There are few investments with a greater return than a college education. But growing rates of student debt have far-reaching implications, both as a heavy burden for college graduates and as a deterrent to would-be college students. The Institute for College Access & Success (TICAS) reports that nationally, more than 60% of students graduate with student loan debt, with those borrowers owing an average of $28,950. TICAS also reports that individuals from low-income backgrounds are more likely to experience difficulties making their federal loan payments during the first year after graduation.
It can be challenging for recent college graduates with student debt to take big chances that could accelerate their careers when they need a reliable paycheck to cover loan repayment each month. Those payments can take a significant chunk out of a starting salary, making it hard to save for the future or even cover monthly expenses. And in a job market rapidly reshaped by the pandemic, some graduates may be at risk of defaulting on loans and damaging their credit.
As scholarship providers, we owe it to students to help them minimize the debt they’re taking on in college so that they aren’t overburdened by loan repayments in the years to come. Here are a few principles guiding our approach at the Dell Scholars program.
Offer flexibility in how scholarship funds can be used.
Our funding approach recognizes that the students we serve know their own needs better than we do. The program provides flexibility in how funds can be used, and advisors work closely with students to help them make well-informed decisions about where their scholarship can have the greatest impact. Each semester, we see Dell Scholars applying their awards to not only tuition and fees, but unpaid internship stipends, study abroad, graduate school, and even loan repayment.
Restricting how funds can be used often has unintended consequences, locking up scholarship dollars that could help a student stay on track. Over the years, we have found that when students are empowered to make use of their funds, they are intentional, accountable, and creative about how to make the most of their college experience.
Avoid financial aid displacement.
As a scholarship provider, we make a commitment to every student in our program to serve as a partner and advocate along their journey to graduation. That includes making every effort to avoid financial aid displacement, and the Dell Scholars program fundamentally opposes anything that penalizes students for receiving as much in scholarship funds as they can get.
To that end, our flexibility in how funds can be used extends to how they are disbursed over time. Rather than requiring a predefined, lump sum amount each year, we allow students to access the funds they need based on their other sources of financial aid. That way, students can get the full value of their Dell Scholars award rather than seeing our funds displaced by their college. Administering funds via 529 plans greatly reduces the potential for displacement, and we also provide educational materials through email and social campaigns so students know what to look out for in their financial aid package.
Be a partner in the college journey.
The Dell Scholars program offers more than a scholarship. Our advisors provide individualized support to help students navigate financial, academic, and personal challenges during college. This includes robust financial aid coaching, from comparing award letters and loan types to making smart financial decisions when selecting their college, or even navigating verification. It’s important for students to be able to self-advocate as they make financial decisions that will impact their futures.
As a partner in their journey, the program doesn’t take away scholarship funds if a student’s GPA drops; instead, we’re here to help them turn things around. Dell Scholars also receive a laptop, textbook credits, and resources to address legal, financial, and mental health needs. These tools and services ultimately strengthen the return on our investment as students are better equipped for success in college.
At the Dell Scholars program, putting these principles in practice helps to minimize college debt for the students we serve. In 2020, about 29% of graduating Dell Scholars reported debt at graduation, less than half the national average. Dell Scholars enter college with a high level of financial need, yet the amount borrowers owe at graduation (average of $12,671 in 2020) is also much lower than average.
Most importantly, Dell Scholars have reassurance that a college degree is attainable no matter their financial circumstances. It’s one of the reasons our scholars graduate at twice the national average compared to their peers. And with the ability to manage their student debt after graduation, Dell Scholars are able to pursue the goals they have for themselves and unlock a lifetime of opportunity.