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Houghton’s safety net: College will help repay student loans for graduates in low-paying jobs

With its tuition in the middle of the pack for private institutions, Houghton College has fared well over the years in independent affordability and value rankings.

But Houghton administrators heard a common refrain from prospective students who had indicated a desire to attend the liberal arts school in Allegany County, but ultimately opted not to enroll.

“They were saying, ‘We think it’s too much money,’ or, ‘We’re concerned about the debt,’ ” said Eric Currie, vice president for enrollment management at Houghton. “We were bleeding students on the issue of costs.”

Administrators at Houghton expect to help its graduates and turn enrollment decline around this fall with the help of an unusual program that aims to ease concerns about student loan debt. It is one of 10 colleges and universities across the country offering a reimbursement plan to all incoming students, and it’s the first institution in Western New York to participate.

Freshmen and transfer students at Houghton who graduate within six years will get help repaying their loans if they make less than $38,000 annually.

The college has teamed up with the LRAP Foundation in Bloomington, Ind., to offer the loan repayment assistance program.

“We understand that there’s fears around loans, and so we’re offering this,” Currie said. “We believe in our degree, and we’re going to back it up.”

The college pays an undisclosed fee per student to LRAP for the loan repayment assistance guarantee.

Graduates who earn less than $20,000 will be reimbursed the full amount of their student loan payments.

The benefit shrinks proportionally as a graduate’s income increases, up to $38,000. The assistance continues until the loan is repaid.

More than a dozen other schools offer loan repayment assistance through LRAP to a limited selection of their students – and LRAP is signing up new colleges and universities at a rate of three a month, said Carroll Stevens, president of the LRAP Foundation.

About one-third of graduates of schools that offer the loan assistance plan avail themselves of at least some assistance, and, on average, the benefit comprises 82 percent of the loan payments they make, Stevens said.

“Educational debt has become more a fact of life for all families,” he said.

So why doesn’t Houghton, which charges $28,000 in tuition for 2014-15, reduce tuition or increase financial aid, instead of paying a fee to LRAP?

Currie said its not so simple. Houghton relies heavily on tuition, so it can discount only so much before it affects the quality of its programs and services.

“On the one side, families will say, ‘That’s a lot of money,’ but on the other side, they say, ‘We want four dining options and residence halls that are fully tricked out,’ ” he said.

Over the past five years, enrollment at the Christian college dropped by 355 students, a quarter of the entire student body.

The LRAP model aims for students to enroll at their preferred college, rather than picking another college simply because of its lower tuition or better financial aid package, Stevens said.

In 2013, about 57 percent of incoming freshmen enrolled at their first-choice campus – the lowest percentage since 1974, according to the Higher Education Research Institute at UCLA.

At the same time, nearly half of freshmen reported that their school’s financial aid offer was a “very important” factor in their college choice decision – the highest percentage in 42 years.

The foundation also wants graduates to be able to make early career decisions without having the burden of college debt influencing those decisions.

“When they graduate, they can pursue their calling in life,” Stevens said.

Colleges benefit from LRAP, as well, because the program’s fees are far less expensive than the amount of discounting necessary – usually $5,000 to $10,000 – to sway a student’s decision away from another school that’s cheaper.

“Colleges already are giving away everything they can in the way of conventional financial aid,” Stevens said. “By adding the LRAP component they can actually do more with less.”

Adding a small amount of institutional financial aid usually doesn’t change the fact that a student will have to borrow money anyway, added Josh David, director of student service for the LRAP Foundation.

Families understand the loan repayment assistance plan is “there for all their student debts,” Stevens said. “That protection is much better than conventional aid of a few thousand dollars in institutional grants.”