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No Loans for Low Income Students

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A handful of schools have instituted policies that ensure that low income students have no loans in their financial aid packages. These are also referred to as "free tuition" programs for low income students.

Typically low income is defined as the bottom quintile by family income, such as family incomes below about $40,000, by Pell Grant eligibility, or families with incomes below 200% of the poverty line.

Types of No-Loans Policies

The policies fall into four main types:

  • No loans. These policies eliminate loans from the financial aid package of low income students. In Princeton's case, the loans are eliminated from the aid packages of all students, not just low income students. Other schools with no loan policies for low income students include Rice University, UNC Chapel Hill, University of Virginia, and the University of Pennsylvania.
  • Loan caps. These policies institute a low cap on student loans for low-income students. Examples of schools with such policies include Brown University.
  • No parental contribution. These policies eliminate the parental contribution, but retain the student contribution along with the standard self-help level. So these policies may still require some loans in the aid package, albeit a reduced amount. Examples of schools with such policies include Yale and Stanford.
  • Pell grant match. These policies match the student's Federal Pell Grant. This significantly reduces but does not eliminate the self-help level. Examples of schools with such policies include MIT and previously included the University of Minnesota system.

Good Public Policy

The justification for such a policy is that the existence of debt in the financial aid package has a much greater impact on matriculation rates among lower income students than among middle and upper income students. Lower income families fear debt and have much less experience with debt than middle and upper income families. What little experience they have with debt is much more likely to be negative. Even when you tell them that they will be able to get a good job and easily repay the debt after they graduate, the idea that they will have to borrow more money than their parents earn in a year has a chilling effect on enrollment. It presents them with a psychological barrier against matriculation.

Middle income students don't like having to borrow to pay for their education, but it doesn't stop them from matriculating to the same degree as lower income students. With lower income students, the form of the financial aid matters almost as much as the amount of aid.

Given that the goal of financial aid is to promote access to higher education, both the amount and the types of aid need to be tailored to the populations the college is trying to serve. Otherwise, promoting access without facilitating matriculation presents these students with an empty promise.

Overall, eliminating loans from the financial aid packages of low income students is a good way for colleges to fulfill their charitable mission.

Impact of No-Loans Policies

Princeton was the first college to eliminate loans from the financial aid packages of low-income students, initiating the trend in 1998-1999. The number of low income students matriculating at Princeton has doubled from 1998-1999 to 2005-2006.

After Harvard University instituted its policy of eliminating the parental contribution for low income families, it saw a 20% increase in the number of low income students matriculating, according to

Christopher Avery, Caroline Hoxby, Clement Jackson, Kaitlin Burek, Glenn Pope and Mridula Raman, Cost Should Be No Barrier: An Evaluation of the First Year of Harvard's Financial Aid Initiative, National Bureau of Economic Research, NBER Working Paper #12029, February 2006.

Both are significant increases. The greater relative increase in the number of low income students at Princeton suggests that a strict "no loans" policy has a greater impact on matriculation rates among low-income students than a no-parental-contribution policy.

The number of Pell Grant recipients also increased at Harvard. In 2003-04, the year before Harvard adopted a more generous financial aid policy, it had 693 Pell Grant recipients. This increased by 11.5% to 773 in 2004-05. With the adoption of a no loans policy as opposed to just a no parental contribution policy, this has jumped 39% to 963 in 2008-09 as compared with the number of Pell Grant recipients in 2003-04.

The Chronicle of Higher Education reported that another NBER study showed that replacing loans with grants in the financial aid packages of low-income students increases the likelihood that the college graduates will pursue careers in public service. That study, by Jesse Rothstein and Cecelia E. Rouse of Princeton University, reported that an extra $10,000 in debt corresponds to a 5% to 6% decrease in the likelihood of pursuing a public service career.

The Journal of Blacks in Higher Education reported declines in the percentages of low income students (as demonstrated by the number of Pell Grant recipients) at elite colleges. This mirrors the results of a similar analysis previously conducted by the Chronicle of Higher Education. The Chronicle found that a very small percentage of students at the wealthiest colleges receive Pell Grants.

Clearly, it is easier for a college with very few low income students to eliminate loans from the financial aid package than a college with a smaller endowment and a much greater percentage of Pell Grant recipients. But the elite colleges also need to do more to help low income students. As the elite colleges become more selective in their admissions policies, they are crowding out lower income students who did not have the same advantages as their wealthier peers. Extending no loans policies to all students and reducing costs for middle income families in addition to low income families increases competition for admission and can potentially reduce the number of low income students being admitted. The elite colleges need to consider that a student who overcame the disadvantages of a low income background may be more impressive than a talented student who has never been tested by adversity. After all, low income students often have to supplement their family income or even act as the primary wage-earner for their family, leaving little time for extracurricular activities or schoolwork. Perhaps the elite colleges should establish admissions preferences for low income students?

