The student loan debt in the United States increased to $1.38 trillion in 2017, up $68 billion from the previous year.
In the previous year, the federal student loans’ interest rate was 4.45 percent, but for the 2018-2019 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
University of Pennsylvania
Washington and Lee
Schools that Only Offer “No Loans” to Low-Income students
Appalachian State University
Arizona State University
California Institute of Technology (Caltech)
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
Georgia Institute of Technology
Indiana University Bloomington
Massachusetts Institute of Technology
Miami University (Ohio)
Michigan State University
North Carolina State University
Northern Illinois University
Sacred Heart University
Texas A&M University
Texas State University-San Marcos
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
Washington University in St. Louis
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.