A college or university that includes a large chunk of loans in its financial aid package isn’t doing you any favors. Unlike grants and scholarships, loans have to be paid back, and that can take years. The good news is that some schools have adopted policies that replace loans with grants and other aid.
These programs don’t necessarily eliminate loans. Students may need to borrow to pay for things that aren’t included in the financial aid package, such as computers. In addition, financial aid awards are based on the school’s estimate of what the family can afford to pay. Some families can’t pay that amount, or choose to use the money for other things.
Still, students who attend “no loan” schools graduate with much lower loan balances than the national average. Here’s a look at the three schools with generous no-loan programs:
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Yale
First on our list is Yale. Yale is difficult to get into, but if you pull it off, you probably won’t have to worry about student loans. The average amount of need-based aid for Yale students is more than $44,000. Families with annual income of up to $200,000 qualify for some financial aid. Only 16% of students who attend Yale have student loans.
Vanderbilt
Coming in second in our rankings is Vanderbilt University, which eliminated loans from its financial aid packages in 2009. Nearly half of the university’s students receive need-based financial aid, and the average aid package is worth more than $39,000. Only 22% of students who attend Vanderbilt have student loans.
Davidson
Finally, Davidson College, a small school in North Carolina, stands out for its generous no-loan program. The liberal arts college provides 100% of financial aid through grants and campus jobs to nearly half of its students. The school’s average need-based aid package is about $33,700. Only 22% of Davidson students have student loans.
Here are seven more colleges and universities that don't require student loans. See if one is right for you.
-
Stock Market Today: Stocks Gain on Tech, Auto Tariff TalkThe Trump administration said late Friday that it will temporarily halt tariffs on some Chinese tech imports.
-
Sam's Club Plans Aggressive Expansion: Discover Its New LocationsSam's Club expansion plans will open up to 15 new stores each year. Learn where they plan to open in 2025.
-
How Intrafamily Loans Can Bridge the Education Funding GapTo avoid triggering federal gift taxes, a family member can lend a student money for education at IRS-set interest rates. Here's what to keep in mind.
-
How an Irrevocable Trust Could Pay for EducationAn education trust can be set up for one person or multiple people, and the trust maker decides how the money should be used and at what age.
-
UTMA: A Flexible Alternative for Education Expenses and MoreThis custodial account can be used to pay for anything once the beneficiary is considered an adult in their state. There are some considerations, though.
-
Coverdell Education Savings Accounts: A Deep DiveWhile there are some limitations on income and contributions, as well as other restrictions, a Coverdell can be a bit more flexible than a 529 plan.
-
529 Plans: A Powerful Way to Tackle Rising Education CostsContributions to 529 plans grow tax-free and are not taxed when they are used to pay for qualified educational expenses for the beneficiary.
-
Are Student Loans Being Forgiven or Not?Student Loans The House and Senate voted to repeal President Biden’s student loan forgiveness plan, but does it even matter?
-
Are Scholarships Always Tax-Free? What You Need to KnowEducation Scholarships are generally tax-free if certain IRS and other requirements are met.
-
Student Loan Forgiveness Blocked For Now Due to Court RulingsBiden's student loan debt forgiveness program is on hold until the U.S. Supreme Court weighs in.