So far about two-fifths of colleges with endowments in the billion dollar plus range have adopted no-loans policies. Any college where the endowment per FTE enrollment exceeds $500,000 can afford to eliminate loans from the financial aid packages of low income students. (Technically, if the endowment per enrolled student multiplied by 5% and divided by the percentage of Pell Grant recipients exceeds the cost of attendance, the college can afford to be generous to low income students.) Colleges with smaller endowments are unlikely to adopt such policies because they cannot afford to do so. (In some cases smaller colleges are able to adopt such policies by limiting them to students who graduate from nearby high schools or by limiting the no loans policies to tuition and fees.) To eliminate loans from the financial aid packages of low income students, Congress would need to double the maximum Pell Grant, as was advocated in Leo Kornfeld and Mark Kantrowitz, A New 'Independence Day for Student Financial Aid, The Chronicle of Higher Education, 53(23):B11, February 9, 2007. Such an increase in need-based grants would likely pay for itself through increased federal income tax revenue.

If smaller colleges want to institution a no loans policy, they will usually need to limit it in various ways. First, they will need to limit the policy to just low income students, such as students whose families earn less than $50,000 (or some other threshold, perhaps based on a multiple of the poverty line) or who are Pell Grant recipients. They main have to retain a self-help level of $2,500, which the students can earn from the work-study program (or, at the student's option, borrow from the federal loan programs).

Genesis

The first college to adopt a policy eliminating loans from the financial aid packages of low income students was Princeton University in 1998-99. They expanded this policy to all students in 2001-02. This was followed by the University of North Carolina at Chapel Hill in 2003-04 and the University of Virginia in 2004-05. But the number of colleges didn't start expanding rapidly until the Advisory Committee on Student Financial Assistance (ACSFA) issued its report, Mortgaging Our Future: How Financial Barriers to College Undercut America's Global Competitiveness in September 2006. This was the first study of "pipeline leakage" to quantify the impact of financial constraints on enrollment and graduation by college-capable low income students. The Kornfeld-Kantrowitz op-ed in the Chronicle of Higher Education in February 2007 also advocated for eliminating loans from the financial aid packages of low income students.

Pressure on colleges to increase funding for student financial aid also increased in September 2007, when Senator Charles E. Grassley of Iowa proposed requiring wealthy colleges to spend at least 5% of their endowment funds, mirroring an existing requirement for private foundations. According to data from the National Association of College and University Business Officers (NACUBO), colleges with endowments of more than $1 billion spent 4.6% in 2006 and colleges with endowments of $500 million to $1 billion spent 4.5%.

Endowment Spending Rates
Year $500 million
to $1 billion
> $1 billion
2007 4.4% 4.4%
2006 4.5% 4.6%
2005 4.8% 4.8%
2004 5.1% 5.2%
2003 5.4% 5.3%
2002 5.1% 4.8%
2001 4.6% 4.1%
2000 4.6% 4.0%

Colleges do not necessarily have the flexibility to increase their endowment spending on student aid, since the endowment funds are often subject to donor restrictions. Unrestricted funds and funds for student aid represent a small percentage of the overall endowment. (Yet money is fungible, so increasing spending from restricted funds may free up some money from the operating budget for student aid.) Colleges also argue that they are being careful to preserve the spending power of their endowments to allow them to weather economic downturns when investment losses decrease the size of the endowment, such as occurred in 2001 and 2002, and to compensate for inflation. Endowment income is also used to balance out fluctuations in gift-giving to the colleges. However, the adoption of a no loans policy provides a good motivation for alumni contributions, and several colleges have launched fundraising campaigns for this purpose.

Caveats

These policies eliminate or reduce loans in the financial aid package. They do not affect loans for students who do not receive financial aid. They also do not prevent a family from borrowing from non-need-based loans, such as the unsubsidized Stafford Loan, the PLUS loan and private student loans, to pay the expected family contribution. Thus students at these colleges may continue to graduate with debt, although much less debt than before.

In addition, colleges that have not eliminated the student contribution are effectively retaining a self-help level. If the student is unwilling or unable to use savings or work to pay the self-help portion of the financial aid package, they will have to borrow instead. So even though federal need analysis shelters work-study and a portion of non-work-study earnings, even students with a zero EFC will need to work or borrow at schools that maintain a self-help level. Also, retaining this self-help level effectively establishes a caste system on campus, where the poor work to serve the needs of the wealthy.

