Schools That Meet Full Financial Need With No Loans

·6 min read

A few colleges and universities help students avoid crippling debt by offering generous financial aid packages.

Last year's college graduates who borrowed loans to pay for their education had an average total student loan debt of nearly $30,000, 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 Pomona College in California and the University of Chicago 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.

[See: 17 Tuition-Free Colleges.]

"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, chief operating officer and co-creator of Scholarships.com, and a 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, called the FAFSA, and sometimes the College Board's CSS Profile, a separate financial aid application that 300 colleges, universities and scholarship organizations require. Nearly every school that meets financial need for all enrolled students without federal student loans uses the CSS Profile.

[Read: Everything You Need to Know to Complete the CSS Profile.]

Schools use financial information from these forms -- such as income, tax data, assets and household size -- to calculate an 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 co-founder and CEO of APO Financial 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, for example, 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.

"Some families end up being surprised and had expected more grant assistance because their personal level of need is higher than what comes out in the CSS Profile, for example," says Karen McCarthy, director of policy analysis at the National Association of Student Financial Aid Administrators. "Take a look at how your school is assessing what that level of need is. If it is through a CSS Profile, then make sure you're familiar with what the CSS results show so you know what to expect."

At Princeton University in New Jersey, which implemented a no-loans financial aid policy in 2001, U.S. News data shows that the average total indebtedness of the Ivy League school's 2020 graduating class was $9,623. But only 17% of graduating students borrowed any type of loan to pay for school. That's substantially less than the average percent of 2020 graduates from all ranked schools who borrowed for college at 64%, according to U.S. News data.

Only 15 schools reported meeting full financial need with a no-loans policy for each enrolled student eligible for federal loans, according to data submitted by 482 ranked National Universities and National Liberal Arts Colleges in an annual survey to U.S. News. National Universities are schools that are often research-oriented and offer bachelor's, master's and doctoral degrees, while National Liberal Arts Colleges emphasize undergraduate education and award half or more of their degrees across liberal arts fields.

There are other schools that limit grant-only aid awards to students from lower- or moderate-income households. Haverford College in Pennsylvania, for instance, limits its no-loans financial aid award packages to enrolled students who come from families that earn $60,000 or less per year.

[See: Best Value Schools.]

Similarly, Washington University in St. Louis meets full financial need with grants, scholarships and work-study instead of loans for families who make $75,000 or less annually or for Pell Grant-eligible students, according to Mike Runiewicz, the school's assistant vice provost and director of student financial services.

Since the establishment of the no-loans program at Wash U in 2008, the average debt for graduates has decreased over the years, as has the amount students borrow. For example, from 2007 to 2020, the percentage of students graduating with debt decreased from around 40% to 28%, Runiewicz says.

"We knew students from underserved backgrounds were really struggling to make Wash U an affordable option," he adds. "We also saw in the couple of years leading up to 2008, other schools, like some of the Ivy Leagues, announced financial aid programs that eliminated loans. We saw the benefits of those programs for students, so that's what really caused us to start the program."

While not on the U.S. News list of no-loans schools that meet full financial need for all enrolled students, Dartmouth College in New Hampshire launched an initiative in 2018 to fundraise and eliminate loans from all of its financial aid packages for eligible undergraduates. Previously providing no-loan aid awards to students from families with total incomes of $100,000 or less, the college recently expanded the program to include undergraduates from families with annual household incomes of $125,000 or less beginning with the class of 2026.

Per U.S. News data, below are the ranked National Universities and National Liberal Arts Colleges that claim to meet full financial need while packaging aid awards with no loans for each enrolled student who qualifies for federal loans, though some do require a minimum family contribution. They are listed in alphabetical order. To be included on this list, ranked schools had to charge tuition.

School name (state)

U.S. News rank

Amherst College (MA)

2, National Liberal Arts Colleges

Bowdoin College (ME)

6 (tie), National Liberal Arts Colleges

Brown University (RI)

14 (tie), National Universities

Columbia University (NY)

2 (tie), National Universities

Davidson College (NC)

13 (tie), National Liberal Arts Colleges

Harvard University (MA)

2 (tie), National Universities

Massachusetts Institute of Technology

2 (tie), National Universities

Pomona College (CA)

4, National Liberal Arts Colleges

Princeton University (NJ)

1, National Universities

Stanford University (CA)

6 (tie), National Universities

Swarthmore College (PA)

3, National Liberal Arts Colleges

University of Chicago

6 (tie), National Universities

University of Michigan--Ann Arbor

23 (tie), National Universities

University of North Carolina--Chapel Hill

28 (tie), National Universities

Washington and Lee University (VA)

11 (tie), National Liberal Arts Colleges

The financial aid data above is correct as of Sept. 24, 2021. For complete financial aid data, full rankings and much more, access the U.S. News College Compass.

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