It’s no secret the cost of higher education can be staggering, with some private schools costing a whopping $80,000 each school year to attend. Many college students cannot even consider going to college without expecting to borrow money to cover college costs. The average student borrows about $30,000 in loans in pursuit of their bachelor’s degree. Student loan debt currently stands at $1.77 trillion.
However, some schools are trying to ease the pain of debt as an unwanted graduation gift by implementing no loan policies. These no loan schools eliminate loans from financial aid packages, replacing them with grants that do not need to be repaid.
The idea of graduating debt-free has gained momentum since it’s inception in 2001 when Princeton University pioneered the concept, and as such the list of no loan schools is growing with several dozen schools participating one form or another.
What is a No-Loan School
At a no loan school, when financial aid packages are sent out, the school has intentionally omitted the requirement for loans and typically replaced them with grants. The amount of the grants will be decided by your FAFSA® (free application for federal student aid) when your financial need is determined.
Financial need is based off the cost of attendance (COA). The FAFSA will take into consideration you and family’s income and assets and create a calculation of how much you and your family should contribute to your education. Then that figure is subtracted from the COA for your school and the difference is your financial need.
If your school is a no loan school, the school will work to cover your entire financial need with scholarships, grants, and work-study. This is a very generalized description. Every school is different in how they implement their programs.
Needless to say, the aim of these programs is to ensure that qualified students who might otherwise want to attend one of these no loan schools, not forgo applying for fear they cannot afford to attend. These schools want to help students in need pay for school without having to borrow any money, if possible.
How Schools Can Offer This Type of Financial Aid
No-loan colleges have committed to a financial aid policy to eliminate the need for student loans in their financial aid packages. Here's a few ways how no-loan schools can support this initiative:
Endowments and Donations
Many no-loan colleges have substantial endowments, often bolstered by donations from alumni and philanthropists who are invested in making education more accessible. These funds are crucial for supporting the financial aid programs that allow these institutions to offer more grants and scholarships instead of loans.
Grants and Scholarships
Instead of offering loans, no-loan schools provide increased grants and scholarships that do not need to be repaid. These can come from the school's own funds (grants), as well as from federal and state programs. The aim is to cover the cost of tuition, room, board, and sometimes additional expenses like books and personal expenses, primarily through these forms of gift aid.
Work-Study Programs
Work-study programs are another component of the financial aid packages at no-loan schools. These programs provide students with part-time employment opportunities on campus or in community service roles. The earnings from work-study jobs help students cover their personal expenses and contribute to their education costs without needing to take out loans.
It's important to note that the specifics of no-loan policies can vary from one school to another. Some may offer no-loan financial aid packages to all students, while others may limit this benefit to students from families with incomes below a certain threshold. The overarching goal, however, remains the same: to make higher education more accessible and affordable by reducing the burden of student loan debt.
Applying to No Loan Colleges
If the idea of no loans sounds good to you and you want to attend one of these schools. There are some things you need to know:
- Low Admissions Rates: While some state universities may have some form of a no loan policy, most of the no loan schools are private. The private schools use their impressive endowments to fund these programs and are usually considered some of the most prestigious schools in the country, meaning getting in could be hard, but not impossible.
- Fill Out the FAFSA: If you’ve been accepted, you need to fill out the FAFSA. Your school will need your financial need calculation to determine your need.
- CSS Profile and Other forms: In additional to the FAFSA you may need to fill out state financial aid forms or the CSS Profile to further determine your eligibility for aid.
- Maintaining Eligibility: Requirements will vary by school but you may be required to maintain a certain GPA and/or take a minimum number of credits each semester to retain your no loan status at the school. This information should be available for you at the school’s financial aid office.
Why No Loan Schools Should Top Your List
If you are a student who knows you will need help paying for college and you have a strong application (excellent grades and GPA, extra curriculars and memorable essays) then definitely consider applying to as many of these schools as it makes sense for you given your desired field of study. Even if you still have to borrow money for expenses not covered in your financial aid package, the amount of debt you graduate with will be greatly reduced at a no loan school.
More often than not students feel like they will work out the debt part after graduation. They don’t take into account the realities of their future salary or employment prospects as a newly minted graduate with little to no experience; and how those circumstances might not meet their financial needs to cover student loan payments along with other costs of living such as rent, car payments and groceries.
Starting out post-college life without debt is the preferred path and one that should be prioritized when looking at attending college, especially if you are starting out knowing that financially paying for school is going to be a challenge.
List of No-Loan Schools
The following schools have no loan policies, or they meet a student’s demonstrated financial need. If you see your school below, make sure to check with the financial office for a complete understanding of their specific program and requirements to maintain no loan status. If you don’t see your school here, that’s not to say they don’t have a program too. Policies are changing all the time. Contact your school to find out what financial aid programs they offer that you may qualify for.
School’s in bold have acceptance rates greater than 20%