What is a No Loan College and Is it Right for You?April 7, 2021
When researching colleges to apply to, cost may be a major factor in your decision, with good reason. The amount of student loan debt in the U.S. in 2020 was more than $1.7 trillion. The graduating class of 2018 averaged $29,900 in student loans per person. If you are looking to save on the cost of college, colleges with no student loans do exist and can be a good way to avoid student loan debt.
What Are No Loan Colleges?
To prevent the amount of student loan debt from increasing, some schools provide other forms of financial assistance to students in lieu of student loans. Colleges with no student loans provide an opportunity to earn an undergraduate degree without educational debt through scholarships, grants and work-studies to cover the costs of tuition.
These no loan universities will not prevent you from taking out student loans if needed, but in many instances they will provide financial aid packages that do not require the use of loans.
Difference in Colleges with No Student Loans versus Others
If you are accepted to a school where student loans are the norm, you will receive information regarding the cost of attendance for the school. The cost of attendance normally includes tuition, fees, transportation, room and board and any other expenses that are necessary for attendees.
This total expected cost of attendance varies at each school. Your family’s expected financial contribution would be subtracted from the cost of attendance based on your FAFSA information. Then if you receive any financial aid, such as scholarships or grants, it will be subtracted from the cost of attendance. You would then be eligible to borrow private and federal student loans for the remaining amount. No loan universities may offer alternatives to student loans to cover overages.
Is a No Loan College Right for You?
There are different types of no loan colleges. Some schools will provide aid to all students regardless of need. Others will only provide to low-income students or in-state students.
Some schools to consider that provide aid to all students include:
- Amherst College
- Brown University
- Columbia University
- Harvard University
- Johns Hopkins University
- Northwestern University
- Princeton University
- Stanford University
- University of Chicago
- Vanderbilt University
No loan universities may tailor their policies to students with the greatest financial need. The information to determine need is normally pulled from the student’s FAFSA application. Some policies will be based on the expected family contribution or the threshold of the household income. Some schools that have policies for low-income students include:
- California Institute of Technology
- Connecticut College
- Cornell University
- Duke University
- Emory University
- Michigan State University
- University of North Carolina – Chapel Hill
What to do if You Don’t Qualify for a No Loan College
Some no loan colleges are very academically competitive, based on the highly desirable option of graduating debt-free. If a no-loan college may not be an option for you, you can explore other options to make your student loan debt more manageable.
If you’re taking out federal student loans, you may choose to consider an income-driven repayment plan. Student loan refinancing may also be an option for individuals with both private and federal student loans.
Income-Driven Repayment Plans for Federal Student Loans
To help ease the stress of federal student loan payments, you can apply for an income-driven repayment plan. In general, these payments are based on your income and family size.
The benefit of these plans is that your payment may be more manageable for your current income. Keep in mind, however, that you must recertify each year and have your payment recalculated. In addition, for some income-driven repayment plans, your monthly payment may not be enough to cover the interest accruing on your loan. In those cases, your loan balance may actually increase during the repayment process.
Student Loan Refinancing
Student loan refinancing enables you to consolidate all or some of your original student loans into a single loan with a new lender. There are many benefits of student loan refinancing. Refinancing student loans can allow you to:
- Reduce your interest rate which can save you thousands of dollars in interest costs over the life of the loan.
- Lower your monthly payment.
- Modify your loan term to better achieve your financial goals. Whether you want to shorten your term to pay them off quicker or lengthen the term to reduce the payment more.
- Combine multiple loans into one making it easier to manage just one loan.
To get an estimate of how much refinancing could save you, use our student loan refinancing calculator for an estimate of your savings.
Refinancing with ELFI
With ELFI you will never pay an application fee, loan origination fee, or prepayment penalty. To make the refinancing process easy you are assigned a Personal Loan Advisor to help with every step of the process.
Whether a no loan college is right for you depends on many factors and may be out of your control to qualify. Even if you are unable to attend one or already have student loans there are options to make your student loan payments manageable.