The University of Michigan announced Monday that it would significantly improve the aid packages of students from low-income backgrounds.
Michigan's announcement follows moves by the Universities of Maryland, North Carolina, and Virginia to eliminate the need to borrow for students in the lowest income brackets. Michigan's plan does not eliminate the need to borrow, but it will provide aid starting in the fall to more than 2,900 in-state undergraduates. In contrast, the other universities' plans are being phased in and will affect fewer students.
The university is committing $9 million to get the program started over the next three years. And Michigan is starting a campaign to raise $60 million for an endowment to cover the program's costs.
Funds will be distributed based on financial need to students at the university's Ann Arbor campus. An example distributed by the university says that a student with family income under $20,000 would receive an additional grant of $1,500 under the program. Such a student's total aid package would stay the same -- at just over $18,000. But the loan total would go from $5,000 to $3,500.
Students from slightly wealthier families might see their loans decreased each year by either $1,000 or $500 through the program, known as M-PACT.
Mary Sue Coleman, Michigan's president, said the goal of the program was "to tear down the barrier of cost for Michigan students of every financial circumstance."
A fact sheet distributed by the university made no apologies for the fact that students who qualify for M-PACT will still need to borrow to pay for college. "Loans are not inappropriate for funding part of a student's college education. Those who complete a college degree have a far higher earning potential than individuals with only a high school diploma -- about a million dollars more over one's lifetime," the fact sheet said. "The cost of attending college represents an investment in each person's future success. However, for low- and moderate-income families, we want to reduce the loan burden by increasing the amount of grant aid we are able to provide."
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