A college or university that includes a liberal allotment of loans in its financial aid package isn’t doing you any favors. After all, you’ll have to repay that money, which isn’t the case with grants and scholarships.
In recent years, though, about six dozen schools have adopted “no-loan” policies whereby grants replace loans in their financial aid packages. Some colleges limit no-loan packages to students whose family income falls below specific levels (such as $60,000 a year). Others have eliminated loans for all students who are eligible for financial aid.
The programs don’t necessarily eliminate loans altogether. The financial aid package is based on a school’s estimate of what the family can afford to pay. Some families can’t or choose not to pay the full amount, which means the student must borrow to make up the difference. And some students borrow to cover costs that aren’t included in the budget covered by their financial aid packages, such as health insurance and laptop computers.
At no-loan schools, the percentage of students that borrow is much smaller, and those that graduate with loans have balances that are below the national average. The 10 schools on this list exclude loans from all financial-aid packages, with no income thresholds. Take a look.
1. Yale University
- Location: New Haven, Conn.
- Total annual cost: $60,850
- Avg. need-based aid: $44,268
- Total net cost: $16,582
- Kiplinger’s combined rank: #2
- Percent of students with loans: 16%
Yale’s no-loan program is open to all students who are eligible for financial aid, and its definition of financial aid eligibility is magnanimous: families with income of as much as $200,000 may qualify for some aid. The trick is getting in: only 7% of applicants are admitted.
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2. Vanderbilt University
- Location: Nashville, Tenn.
- Total annual cost: $60,294
- Avg. need-based aid: $39,373
- Total net cost: $20,921
- Kiplinger’s combined rank: #15
- Percent of students with loans: 22%
Vanderbilt eliminated loans from its financial aid package in the fall of 2009. The policy extends to all students who qualify for financial aid. Nearly half of Vanderbilt students receive need-based aid, and 87% graduate in four years, which also keeps costs down.
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3. Davidson College
- Location: Davidson, N.C.
- Total annual cost: $59,146
- Avg. need-based aid: $33,717
- Total net cost: $25,429
- Kiplinger’s combined rank: #24
- Percent of students with loans: 22%
While Davidson’s endowment is considerably smaller than that of Ivy League schools with no-loan programs, this liberal arts college provides 100% of financial aid through grants and campus jobs to the 46% of students who receive need-based aid.
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4. Princeton University
- Location: Princeton, N.J.
- Total annual cost: $59,165
- Avg. need-based aid: $37,183
- Total net cost: $21,982
- Kiplinger’s combined rank: #1
- Percent of students with loans: 24%
Princeton implemented its no-loan policy in 2001, making it the first school to abolish loans from its financial aid package. Princeton’s policy applies to all students who qualify for financial aid. And even among students who borrow, the average debt is the lowest of all 300 schools ranked in Kiplinger’s 2015 Best College Values.
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5. Harvard University
- Location: Cambridge, Mass.
- Total annual cost: $59,607
- Avg. need-based aid: $41,975
- Total net cost: $17,632
- Kiplinger’s combined rank: #6
- Percent of students with loans: 26%
Harvard offers need-based aid to more than 60% of students and meets 100% of those students’ demonstrated financial need – all without loans. Families with income between $65,000 and $150,000 are generally expected to contribute no more than 10% of their income. Competition for these generous aid packages is fierce: only 6% of Harvard applicants are admitted.
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6. Amherst College
- Location: Amherst, Mass.
- Total annual cost: $62,206
- Avg. need-based aid: $45,604
- Total net cost: $16,602
- Kiplinger’s combined rank: #11
- Percent of students with loans: 29%
While some schools have been forced to limit their no-loan packages to low-income families, Amherst continues to offer them to all students who qualify for financial aid. Last year, Amherst provided more than $45 million in scholarship aid to about 60% of its students.
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7. Bowdoin College
- Location: Brunswick, Maine
- Total annual cost: $60,400
- Average need-based aid: $40,025
- Total net cost: $20,375
- Kiplinger’s combined rank: #13
- Percentage of students with loans: 31%
Students will need to buy warm clothes to attend this liberal arts school (its mascot is a polar bear), but they won’t need to borrow to pay for tuition. Bowdoin eliminated loans from its financial aid package in 2008. Students are expected to contribute to the cost of their education by working during the summer and academic year.
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8. Pomona College
- Location: Claremont, Calif.
- Total annual cost: $61,432
- Average need-based aid: $43,486
- Total net cost: $17,946
- Kiplinger’s combined rank: #9
- Percentage of students with loans: 33%
Graduates may leave Pomona’s idyllic southern California campus with a tan, but they don’t leave with a lot of debt. Pomona’s no-loan policy extends to all students who qualify for financial aid. In addition, 93% of students graduate in four years, which also goes a long way toward keeping costs down.
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9. Swarthmore College
- Location: Swarthmore, Pa.
- Total annual cost: $60,840
- Average need-based aid: $38,701
- Total net cost: $22,139
- Kiplinger’s combined rank: #3
- Percentage of students with loans: 36%
Swarthmore’s financial aid packages consist entirely of grants and scholarships, with no income limits. The 151-year-old school’s generous financial aid awards reduce the average cost for students who qualify to about one-third of the sticker price.
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10. University of Pennsylvania
- Location: Philadelphia
- Total annual cost: $62,352
- Average need-based aid: $38,258
- Total net cost: $24,094
- Kiplinger’s combined rank: #26
- Percentage of students with loans: 36%
UPenn officials say the school’s no-loan policy, which extends to all undergrads who qualify for financial aid, helps the school enroll students who would otherwise rule out an Ivy League education. Loans are still available for students who don’t want to hold down work-study jobs or need money for expenses not included in the standard cost of attendance, such as health insurance and summer school.
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