“No-loan colleges" are academic institutions for higher learning that offer financial aid to their students without the expectation of being reimbursed—supporting enrollment through grants and scholarships, and without federal student loans. Such colleges make graduating without student loans a guarantee, rather than a remote possibility.
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:
"Princeton University will no longer require undergraduates on financial aid to obtain loans to help pay for their education. Beginning next fall, Princeton will eliminate its loan requirement, and replace it with additional scholarship support.
The "no-loan" policy extends a groundbreaking program begun with the Class of 2002 to reduce the financial burden for low- and middle-income students. In that initiative, loan requirements were eliminated for students from families earning less than $46,500 and reduced for those earning between $46,500 and $66,500 (current dollars, adjusted for inflation)."
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
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.
However, this doesn’t mean they can’t take out loans. Many no-loan colleges require parental or student contributions to tuition and if that’s not an option, the student may have to take out loans to cover the difference.
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.
If you're planning to attend a no-loan college with a restricted policy, you must be able to prove you are “low income” to qualify for a no-loan financial aid package.
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.