Colleges Eliminating Loans from Financial Aid

Colleges that have eliminated loans from the financial aid packages of all undergraduate students include Princeton University, Davidson College, Amherst College, Harvard University, Pomona College, Swarthmore College, Haverford College, University of Pennsylvania, Yale University, Bowdoin College, Stanford University, Wellesley College, Columbia University and Vanderbilt University.

Colleges that previously eliminated loans from the financial aid packages of all undergraduate students, but subsequently restored loans in the financial aid packages of wealthier students include Dartmouth College, Williams College, Carleton College and Claremont McKenna College. Yale University also scaled back the generosity of its program for wealthier students, as did Cornell and MIT.

  • Williams College interim president Bill Wagner announced in a letter dated January 31, 2010 that Williams College will be reintroducing "modest loans" for some students receiving financial aid in 2011-2012, but that it will continue to eliminate loans for low income students.

  • Dartmouth College announced on February 8, 2010 that it would reintroduce loans in the financial aid packages of students with family income greater than $75,000 for the class entering in fall 2011. Current students and students entering in fall 2010 will not be affected.

  • Yale University announced in early 2011 that it would reduce aid slightly to students whose parents earn more than $130,000 a year for freshmen entering in fall 2011.

  • Cornell University announced in July 2012 that it would reintroduce loans in the financial aid packags of students witth family income of $60,000 to $75,000 a year for the class matriculating in fall 2013.

  • Massachusetts Institute of Technology announced that students in fall 2012 will be expected to contribute $6,000 toward college costs, a 36% increase. Students may use the Pell Grant to pay for the student contribution. But it is likely that some students will need to borrow to pay for the student contribution.

  • Carleton College of Northfield, Minnesota, has dropped its loan reduction program, making it the first college to completely terminate a no loans or loan reduction financial aid program. Loans are now capped at $4,500 for first-year students.

  • Claremont McKenna College has ended its "No Packaged Loan" financial aid policy effective with new students entering in fall 2014. These students will have loans of up to $4,000 per year included in their financial aid packages. Students enrolling in fall 2013 and previous years will not be affected by the change.

The following table lists colleges that have taken steps to significantly reduce or eliminate the self-help level or eliminate loans from the aid package for lower income students.

