A handful of higher education institutions are making headlines by offering financial aid packages without federal student loans. There are about 50 colleges and universities nationwide that have incorporated these offerings into their programs for low-income students, but 16 of these institutions have begun offering no-loan aid packages to students of all backgrounds.
Shannon Vasconcelos, the director of college finance at College Coach, had this to say about the types of schools instituting these no-loan programs: “They tend to be the richest private schools that are super selective and very hard to get in to. Most of the Ivy League schools have no-loans policies and other similarly rich schools.”
Vanderbilt University and Yale University were two of the sixteen schools that offer unrestricted no-loan policies; these schools are able to offer such high-profile options to the majority of their applicants and students through endowments. In the case of Yale, the total endowment for the 2016 fiscal year for this goal numbered $25.4 billion.
In 2001, Princeton University made a splash as the frontrunner in this new mode of financing higher education. The first in the country to offer no-loan aid packages, in 2016 the university reported more than $21.7 in endowments for their ongoing no-loans program.
Vasconcelos notes that many of these schools began offering no-loan policies before the Great Recession. “Once one school starts offering a more generous policy then the others start jumping on board to compete with that school to recruit the same students.”
However, there are still some holdouts; not all Ivy League institutions are offering total no-loans policies. Cornell University, for one, only allows families earning less than $60,000 a year to qualify for their program of no-loans, grant-only packages.
Brian Clark, a spokesman for Brown University, talked about the new initiative for the 2018-2019 school year; Brown University is going to eliminate loans in financial aid packages for all undergraduates under this new plan. “This new initiative is intended to extend that commitment with a specific focus on moderate-income families, who often do not quality for the generous financial aid offered to low-income families by Brown and some other universities, yet also do not have the full resources to cover the cost of attending college.
Duke University’s financial aid director, Allison Rabil, also testifies about the effectiveness and necessity of having no-loans options for lower-income students. “Being able to say that you are a no-loans school has an appeal to families that can understand the implication of graduating without having to borrow. It’ll help them to understand they can afford to come.”
The general consensus seems to be that even if a school limits access to its no-loans policies by income level, the presence of these programs are still a big help to the population that needs it the most. Students from low-income families are often so averse to borrowing for their higher education; offering no-loans, grants-only packages eliminate the stress and hassle of trying to fund their education in a way that best fits their financial means and goals.
What do you think? Are no-loans packages something more schools should offer? Let us know in the comments!