No-Loan Colleges: What They Are and How to Apply

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Graduating from college with no student loans may sound too good to be true, but some schools are making this a reality.

Called “no-loan colleges,” some schools are offering no-loan financial aid – offering students tuition help via grants and scholarships but no federal student loans. Read on to learn if a no-loan college is right for you, plus how to apply.

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 has recently topped $1.5 trillion in student loan debt among 44 million borrowers. In fact, experts have recently estimated that it will take the average borrower more than 21 years to pay off his or her student loans.

Spearheaded by Princeton University in 2001, no-loan colleges have since emerged as a real financial option for students to cover the staggering cost of college. Since then, many other schools have followed suit, including:

  • Amherst College
  • Bowdoin College
  • Brown University
  • Colby College
  • College of the Ozarks
  • Columbia University
  • Davidson College
  • Harvard University
  • Haverford College
  • Pomona College
  • Princeton University
  • Stanford University
  • Swarthmore College
  • The University of Pennsylvania
  • Vanderbilt University
  • Washington and Lee University
  • Yale University

There are also no-loan colleges intended for low-income students only. These include:

  • California Institute of Technology
  • College of the Holy Cross
  • Dartmouth College
  • Duke University
  • Vassar College
  • Wesleyan College
  • ...and more

Find a complete list of no-loan colleges here.

How No-Loan Financial Aid Works

Here’s how it works: in a standard financial aid package, students are likely offered a combination of financial aid, based in their family’s financial situation, plus any scholarships or grants that they may qualify for. The student is then granted a certain amount in student loans to make up the difference.

But with no-loan financial aid packages, students’ financial aid is simply upped to cover the difference, and no loans are given.

However, that doesn’t mean that you can’t take out loans. Many no-loan colleges require parental or student contributions to tuition and if that’s not an option, you may have to take out loans to cover the difference.

Applying to No-Loan Colleges

Applying – and getting accepted – to a no-loan college may be difficult since many of these schools are top tier universities with a competitive application and acceptance process.

But the good news is, once you’ve been accepted to a no-loan college, the financial aid office will help facilitate the process. In short, they’ll determine how much tuition assistance you’ll qualify for, based on how much your family can afford to contribute, how much you as a student can contribute via a summer internship or on-campus job, and any scholarships or grants you have.

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.

If you are planning to attend a no-loan college with a restricted policy, you must be able to prove that you are “low-income” to qualify for a loan-free financial aid package.

Final Thoughts

While no-loan colleges sound like the shining beacon of paying for college, keep in mind that they simply aren’t an option for everyone.

In order to qualify, you’ll need to either be accepted to a top-tier school or have a household income under a certain threshold, depending on the school’s requirements.

If you find that a no-loan college is a no-go for you, there are other options. Do your homework and research the best grants to pay off your student loans, from those aimed at nurses and those in the medical field to graduates working in the public service field.

You may also consider attending an in-state public college to cut down on tuition costs, or even working a part-time job throughout college to help offset the cost. Paying on the interest on your student loans while you’re still a student will also help lower your monthly student loan payments in the future.

And don’t forget about student loan refinancing options. Many federal student loans allow you to make monthly payments based on your income, or even defer payments temporarily if you are unable to pay.

Whatever financial path you chose, thinking critically and trying to offset the cost of your college – and the amount of student loan debt you will occur – is a smart financial move.