Banking & Finance and Higher Education

Spring Arbor University repays student loans

February 25, 2013
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Spring Arbor University repays student loans
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Spring Arbor University is offering to pay back loans for students if they don't meet certain financial benchmarks after graduation.

SAU will begin implementing its Loan Repayment Assistance Program for all incoming freshmen in the fall of 2013.

SAU is a 4,000 student Christian college in Spring Arbor. The university operates extension sites throughout Michigan and Ohio, including its Grand Rapids extension, at 2620 Horizon Dr. SE.


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SAU is offering to pay back a student’s loans if the student graduates and earns an income that cannot meet benchmark requirements. All students will be automatically enrolled in the program.

SAU administration has been prepping for this development since 2012, said Malachi Crane, assistant vice president for communications. The decision to enact the LRAP system came after discussions with alumni and from the university’s desire to keep college affordable for prospective students, he said.

Spring Arbor tuition is about $21,520 for both in state and out-of-state students, according to findthebest.com.

“Student debt load is a real issue many people face today, and it’s an issue for many students and families if they’re looking at attending colleges," Crane said. "We wanted to remove any additional barriers to coming to Spring Arbor for them. For us, it fits in with our mission as a Christ-centered education environment.”

There will be no additional costs or fees for students, Crane said, because the program will be funded through other means developed by the university’s fundraising arm.

“Essentially, what it breaks down to is we need to be able to recruit 17 additional students from what we would have budgeted for last year,” he said. “As long as we can get an extra 17 students, it pays for itself.”

To be eligible for LRAP, students must graduate from the university and become employed for a minimum of 30 hours a week. The graduates must be able to show proof of employment. Self-employment, such as entrepreneurship, is not considered eligible.

If they make below $20,000, SAU will make full reimbursements for their loans quarterly, Crane said.

If students wish to attend graduate school, the window of time they have is 18 months after they graduate to let SAU know they want to move forward within the program, Crane said.

“The LRAP program covers all educational loans, not just student loans,” he said. “Parent loans taken out for their student’s education would also be included.”

LRAP describes its program, based on the LRAP system used at Yale Law School, as “a tool that provides a ‘safety-net’ for students and their families.”

“If your income after graduation is low, you will receive assistance to help you repay your student loans," according to the mylrap.org. "If your income is below the lower income threshold, you will receive reimbursement for the entire amount of your loan payments. As your income increases to the upper income threshold, the benefit is reduced proportionately. . . . Assistance will continue until your loans are repaid or your income increases above the upper income threshold.”

This move is designed by SAU to reduce the crushing amount of student debt facing prospective and current generations of college students.

Student debt exceeded credit card debt for the first time in 2010, and it surpassed auto loans in 2011, according to a story by Bloomberg Businessweek’s Peter Coy last year. Coy also notes that student debt has grown since 2008 — and surpassed $1 trillion — while other types of debt have gone down.

SAU will be the first Michigan university to adapt LRAP and the fourth nationwide, joining Indiana’s Huntington University, Minnesota’s Oak Hills Christian College and the Central Christian College of Kansas.

Crane said he did not know if public universities also would try to implement LRAP, but hopes all colleges will look for ways to lessen the burden of tuition.

“I would hope that anyone in higher education is looking at ways to make their degrees more affordable," Crane said. "Everyone’s in the same situation as us, looking at the marketplace and realizing you have to be proactive. It’s hard to say whether other institutions are going to pursue (LRAP), but my hope is other institutions will try to be innovative in helping students attain a degree.”

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