Colleges with No-Loans Financial Aid Policies

Mark KantrowitzBy: Mark KantrowitzBy: Savingforcollege.com | 

More than six dozen U.S. colleges and universities have adopted no-loans financial aid policies. These policies eliminate loans from the financial aid packages of low-income students, replacing them with grants and work-study. Some of the colleges have extended their no-loans financial aid policies to also include middle-income students and some to all student aid recipients, not just low-income students.

Students can still borrow for their share of the college costs, so a no-loans financial aid policy does not eliminate all student debt. However, the percentage of students graduating with debt and the average debt at graduation tend to be much lower than at colleges that include loans in the financial aid package. For example, the average debt at graduation at Princeton University – the college that started the no-loans trend in 1998-1999 – had an average debt at graduation of around $9,000 in 2017, with only 17% of undergraduate students graduating with student loan debt.

Two dozen of the college no-loans financial aid policies began as free tuition policies. Several colleges have found that no-loans and free tuition policies can help motivate donations from alumni.

Most of the no-loans policies are based on a comparison of adjusted gross income (AGI) with a specific dollar amount. A few are based on a comparison with a multiple of the poverty line.

Two colleges have subsequently dropped their no-loans financial aid policies. Carleton College ended its no-loans financial aid policy starting in fall 2012 and Claremont McKenna College ended its no-loans policy in fall 2014.

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Mark Kantrowitz

Mark Kantrowitz

Publisher and VP of Research

Mark Kantrowitz is a nationally-recognized expert on student financial aid, scholarships and student loans. His mission is to deliver practical information, advice and tools to students and their families so they can make informed decisions about planning and paying for college.