Davidson College, a small (1700 students) but prestigious liberal arts college in North Carolina, announced today that it will not offer student loans as part of its standard education funding packages anymore. Instead, it will help need-based students to get their degrees by using a mix of grants and work study jobs. Assuming Davidson can pay for this in the long run, from now on when Davidson College students graduate, they will not carry any Student Loan debt with them. In effect, Davidson is telling prospective students that if they're good enough to get IN to the college, Davidson will make sure they get OUT of the college in good financial shape.

It's a small school, so this isn't a complete revolution, but it's another step in getting good students to complete their degrees and find good jobs without the overwhelming burden of immediately starting to pay off massive student loan debt. Not only does it help students that come from less-than-affluent families to get their degrees, it gives them more of an opportunity to really choose a career path upon graduation, instead of simply taking the highest-paying job in order to keep up with loan payments.

Other schools have started to go in this direction as well, most notably Harvard and Yale's policy of allowing the neediest students to attend basically for free.

Is it feasible for all schools to fund education completely through grants and work study, though? I can't imagine it is. That grant money has to come from somewhere, and even if these schools run very successful capital campaigns to get the ball rolling, will they be able to keep those donations rolling in over time? On the other hand, it certainly could lead to some grateful students who want to give back in their post-college years once they start making decent money, especially if they don't have student loans trailing them for 10 years.

To fix the education funding dilemma, though, we need some guinea pigs, and it's good to see another school experimenting with a fomula that give graduates a better shot at success.