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Schools That Won't Let You Take Out a Loan

Mar 5, 2010 Jennifer Williamson, Distance Columnist | 0 Comments

The average college student can expect to graduate with over $20,000 in student loans as of 2009 studies. There’s no question that colleges are getting more expensive, and students often graduate with crippling debt.
Some schools are taking steps to reduce their students’ debt load, however. At a handful of schools, loans in financial aid packages are replaced with grants that don’t have to be repaid. At some schools, this is given on a needs-based basis—and at others, it’s given to all students as a matter of course.

Aid under these policies includes “no-loan” financial aid—in which all loans in a student’s financial aid package are replaced by grants. Some colleges do this only for low-income students—and while each college’s idea of what constitutes “low income” is different, it’s most common for colleges to use the federal government’s eligibility standards for Pell grants as a benchmark.

Schools may lower the burden on students who don’t qualify for no-loan programs by capping the amount of loans students are allowed to take out to attend school to a certain amount or a certain percentage of tuition over the course of four years.  Other schools reduce or eliminate the parental contribution, even for students who do have loans. And others don’t take into account the parents’ home values or other assets when judging the family’s net worth.
Here’s an overview of the no-loan policies at a handful of American schools.


Princeton eliminated loans from all of its financial aid packages as of 2001. Instead of loans, it offers students grants. This aid isn’t need-based, and it doesn’t leave students hanging for large chunks of tuition—most financial aid packages cover 100% of the Princeton tuition load.

Students are required to chip in towards Princeton’s tuition, however. Students are expected to save $1,500 over the summer to apply to their first year at the school, and some grant money is available to cover this amount for some students. Students are also expected to contribute a little over $2,000 per school year, which can be earned in work-study programs on campus.

Rice University

Rice University gives no-loan aid packages based on students’ financial need. For freshmen coming in during the 2009 and 2010 school year, the family income threshold for eligibility has been raised from $60,000 to $80,000 per year.  For freshmen who don’t qualify for no-loan financial aid packages, the school will lower the amount of loans that can be included in financial aid—from $14,500 to $10,000 for all four undergraduate years—on a need-based basis.

University of Virginia

This school’s no loan program is limited to low-income students. It also limits the amount of needs-based loans given to any student who qualifies for financial aid to a total of 25% of the total in-state tuition cost over a four-year period. 

University of Pennsylvania

This school began phasing in a plan in 2008 that aims to get rid of all loans for all students, regardless of family income, as long as the students qualify for some kind of financial aid. Effective in 2008, the plan granted no-loan financial aid packages to students with family incomes under $100,000 per year.


Cornell does not require a family contribution for students who make less than $60,000 per year or who own assets worth under $100,000. For students who make less than $120,000 per year, the school limits need-based loans to $7,500 per year. For some students who have family incomes over $60,000 per year, the school reduces the required parental contribution.

It’s difficult to get out of college completely debt-free. But some schools are working hard to lower the debt burden for students with financial need—and sometimes for all students, regardless of family earnings. Even at Ivy League schools including Princeton and Penn, you may be able to escape the student debt burden as a low or middle-income student. If you’re considering which college to attend, take into account whether the school offers a generous no-loan financial aid policy—and you may be able to leave college without accruing a huge amount of debt.



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