The cost of college has nearly tripled over the last four decades. According to the National Center for Education Statistics, tuition at four-year institutions went from roughly $5,000 a year in 1980-81 to over $16,000 a year in 2020-21. Now, record-high inflation coupled with a looming recession are bound to make college even more expensive.

No-loan colleges offer students the opportunity to get a degree — without the hefty price tag — while putting them in a better position to build wealth after they graduate. Here’s what to know.

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 like a novel idea, but they’ve been around since the early 2000s. Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators (NASFAA), says that 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 need, 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 a no-loan policy or “need-blind” admissions to all its students. Many of these are prestigious institutions with solid endowments — some even exceeding the $50-billion mark. However, most of these schools do 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 an expected family contribution of zero and be Pell Grant recipients.
College of the Holy Cross Students must have a household income of $75,000 or less.
Cornell University Students must have a household income of less than $60,000 and less than $100,000 in total assets (including primary home equity).
Duke University Students must have a household income below $40,000.
Texas A&M University Students must have a household income of $60,000 or less.
University of Arizona (resident students only) Students must have an expected family contribution of zero and be eligible for Pell Grant.
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 Students’ household income must not exceed $120,000 and have $400,000 or less in total assets.

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 is used to determine 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.