Inflation has not only brought a rise in the prices of many household products but has also started making education unaffordable for most students. Many reports now say that unless there is a big donation or widespread student loan forgiveness, college is only an option for those who can pay for it.
However, some colleges are trying a new approach to attract students worried about the high costs.
It has been reported that 24 schools have started no loan policies, which means they will be removing student loans completely from their offerings in financial aid.
Menaka Hampole, an assistant professor of finance at Yale School of Management talked on the subject of the increasing number of no loan policies, and she said that the colleges are right now giving out these policies like candy.
What Are No Loan Policies?
Some US colleges have introduced these no loan policies in which there are no federal loans in financial aid packages, and instead, they are replacing them with scholarships, grants, and work-study options to help families and students financially.
The goal is for students to graduate without debt. However, the rules for who qualifies for this policy differ from school to school, so it is important for potential students to carefully go through the requirements.
The private National Universities have increased their tuition and fees by 132% in the last 20 years or it has risen by 40% when adjusted for inflation. Similarly, the fees and tuition in out-of-state public National Universities have also gone up by 127%, or 38% when adjusted.
There has been a hike even in in-state tuition and fees at public National Universities, where it was reported to have a rise of about 158%, or 56% when adjusted. The average total student loan debt was reported to be around $30,000, as per US News data.
Even though the Biden Administration had planned to forgive up to $20,000 in federal student loan debt, affecting many of the nearly 43 million Americans who borrowed for college, the proposal was rejected by the Supreme Court in July 2023. With student loan repayments restarting in fall 2023, it is not clear whether the future forgiveness plans will be approved or not.
Recently, the Education Department introduced the Saving on a Valuable Education Plan, an income-driven repayment plan that reduces monthly payments to $0 for many borrowers.
With the cost of college increasing day by day and uncertainty rising about student loan forgiveness, attending a college with a no-loans financial aid policy can be a good option for students who are looking for a budget-friendly education.
Which Colleges are Offering No Loan Policy
One of the colleges that has introduced the no-loan policy is Lafayette College in Easton, Pennsylvania. In Lafayette College, families whose income is up to $200K receive financial support through the help of grants and work-study, allowing them to continue their education without any loans.
Speaking on this, Nicole Hurd, president of Lafayette College, recently said that college is costly, and it is the university that should take all the actions required to ensure that education is within reach. She added that they have a moral duty to assure the low- and moderate-income families that college is an important investment in themselves.
Another college that has introduced the no loan policy is Colby College in Waterville, Maine. Terra Gallo, a senior studying environmental policy, was able to receive the benefits of the policy. Talking about it, she said that the no-loan policy was very crucial for her and her family.
She added that she had witnessed her friends struggle with the immense education debt, and one of the main things she considered before choosing a college was the cost of attending one.
Another student who was grateful for the policy is 21-year-old Hardwick, 21, who studies global studies and East Asian studies at Colby University. She said she would not have been able to pursue her education had she not received the no loan policy. Hardwick works six part-time jobs to support her family, and this policy has been an immense factor for her to continue her education.
Randi Maloney, Colby’s dean of admissions and financial aid, shed his views and said that the no-loan message is very impactful, especially when many families are worried about the high cost of college.
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