The student loan debt in the United States increased to $1.5 trillion in 2020, up $68 billion from the previous year.
In the previous year, the federal student loans’ interest rate was 4.45 percent, but for the 2020-2021 academic year, the interest rate will increase to 5.05 percent. Rates on loans for graduate students will go up to 6.6 percent from 6 percent; and rates on PLUS loans, for parents and graduate students, to 7.6 percent from 7 percent. The federal government sets rates for new student loans each year. Interest rates might fall or remain constant, however, this will be the second consecutive year it has risen.
With the student loan debt increasing each year, some schools are implementing a “No Loan” policy. This policy allows schools to reduce student loans while increasing scholarships and grants. Many of the “no-loan” schools are elite public and private universities.
The list of “no-loan” colleges has increased to more than 70 schools. No-loan financial aid package comes in two ways: one that specifically benefits students from lower-income families and one open to all students eligible for financial aid regardless of family income.
Some colleges with “no-loan” financial aid policies aren’t truly eliminating all loans. Rather, they are reducing a student’s need for loans (based on their family’s income) to attend their school. Each school will have its own policy and requirements. Some examples are:
- Some colleges may require a minimum student contribution that could include part-time student employment.
- Other schools may limit student eligibility based on the student’s financial need, while some will implement a blanket policy that applies to all students.
- Certain schools may not completely eliminate loans from a financial aid package, but they may use other methods of funding, such as grants, to reduce the amount that you need to borrow.
Are you eligible for your college’s no loans policy?
Schools who have adopted the “No Loan” Policy will have certain requirements to meet, and it’s possible that these schools have a low acceptance rate. In order to find out if your school has this policy, you should do some research or contact your school’s financial aid office.
- Complete your FAFSA®.
- Reach out to your prospective school’s financial aid office. Ask them if there are any required forms that need to be completed, or if you need to provide additional information to qualify.
- Before you enroll in a school, make sure to go over the financial aid package they’re offering. Compare their financial aid to other schools’, ensure that you’re choosing a school that fits your circumstance both financially and academically.
Benefits of No-Loan Programs:
- Increases opportunities for students from lower-income families
- Decrease student debt
List of colleges with the “No Loan” policy
Schools that Offer “No Loans” to Everyone
- Amherst College
- Bowdoin College
- Colby College
- Columbia University
- Dartmouth College
- Davidson College
- Harvard University
- Haverford College
- Pomona College
- Princeton University
- Stanford University
- University of Pennsylvania
- Vanderbilt University
- Washington and Lee
- Yale University
- Schools that Only Offer “No Loans” to Low-Income students
- Appalachian State University
- Arizona State University
- Boston University
- Bryan College(Tennessee)
- California Institute of Technology (Caltech)
- Carleton College
- Claremont McKenna College (ended for new students in fall 2014)
- College of Holy Cross (Worcester, MA)
- College of William and Mary
- Colorado State University-Pueblo
- Connecticut College
- Cornell University
- Dartmouth College
- Duke University
- Emory University
- Fairfield University
- Georgia Institute of Technology
- Grinnell College
- Indiana University Bloomington
- Kenyon College
- Lafayette College
- Lamar University
- Lehigh University
- Massachusetts Institute of Technology
- Miami University (Ohio)
- Michigan State University
- North Carolina State University
- Northern Illinois University
- Northwestern University
- Oberlin College
- Rice University
- Sacred Heart University
- Texas A&M University
- Texas State University-San Marcos
- Tufts University
- University of Arizona
- University of California at Berkeley
- University of California System
- University of Chicago
- University of Florida
- The University of Illinois at Urbana-Champaign
- University of Louisville
- University of Maryland, College Park
- The University of Michigan at Ann Arbor
- University of Minnesota System
- The University of North Carolina at Chapel Hill
- University of Tennessee
- University of Texas at El Paso
- University of Texas Dallas
- University of Toledo
- University of Vermont
- University of Virginia
- University of Washington
- Vassar College
- Washington University in St. Louis
- Wellesley University
- Williams College
With the interest rate increasing each year, families should think twice before taking out various loans. Make sure you understand the kinds of loans you’re taking out and their interest rate. Parents often overestimate how much they are willing to contribute to their children’s education and underestimate how much they will have to borrow.
If you attend a school that has a “no-loan” policy, the average loan debt you will have after you graduate will be lower than a student who goes to a school with no such policy.