White House ranking calls Penn's 'No-loan' policy into question

Administrators tout affordability, press releases emphasize access and brochures highlight no-loan financial aid — but the numbers tell a very different story.

Statistics released by peer institutions, the White House and even Penn’s own Student Financial Services indicate that Penn is actually among the least affordable universities in the Ivy League.

According to the federal government’s “College Scorecard,” Penn students on average take out $20,407 in loans — the highest amount among all Ivy League universities. The federal government is not alone in singling out Penn for its lack of affordability. Business Insider ranked Penn the third least affordable Ivy in its 2013 college rankings. In terms of cost of attendance, Penn’s $64,200 total cost of attendance is the second most expensive among Ivy League universities for the 2014-15 academic year.

In a meeting with Student Registration and Financial Services Associate Vice President Michelle Brown-Nevers, Financial Aid Director Joel Carstens and Credit Services Senior Director Sharon Pepe, SFS provided updated counter statistics from the Institute for College Access and Success evidencing that Penn does not have the highest median student indebtedness in the Ivy League. Rather, Penn has the third highest indebtedness, with students incurring an average debt of $19,798 as of 2013.

He also pointed out flaws in the federal government’s methodology. “The whitehouse.gov information is 2011 data. My concern is that you’re using some stale information,” Carstens said. “As an institution, we feel more confident in what we’re reporting and what our peers are reporting,” he said in reference to data that universities provide to TICAS.

Carstens isn’t alone in questioning the federal government’s statistics. In a public response to the Postsecondary Institution Rating System, Penn President Amy Gutmann wrote that “the most distinctive characteristics of the University of Pennsylvania’s financial support are not, however, captured in currently available data that apply to all institutions.” Furthermore, she argued that Penn’s “commitment to aggressively recruiting students from underserved and underrepresented populations” was not appropriately captured.

Even according to SFS’s own statistics, however, Penn students take out more loans than students at comparable institutions. Their TICAS reports indicate that 36 percent of Penn students take out loans, the third highest rate among Ivy League universities. Furthermore, the average loan amount, which is currently close to $20,000, has held steady since 2009.

SFS, however, doesn’t think that the high number of students taking out loans is necessarily a bad thing. They point out that 16 percent of Penn students receive Pell Grants, indicating that Penn has the second largest low-income population in the Ivy League, second only to Columbia, and that could explain why so many students have to take out loans. They also note that only 5 percent of Penn students take out nonfederal loans — the rest receive low-interest debt through federal programs.

“The fact that we have an all-grant aid policy that doesn’t require them to borrow means that it’s now a long-term debt instrument that the family can use to help pay their cost. It’s not that the family can’t afford what we’ve determined, it’s that they have alternative methods they can use to pay that cost,” Carstens said. “I think what we see most often, as far as the average student, is that they’re borrowing because it’s available to them, not because it’s required.”

Students of all backgrounds, however, said they had no other choice. “It’s out of necessity.” College freshman Leigh Ann Eisenhauer said. “It’s not like I’m taking out loans just because they’re available to me.”

Eisenhauer, who hails from a middle class family and did not receive financial aid despite numerous appeals, has already taken out $12,000 in loans and expects to take out more in the future. “My parents shouldn’t have to work 10 more years to put me through college,” she said.

College freshman Rita Wegner, who is on financial aid, has been put in an even worse situation — both she and her parents have taken out loans. “My total [loan amount] is $3,500,” she said. “My parents took out the rest of what Penn didn’t give me” — a total of $15,000 — “because we felt we couldn’t pay anything.” Both Wegner and Eisenhauer said that they didn’t receive enough money because they owned a house. “You can’t just sell your house and buy a new house and use that money for college,” Wegner said.

For these students, debt is much more than a number. Unlike most other debt, student loans generally cannot be discharged in bankruptcy, and the government can garnish wages or take tax refunds or Social Security payments to recover the money owed. Graduating with debt can have long-term consequences – it makes it more difficult to fundraise for a small business and can create obstacles in getting a mortgage for a house.

Debt also affects day-to-day life on campus. “It really impacts how you look at future careers because you’re not only trying to be financially secure but you have all this debt you’re graduating with that you have to handle,” Eisenhauer said. “I pay for everything here and so I’m limited in what I can do... I think a lot of people are excluded because of that.”

Whether or not Penn is affordable, the administration is making efforts to reduce student debt. Between 2009 and 2013 the number of students taking out loans fell from 41 percent to 36 percent. “Our goal is to get to a broader section of the undergraduate students and find more information about why students take out loans,” Carstens said.

A previous version of this article referred to the White House’s “College Scoreboard” instead of the “College Scorecard.” The DP regrets the error.

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