Huh?

We're not sure how to interpt Davidson College's recent proclomation: Davidson will no longer include student loans as part of their aid package. Only grants, scholarships, and workstudy will be identified. Yes, it's a noble gesture on their part: "In an effort to make a Davidson education affordable for all students, the Board of Trustees has approved a new policy that will eliminate loans from financial aid packages."

But why do people need financial aid packages to begin with? Yeah, that's right, to pay the tuition, fees, room, and board. So00, let's break this down. Davidson sets the tuiton rates, the fee rates, the room rates, and the board rates. And it's no secret that those rates are increasing at more than twice the US inflation rate. And Davidson holds the keys to determining the financial ability for applicants to attend their institution of higher learning? We suppose this is a policy that works when most university's are accepting only 17% of all applicants.
But what's gonna happen when the baby boom's kids are done going to college.

Simply put, a college/university cannot treat their consumers like this and expect to build a loyal, reliable source of prospects. At some point the tuition vs ability problem is going to result in revolution.

For lenders it's shaping up to be a bad next 5 years. No matter what innovation, service, or pricing solutions are put in place: 1) the schools will blame the lenders; 2) the government will blame the lenders; 3) the students will blame the lenders; 4) the fall of capitalism will be blamed on the student loan lenders.

Our point is: the free market will vote on how all this works. Please do not focus on the rhetoric, the legalese, or the gossip. The winner will be decided by who can provide student loans for the best price, in the most efficient manner, and with the best price. A school cannot accomplish this. The government cannot accomplish this. Who can do this? A well trained financial intermediary institution -- the private lender.