Twenty years ago, just half of those earning bachelor’s degrees graduated with debt, and it averaged only about $10,000.

Meanwhile, Samuel Garner, a bioethicist in Washington, D.C., put a human face on the problem in a recent, much-discussed essay for the online magazine Slate. He explains how he and his family racked up nearly $200,000 in debt – much of it unwittingly through private, high-interest loans – while financing his undergraduate and graduate educations.

In an age of growing income disparity, earning a college degree is increasingly necessary for landing a good job. But the financial impact for graduates, who often struggle for years to pay off their student loans, can be monumental. Studies by Kantrowitz and others show that graduates saddled with high debt frequently pursue work outside their field of study in search of higher salaries. They also delay buying houses, starting families and saving for retirement. In short, they enter adulthood on a financial precipice.

This year’s Republican and Democratic presidential contenders are focusing on the problem as never before, with several candidates rolling out proposed solutions. Yet, as the national debate about the student loan crisis roils, a number of private and public colleges and universities in North Carolina are already experimenting with better ways of managing the debt challenge.

No-loan policy

None have been bolder than Davidson College. To maintain its long-standing commitment to affordability, the school announced in 2007 that its financial aid packages would no longer contain any loans – just grants and campus employment. Through an initiative called the Davidson Trust, Davidson became the nation’s first liberal arts college to implement a true no-loan policy. Today, it is one of fewer than 20 higher education institutions of any size in the U.S. – and the only one in North Carolina – with that approach.

When Davidson rolled out the plan, questions lingered as to how sustainable it would be. Nearly a decade later, it is thriving thanks to generous support from charitable foundations, alumni, students and other donors who have raised more than $141 million in commitments to the Davidson Trust. “It’s a community project,” says Davidson President Carol Quillen – and one that’s focused, she says, on “creating a society where equal educational opportunity is actually real.”

The initiative is getting the results the college hoped for: a significantly more diverse body of students who graduate on time and transition smoothly into the workforce. Since 2007, applications and admissions for minority groups, first-generation students and federal Pell Grant recipients have all risen steadily.

Other higher education institutions across the state have put variations of Davidson’s policy into play. Duke University and UNC-Chapel Hill, for example, do not include loans in financial aid packages for low-income students. Appalachian State University and N.C. State University offer no-loan plans for in-state students with low-income backgrounds.

Talent strategy

Many colleges and universities do not have the resources to adopt no-loan policies, but they can play a more proactive role in helping students borrow wisely. “What we’re seeing as a larger trend is colleges stepping up to provide financial education and debt management support to students,” said Allesandra Lanza, a spokesperson for the Boston-based nonprofit American Student Assistance. “Eliminating debt altogether, for most schools, is a tall order, but there’s no question that schools can be doing more to prepare students to handle the debt.”

ASA provides financial literacy training and loan counseling for students at partner schools throughout the U.S. North Carolina is one of the most active participants with 11 institutions in the network, ranging from Pfeiffer University, Queens University and Rowan-Cabarrus Community College to East Carolina, N.C. State and Pitt Community College.

All of these efforts bode well for North Carolina. As Quillen puts it, “The Davidson Trust is a talent strategy. It’s about attracting the most talented students in the country to Davidson.” That’s great news for our state’s talent pipeline – and a challenge for our other colleges to recruit in more innovative ways as well.

Christopher Gergen is CEO of Forward Impact, a fellow in Innovation and Entrepreneurship at Duke University, and author of “Life Entrepreneurs: Ordinary People Creating Extraordinary Lives.” Stephen Martin, a director at the nonprofit Center for Creative Leadership, blogs at They can be reached at and followed on Twitter through @cgergen.