In the face of rising college costs and growing concerns about affordability, a new approach is emerging among some institutions. Reports indicate that approximately two dozen colleges have implemented “no-loan” policies, signaling a departure from traditional financial aid packages that include student loans.

This shift is seen as a response to the challenging financial landscape students face, making higher education accessible to a broader range of individuals. Among the colleges recognized on The Princeton Review’s “The Best 389 Colleges” list, 23 institutions commit to meeting 100% of their undergraduates’ financial needs without relying on student loans. This trend gained momentum post-COVID, with Princeton University leading the way due to its substantial endowment.

Menaka Hampole, an assistant professor of finance at Yale School of Management, notes the increasing prevalence of these no-loan policies, stating, “They are giving them out like candy now.” However, it is acknowledged that the ability to adopt such policies is more feasible for top universities with robust financial resources.

Despite the positive shift, challenges persist. The “no-loan” label doesn’t equate to a free education. Students may still be responsible for expected family contributions, additional costs like books and fees, and potential work-study requirements, depending on the school.

Colleges such as Lafayette College in Pennsylvania and Colby College in Maine have embraced the no-loan approach to make higher education more accessible. At Lafayette, families with incomes up to $200,000 have their financial needs met through grants and work-study, without incorporating loans. Nicole Hurd, Lafayette College’s president, emphasizes the moral obligation to ensure affordability for low- and moderate-income families.

Colby College has upheld a no-loan policy since 2008, contributing to a positive impact on students’ decisions. Terra Gallo, a senior majoring in environmental policy, appreciates that Colby’s no-loan policy aligns with her values, emphasizing the importance of minimizing student debt. These initiatives aim to address the financial stressors within the higher education system and underscore a commitment to keeping college accessible.

By Impact Lab