If you’re considering higher education, research your options for attending a no-loan college, and compare the value alongside your other choices.
What Are No-Loan Colleges?
No-loan colleges were formed in response to the growing amount of student loan debt in the U.S., which topped $1.57 trillion in 2020, and accounts for a 116% increase over the past 10 years. Experts have estimated it will take the average borrower more than 21 years to pay off their student loans. Spearheaded by Princeton University in 2001, no-loan colleges have since emerged as a real financial option for students to offset the staggering cost of college. In their 2001 press release regarding no-loan education, Princeton leadership wrote: Since then, many other schools have followed suit, including:
Amherst CollegeBowdoin CollegeBrown UniversityColby CollegeCollege of the OzarksColumbia UniversityDavidson CollegeHarvard UniversityHaverford CollegePomona CollegePrinceton UniversityStanford UniversitySwarthmore CollegeThe University of PennsylvaniaVanderbilt UniversityWashington and Lee UniversityYale University
There are also no-loan colleges intended for low-income students only. These include:
California Institute of TechnologyCollege of the Holy CrossDartmouth CollegeDuke UniversityVassar CollegeWesleyan College
Standard Financial Aid vs. No-Loan
In a standard financial aid package, students are likely offered a combination of financial aid instruments based on their family’s financial situation, plus any scholarships or grants they may qualify for. The student is then granted a certain amount in student loans to make up the difference. With no-loan financial aid packages, once the school has determined how much financial aid a student needs, the school covers that need with funds other than student loans.
Applying to No-Loan Colleges
Applying and being accepted to a no-loan college may be difficult as many are top-tier colleges to begin with, and have a competitive history of application and acceptance policies. The no-loan incentives for financial aid have intensified this competition even further, but once a student has been accepted to a no-loan college, the financial aid office will help facilitate the rest. In short, they’ll determine how much tuition assistance to award, based on family income, how much the student can contribute via a summer internship or on-campus job, and any scholarships or grants they’ve been awarded. For example, with Columbia University’s need-based aid program, parents of students from a household making less than $60,000/annually are not required to contribute to the cost of tuition.
The Bottom Line
While no-loan colleges are shining beacons of academic hope for young Americans, they simply aren’t an option for everyone, and currently benefit only the most highly competitive students. If you find that a no-loan college is not an option for you or your family, research the best grants to pay off your student loans. Grants tend to be distributed based upon specialization, such as those for nurses, lawyers, or engineers committed to a niche within public service. You may also consider attending a community college prior to transferring credits to an in-state, public university (thus reducing overall tuition costs)—especially if your state or county offers a free college program. Paying the interest on your student loans while you’re still a student will also help lower your monthly student loan payments in the future. Stay informed on where you stand with student loan refinancing options, as many federal student loans allow you to make monthly payments based on your income, or to defer payments temporarily if you’re unable to pay.