College/Program Accommodation Eligibility Year Initiated
Amherst College Replaces loans with grants and work-study in the financial aid package. Students with parental contributions of up to $3,800 (family income roughly $40,000). 2007-2008
Replaces loans with grants and work-study in the financial aid package. All students 2008-2009
Appalachian State University
(Appalachian ACCESS)
Replaces loans with grants in the financial aid package sufficient to cover institutional charges such as tuition, fees, room and board. An on-campus job is provided to cover transportation and personal expenses. North Carolina residents entering as a full-time freshman (no transfer students) with family income below the Federal Poverty Line for the family size. 2007-2008
Arizona State University
(ASU Advantage)
Replaces loans with grants and work-study in the aid package. Does not include transportation and personal expenses within the scope of this policy. Arizona residents with family income of up to $25,000. 2007-2008
Boston University Replaces loans with grants in the financial aid package. Boston residents who graduate from Boston Public Schools 2009-2010
Bowdoin College Replaces loans with grants in the financial aid package. All students 2008-2009
Brown University Significantly reduced loans for low-income students, replacing them with grants. Caps total loans for four years of college at $7,000. Also applies outside scholarships first toward reducing self-help. Family earning less than about $30,000 1999-2000
Significantly reduced loans for low-income students, replacing them with grants. Caps total loans for four years of college at $11,500. Also applies outside scholarships first toward reducing self-help. Family earning less than about $50,000
Eliminates loans from the financial aid package, replacing them with grants. Family earning less than $100,000 2008-2009
Limits total four-year debt to $12,000. Family earning $100,000 to $125,000.
Limits total four-year debt to $16,000. Family earning $125,000 to $150,000.
Limits total four-year debt to $20,000. Family earning $150,000 or more.
Eliminates the parental contribution. Family earning less than $60,000
Bryan College (Tennessee)
William Jennings Bryan Opportunity Program
Full tuition and fees First-time full-time student with total family income of $35,000 or less. Students must maintain a 3.0 GPA for continued eligibility. A separate application is required and the FAFSA must be submitted by the school's priority deadline of February 15. 2007-2008
California Institute of Technology (Caltech) Replaces loans with grants in the financial aid package. Student contribution of $1,500 (from summer earnings) plus federal work study of $750. US students with family income less than $60,000. 2008-2009
Carleton College (Access Scholarship Program) $4,000 scholarship (70% reduction in debt) Students from families earning less than $40,000. 2008-2009
$3,000 scholarship (50% reduction in debt) Students from families earning between $40,000 and $60,000.
$2,000 scholarship (33% reduction in debt) Students from families earning between $60,000 and $75,000.
Ended Access Scholarship program effective fall 2012.   2012-2013
Claremont McKenna College Replaces loans with grants in the financial aid package. All students. 2008-2009
Ended "No Packaged Loan" policy effective for new students enrolling in fall 2014. New students will have loans of up to $4,000 per year in their financial aid packages.   2014-2015
Colby College Replaces loans with grants in the financial aid package. All students. (Initially it was restricted to Maine residents, but was expanded to all students later the same year.) 2008-2009
College of Holy Cross (Worcester, MA) Free tuition Worcester residents with family income below $50,000. 2008-2009
College of William and Mary
(Gateway)
Replaces loans with grants in the financial aid package. Virginia residents with family income below $40,000. 2007-2008
Colorado State University-Pueblo
(Commitment to Colorado)
Covers 100% of the cost of base tuition and mandatory fees. Full-time Colorado resident undergraduate students who receive the Pell Grant and who have family AGI less than $50,000. Students must be pursuing a first Bachelor's degree. 2011-2012
Columbia University Replaces loans with grants in the financial aid package. Undergraduate students from families with annual incomes below $50,000. 2007-2008
Eliminates loans from the financial aid package, replacing them with grants. All students attending Columbia College or SEAS. 2008-2009
Eliminates the parent contribution. Students will "no longer be expected to borrow or contribute any of their income or assets" to tuition, room and board or other fees. Undergraduate students in Columbia College or the Fu Foundation School of Engineering and Applied Science (SEAS) from families with annual incomes below $60,000.
Reduces the parent contribution. Undergraduate students in Columbia College or SEAS from families with annual incomes of $60,000 to $100,000 and typical assets.
Connecticut College Replaces loans with grants in the financial aid package. Students with family income less than or equal to $50,000 and EFC less than or equal to 5000. 2006-2007
Reduces loan burden by 50% by replacing some loans with grants. Students with family income between $50,000 and $75,000 and EFC between 5000 and 15000. 2008-2009
Cornell University (January 2008, November 2008, July 2012) Replaces loans with grants in the financial aid package. Undergraduate students from families with annual incomes below $60,000. 2008-2009
Caps need-based loans at $3,000 Undergraduate students from families with annual incomes between $60,000 and $120,000.
Replaces loans with grants in the financial aid package. Undergraduate students from families with annual incomes below $75,000. 2009-2010
Eliminate the parental contribution Undergraduate students from families with annual incomes below $60,000 and assets below $100,000.
Caps need-based loans at $3,000 annually Undergraduate students from families with annual incomes between $75,000 and $120,000.
Caps need-based loans at $7,500 annually Undergraduate students from families with financial need and annual incomes over $120,000.
Replaces loans with grants in the financial aid package. Undergraduate students from families with annual incomes below $60,000 and assets below $100,000. 2013-2014
Eliminate the parental contribution Undergraduate students from families with annual incomes below $60,000 and assets below $100,000.
Caps need-based loans at $2,500 annually Undergraduate students from families with annual incomes between $60,000 and $75,000.
Caps need-based loans at $5,000 annually Undergraduate students from families with annual incomes between $75,000 and $120,000.
Caps need-based loans at $7,500 annually Undergraduate students from families with annual incomes of $120,000 and up.
Dartmouth College No loans in the financial aid package. All students 2008-2009
Free tuition Students from families earning less than $75,000
Free tuition with no loans in the financial aid package. Students from families earning less than $75,000 2011-2012
Loans limited to $2,500 to $5,500 annually Students from families earning $75,000 to $200,000 entering fall 2011. Current students will not be affected.
Free tuition with no loans in the financial aid package. Students from families earning less than $100,000 2012-2013
Loans limited to $2,500 to $5,500 annually Students from families earning $100,000 to $200,000 entering fall 2012. Current students will not be affected.
Davidson College (North Carolina) No loans in the financial aid package.   2007-2008
Duke University Replaces loans with grants in the financial aid package. Undergraduate students with family income below $40,000. 2008-2009
Eliminates the parental contribution. Undergraduate students with family income between $40,000 and $60,000. 2008-2009
Limits loans on a graduated basis ($1,000 to $4,000 per year) and freezes loans at the freshman level. Undergraduate students with family income between $40,000 and $100,000 in four $15,000 income tiers. 2008-2009
Caps loans at $5,000/year. Undergraduate students with family income of $100,000 or more. 2008-2009
Emory University
(Emory Advantage)
Replaces loans with work-study and grants. Undergraduate students with family income below $50,000. 2007-2008
Caps four-year need-based debt at $15,000 Undergraduate students with family income between $50,000 and $100,000. 2007-2008
Fairfield University
Bridgeport Tuition Plan
Free tuition. Undergraduate students from Bridgeport public and diocesan high schools with family income below $50,000. 2008-2009
Georgia Institute of Technology
(Tech Promise)
Replaces loans with work-study and grants in the financial aid package. Up to $1,250 in work per semester ($2,500 per year). Only covers institutional charges for tuition, fees, room and board. Georgia residents pursuing a first undergraduate degree with parent income below $33,300 and eligible to file a 1040A or 1040EZ. Requires minimum 2.0 GPA. 8 semester limit. 2007-2008
Grinnell College Caps need-based loans at $2,000 per year, replacing loans with grants. Students with financial need. 2008-2009
Harvard University

