Student debt solution? College promises to pay students' loans if they make less than $37,000 after graduating

In this Dec. 9, 2014 photo students walk on the mall at Adrian College in Adrian, Mich. (AP Photo/Carlos Osorio)

As recent college graduates continue to struggle with student loan debt, one school is instituting a bold new financial experiment: paying off some or all of its students' loans if they don't make over $37,000 a year following graduation.

Adrian College based in Adrian, Mich. is one of the first colleges in the nation to take out insurance policies on incoming freshman and transfer students who have student loans and at least two years of school remaining, according to AP. The program is being framed as a solution to increasing tuition costs and student loan defaults.

"Obviously, we feel like this is a big solution to a big problem - maybe the biggest problem right now in higher education," Adrian President Jeffrey Docking told AP. "We felt like we needed to make a grand statement."

The school paid roughly $575,000 in 2014, or $1,165 per student, to take out policies on 495 students. For students who graduate and get a job that pays less than $20,000, the college will make full monthly loan payments until that student reaches $37,000 a year in income. For students who get a job that earns between $20,000 and $37,000 a year, the college will make loan payments on a sliding scale.

Adrian students and parents are very receptive to the program.

"(My mother) said, 'Look at me, I'm still trying to pay my student loans off - this would be great. I don't want you in this situation,'" said Abby Slusher, 18, who is studying to become a social worker at Adrian. "And seeing her in this situation, I don't want that."

According to AP, there is no time limit for the repayment plan, but the college caps total loan payments at $70,000 per student. The annual cost of tuition, room and board at Adrian is about $40,000 per student before financial aid.

Nearby Spring Arbor University, a small Christian school 35 miles northwest of Adrian, has instituted similar financial initiatives to help students with loans. Both of the schools' programs were made possible by the Loan Repayment Assistance Program Association, and federal education officials have commended the initiatives for their "creative approach" for helping students manage their loans, AP reported.

"We're talking about this far and wide because we hope other colleges do it as well," Docking said.

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