A shocking revelation has been made about two renowned Chicago universities, Loyola University Chicago and DePaul University. A recent report by the progressive think tank New America has exposed a disturbing trend: these institutions are allegedly favoring wealthier families when it comes to financial aid, pushing low-income families towards taking on hefty loans.
The report, released on Thursday, paints a concerning picture. It highlights how these universities are offering attractive scholarships to high-achieving students from affluent backgrounds while leaving lower-income families with a financial aid gap, forcing them to borrow beyond their means.
But here's where it gets controversial...
According to the report's author, Steven Burd, these schools have a high percentage of lower-income families taking out loans they can't afford to repay. In some cases, the loan amounts exceed the parents' annual earnings!
Burd explains, "The fear is that these families are being put in a financial jeopardy they can't escape."
The report focuses on federal Parent PLUS loans, which are designed to help families cover tuition costs not met by other means. However, these loans, with their high fixed interest rates and fees, were never intended for low-income families. They were meant to assist middle- and upper-class families in sending their children to prestigious, expensive institutions.
DePaul University, in response, claims to provide scholarships and grants and offers information on various loan options. A Loyola spokesperson, on the other hand, requested time to review the study before commenting further.
And this is the part most people miss...
Schools are not held accountable if borrowers default on Parent PLUS loans. With the Trump administration set to resume wage garnishments for defaulted student loans, the financial burden on these families could be devastating.
Burd argues that the problem lies in the way schools allocate their financial aid funds. They offer merit-based scholarships to high-achieving students, often leaving low-income students with no choice but to take on loans.
The report suggests that some universities use this strategy to improve their national rankings and transform themselves into competitive institutions.
To identify these practices, Burd analyzed colleges where a significant portion of Pell Grant recipients (meant for low-income students) had parents taking out Parent PLUS loans. At DePaul, an alarming 53% of students whose parents took out PLUS loans were Pell Grant recipients, with an average loan amount of $33,000. At Loyola, the situation was similar, with 48% of students whose parents had PLUS loans also receiving Pell grants, and an average debt of around $46,000.
"These are families earning $30,000 or less, yet they're taking on $30,000 in debt to send their kids to school," Burd said.
A DePaul spokesperson emphasized the university's efforts to ease the financial burden on students but did not directly address the concerns raised in the report.
The 41 colleges and universities mentioned in the report collectively spent $2.4 billion of their financial aid on students who didn't need it in 2023. Nearly $2 out of every $5 spent on financial aid went to students considered able to afford college without additional aid by the federal government.
Burd's research started with a list of over 300 selective colleges and universities, excluding historically Black colleges and universities due to their historical underfunding, and art schools due to their high costs. He then identified schools where at least one-third of PLUS loan borrowers were parents of Pell Grant recipients, with a median loan amount of at least $15,000.
Some lawmakers have taken note and capped Parent PLUS loans at $65,000 per child, but Burd argues this is still too much for many families. He believes legislation is needed to prevent schools from steering families towards unaffordable loans.
"The worry is that private lenders will step in and offer even more predatory products," Burd said.
This report raises important questions about the ethics of financial aid practices in higher education. What are your thoughts? Do you think these universities are responsible for ensuring financial accessibility for all students, regardless of background? Or is it up to families to make informed decisions about their financial capabilities?
