A small, private Christian university in Michigan has announced that it will be offering all incoming freshmen the opportunity to participate in the Loan Repayment Assistance Program, which will help graduating students pay off student loans should their post-college income prove too low.
Spring Arbor University, which boasts an attendance of 4,000 students and is located in Spring Arbor, Mich., will implement this new fund repayment program in Fall 2013.
"As a Christ-centered institution that wants to maintain our commitment to access for all students seeking a quality Christian education, while pursuing their God-given calling, the Loan Repayment Assistance Program provides the perfect safety net, for those times when that calling is to a profession that may have a lower salary," Matthew Osborne, vice president of Enrollment at Spring Arbor University, told The Christian Post on Friday.
Osborne added that the refund program will be implemented in 2013, so it will benefit future alumni.
"In today's economy students and parents from all backgrounds and economic levels have real concerns about what the future may hold in terms of employment and salaries," Osborne continued. "Those fears were leading too many to settle for cheaper educational options or to pursue a degree for entry into a field that would pay more, even if that field wasn't a true fit to their giftedness."
Osborne continued, "Our decision, at Spring Arbor University, to provide this program is a means for addressing those concerns and freeing our students to pursue their calling and live on purpose for Christ," Osborne added.
According to the information provided on the university website, the program guarantees that if a student's income after graduation is low, they will receive assistance in repaying their student loans, and the student pays nothing to participate in the assistance program.
Once the student applies to the program, they will receive information specifying lower and upper income thresholds that will determine how much assistance they receive.
The lower income threshold is $20,000 per year, while the upper is $37,000 per year. Additionally, the post-graduate must work 30 hours per week to receive assistance. As a student's income increases, the university's assistance is reduced accordingly.
The announcement of this loan repayment program contrasts the recent actions of other universities, including Yale, University of Pennsylvania and George Washington University, which are reportedly filing lawsuits against students who have not paid off their Federal Perkins Loans, which are given out by individual universities to students that demonstrate extreme economic hardship.
The problem is that when students do not pay back their Perkins loans, it serves as a detriment to future loan receivers as the money is recycled for each incoming class.
These three universities have filed numerous lawsuits against graduated students, which, according to Bloomberg , defaulted on $964 million in Perkins loans by the end of the 2011 school year.
This recent default is a 20 percent increase compared to the default five years prior, reflecting the current job market and economic situation in the U.S.
U.S. President Barack Obama is currently seeking to increase funding for the Perkins program so that more working-class families may have access to higher education. Obama is reportedly seeking to up the Perkins fund from $1 billion to $8.5 billion, and the loans would be provided by the federal Department of Education, as opposed to individual universities.