Several universities and colleges are going loan-free by offering only generous financial aid packages to needy students to avoid entanglement in student loans. No-loan schools are encouraging students from modest or low-income family to apply for admission in their institutions as acceptance would mean they do not have to worry about payment of expensive school fees.
According to COO of Scholarships.com Kevin Ladd, the likeliest students who will be considered by no-loans schools are those who meet the grade and extracurricular activity requirements of the educational institutions.
How Do No-Loan College or University Offers Work?
It is important to note however, that attending these colleges does not necessarily mean zero expenses. Generally, no-loan colleges aim to cover a low or middle income family’s demonstrated financial need. The amount of financial need represents the gap between the amount that a family can afford to pay as contribution and the actual costs of their child’s higher education.
No-loan institutions completely remove student loans from financial aid packages offered to eligible students and will include only available scholarships, grants, work-study aid, and other similar components.
That is why before a college or university offers financial aid to a qualified student, the institution must first review the family information submitted by a student via the Free Application for Federal Student Aid (FAFSA). If the information in the FAFSA application is insufficient, no-loan colleges or universities can also review the College Board’s CSS Profile, another financial aid application portal being run by 300 universities, colleges, and scholarship organizations.
Examples of educational institutions with no-loan financial aid policies are the University of Chicago in Illinois and the Pomona College in California.
According to an annual survey, the recent college graduates of 2020 have to pay total student loans that on the average, amounted to almost $30,000. Due to worries of crippling debt, a lot of incoming college students are not too keen on enrolling in higher education due to college affordability issues.