The cost of college has nearly tripled over the last four decades, forcing many students and their families to take on student loans when other forms of aid fall short. Starting next year, Lafayette College is eliminating student loans for domestic students who have a household income of $200,000 or less to tackle the existing college affordability crisis.

However, Lafayette College is just the latest school to join the “no-loan” movement. Over a dozen schools have already nixed student loans from their financial aid packages to help students graduate debt-free.

What are no-loan colleges?

No-loan colleges are exactly what they sound like: schools that meet 100 percent of their students’ financial need without including student loans as part of their financial aid package. This takes the financial stress away from students and their families when paying for college tuition. It places students in a better position to build wealth by reducing — or even eliminating — how much they need to borrow to pay for school.

No-loan colleges may seem novel, but they’ve existed since the early 2000s. Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators (NASFAA), says the agency is keeping close tabs on these institutions as they may become more mainstream in the coming years.

“Several schools that have ‘no-loan’ policies — particularly those with large endowments — have been rethinking their strategies and increasing their aid packages to allow students to focus solely on being students,” Draeger says. “I suspect more schools with large endowments will be reexamining their financial aid levels coming out of the pandemic,” he adds.

How do no-loan colleges work

No-loan colleges use a combination of scholarships, grants and work-study programs to cover students’ tuition and fees. Colleges that offer this option are usually able to do so thanks to the generous gifts and donations they receive, which they can invest in funds (aka endowments). Because of this, many of these schools are prestigious institutions that are highly selective — so getting in is no easy feat.

Still, Draeger says that you shouldn’t let that discourage you from applying, as these schools use several criteria beyond academics to create a diverse class.

It’s also worth noting that while no-loan colleges don’t rely on student loans to meet your financial needs, that doesn’t mean you can’t take out student loans. You’re more than welcome to borrow money if you need to, as there are some expenses, like books, materials and room and board, which you’re expected to cover on your own.

Some schools also ask you to work on campus in exchange for this benefit, in addition to requiring a small family contribution based on your parent’s income — so you’re not 100 percent off the hook. Despite this, attending a no-loan school is still worth it as you will graduate with much less debt – if any at all — than those who attend a traditional school.

Colleges that have a no-loan policy for all its students

The colleges listed below offer all their students a no-loan policy or “need-blind” admissions. Many of these are prestigious institutions with solid endowments — some even exceeding the $50-billion mark. However, most of these schools require students above a certain income threshold to make a yearly family contribution based on their income and assets, in addition to requiring students to work at least 12 hours a week.

Colleges that have a no-loan policy for low income students

Schools with large endowments aren’t the only ones that offer no-loan policies for its students. There are several state universities, as well as other smaller private colleges that offer this benefit, but only to students from low income families. Some of these may also limit the benefit to resident students.

School Income requirements
Arizona State University (resident students only) Students must have graduated high school with a GPA of 2.5 and above, be Pell Grant recipients and pursue a full-time on-campus degree for the first time.
College of the Holy Cross Students must have a household income of $75,000 or less to get all of their financial aid needs met through the school’s scholarships and grants.
Duke University Students must have a household income below $40,000.
Smith College Must be an undergraduate student receiving institutional grant aid.
Texas A&M University Students must have a household income of $60,000 or less.
University of Arizona (resident students only) Students must have graduated high school with a GPA of 2.5 or above, be enrolled in a full-time program, and be Pell Grant recipients.
University of Illinois at Urbana-Champaign (resident students only) Students must have a household income of $67,100 or less, in addition to no more than $50,000 in total assets.
University of Louisville (resident students only) Students must be Pell Grant recipients.
University of Vermont (resident students only) Students must be Pell Grant recipients.
Vassar College Students’ household income must not exceed $60,000.
Wesleyan University The school will cover 100% of tuition costs for qualifying students who demonstrate financial need.
Williams College The school will cover 100% of tuition costs for qualifying students who demonstrate financial need

Applying to no-loan colleges

The lists above are not inclusive — just a few examples of schools where you can study without the need for student loans. To find out whether your schools of choice offer this benefit, the best thing to do is check out their financial aid website or contact the schools’ financial aid office.

Whether you choose a need-blind school or one that only offers a no-loan policy to low income students, the process for applying to this program is the same. It starts with filling out the Free Application for Federal Student Aid or FAFSA, as this will provide the school with your expected family contribution and financial need.

From there, you may also be asked to fill out your state’s form for financial aid, in addition to the CSS Profile, which determines your eligibility for institutional aid, such as institutional grants and scholarships.

Most no-loan policies also require students to maintain a certain GPA and take a minimum of 12 credits per semester to qualify and remain eligible throughout their college years.

The bottom line

No-loan colleges lower the cost of tuition and fees to the point where students may not need to take out student loans. However, this does not mean that you’ll get to go to college for free, as there are other expenses you’re expected to cover on your own.

Still, attending one of these institutions is 100 percent worth it — you’ll save thousands in tuition, plus increase your chances of graduating debt-free.