A few colleges and universities help students avoid crippling debt by offering generous financial aid packages. When it comes to debt, last year’s college grads who borrowed student loans took on nearly $30,000 in loans…
When it comes to debt, last year’s college grads who borrowed student loans took on nearly $30,000 in loans to pay for their education, according to data reported to U.S. News in an annual survey. For that reason, college affordability is a top concern among many prospective students.
Schools like Harvard University in Massachusetts and the University of Pennsylvania offer no-loan financial aid policies to reduce students’ debt loads. These no-loan institutions typically remove student loans from financial aid packages and only feature grants, scholarships, work-study aid and other components.
“No-loan schools are basically telling students of modest or even extremely low income that they should apply if they have the grades and extracurricular [activities] to be considered and that they don’t have to worry about the high price tag as long as they are able to get accepted,” says Kevin Ladd, founder of Scholarships.com, a college and scholarship search website, and former U.S. News contributor.
But that doesn’t necessarily mean the cost of attendance at these schools is zero dollars. Most no-loan colleges aim to cover each family’s demonstrated financial need — the difference between the cost of attendance and the expected family contribution, referred to as EFC.
The amount of need-based aid that a school offers is usually determined by the information a family provides on the Free Application for Federal Student Aid, known as the FAFSA, and sometimes the College Board’s CSS Profile, the additional financial aid application that more than 400 colleges, universities, organizations and scholarships use. Nearly every school that meets financial need for all admitted students without federal student loans uses the CSS Profile.
Schools use financial information, such as income, tax data, assets and household size, on these forms to calculate EFC. While the federal government has a formula for calculating EFC, institutions have their own methodology when it comes to forking over their financial aid award dollars.
“All of these schools determine the family need calculations a little differently and really don’t disclose how they compute such need,” says John Goodhue, an attorney and founder of Asset Protect One Inc., a Colorado-based investment advisory firm.
Under an EFC calculation, a school may determine that a family can afford to pay $10,000 a year toward the cost of attendance. However, that household may only be able to manage $5,000 annually with their current income and financial obligations. This is known as a financial aid gap. Even at a no-loans institution, some families and students may still need to borrow money to cover college costs.
At Princeton University in New Jersey, which implemented a no-loans financial aid policy in 2001, U.S. News data show that the average student who borrowed loans and graduated from the Ivy League in 2017 took on $9,005 in debt. But only 17 percent of graduating students borrowed loans to pay for school. That’s substantially less than the average percent of 2017 graduates from all ranked schools who borrowed for college at 66 percent, according to U.S. News data.
Only 18 schools among ranked National Universities and National Liberal Art Colleges reported meeting full financial need for each admitted student with a no-loans policy, according to data submitted by ranked institutions in an annual survey to U.S. News. There are other schools that limit grant-only aid awards to students from lower- or moderate-income households. Williams College in Massachusetts, for instance, limits its no-loans financial aid award packages to admitted students who come from families that earn $75,000 or less per year.
While not on the list of no-loans schools for all admitted students, Rice University in Texas now packages financial aid awards to cover the full cost of tuition with grants instead of loans for families who make less than $130,000 annually for the 2018-2019 school year.
“Our new program is aimed at dramatically increasing affordability for a very broad middle class, up to $200,000 in income, including full tuition grants for all those from families whose income falls below $130,000. Those with income below $65,000 will receive grants that cover tuition plus fees, room and board,” says David Leebron, the president of Rice University, on the school’s new financial aid initiative called the Rice Investment.
Previously, Rice only packaged no-loan financial aid awards to families who earned less than $80,000 a year.
Dartmouth University also raised its income threshold this year to cover more middle class students. The university launched an initiative in early this year to fundraise and eliminate loans from all of its financial aid packages for eligible undergraduates. As part of the Ivy League school’s goal, Dartmouth increased the current family income threshold to qualify for a no-loans aid award to $100,000 from $75,000.
Below are the National Universities and National Liberal Arts Colleges that claim to meet full financial need while packaging aid awards with no loans for each admitted student.