See also the December 10, 2007 announcement of Harvard's "Zero to 10 Percent Standard".

Eliminates parent contribution. Families with annual incomes below $40,000. 2004-2005
Families with annual incomes below $60,000. 2006-2007
Replaces loans with grants in the financial aid package. Also eliminates consideration of home equity in need analysis. All undergraduate students. 2008-2009
Zero to 10 Percent Standard. Upper middle income families will be expected to pay at most 10% of their income. Families with annual incomes above $120,000 and below $180,000. 2008-2009
Zero to 10 Percent Standard. Middle income families will be expected to pay at most 0% to 10% of their income on a sliding scale. Families with annual incomes above $60,000 and below $120,000. 2008-2009
Zero to 10 Percent Standard. Lower income families will be expected to contribute nothing to the cost of attendance. Families with annual incomes below $60,000. 2008-2009
Haverford College Replaces loans with grants in the financial aid package All students (phased in for incoming first-year students, with other relief for continuing students) 2008-2009
Indiana University Bloomington
21st Century Scholarship Covenant (21st Century Scholars Program)
Replaces loans with grants in the financial aid package. Covers only the tuition and fees at an Indiana public college; it will be less than the full tuition and fees at Indiana private colleges. The tuition scholarship does not cover the cost of room and board, books and personal expenses. Indiana residents who complete the 21st Century Scholars Application in middle school (a pledge to remain drug-, alcohol- and crime-free, maintain a 2.0 gpa, and to graduate high school) and who are low income (eligible for the federal school lunch program) and enrolled full-time at eligible Indiana Colleges. Home-schooled students are not eligible. 2007-2008
Kenyon College No loans in the financial aid package. 25 students with greatest financial need, eventually more. 2008-2009
Lafayette College No loans in the financial aid package. Students from families earning less than $50,000 and with typical assets. 2008-2009
Limits loans in the financial aid package to $2,500 per year. Students from families earning between $50,000 and $100,000 and with typical assets. 2009-2010
Lamar University
Lamar Promise Program
Covers tuition and fees. Undergraduate students who are Texas residents and eligible for the Pell Grant with family income of $25,000 or less. Students must also maintain satisfactory academic progress. 2009-2010
Lehigh University No loans in the financial aid package. Students from families with income less than $50,000. 2008-2009
Caps loans in the financial aid package at $3,000 per year. Students from families with income between $50,000 and $75,000.
Oberlin College Replaces loans with grants in the financial aid package. Students who are eligible for the Pell Grant. 2008-2009
Massachusetts Institute of Technology Matches Federal Pell Grants   2006-2007
Eliminates tuition. Families earning less than $75,000 a year with typical assets. (Roughly 30% of families.) 2008-2009
Eliminates loans from the financial aid package. Families earning less than $75,000 a year with typical assets.
Eliminates consideration of home equity in need analysis. This will lead to a reduction in the parental contribution of approximately $1,600. Similar reductions will be applied to families who rent instead of own a home. Families earning less than $100,000 a year with typical assets.
Reduces work-study requirement by 10% All financial aid recipients
Partially backs away from no loans financial aid policy by increasing the self-help expectation from $2,850 to $6,000, the same as for all other undergraduate students. Students may meet the self-help level with work-study and outside scholarships. All other aspects of the financial aid policy remain unchanged. Families earning less than $75,000 a year with typical assets. 2012-2013
Miami University (Ohio)
Miami Access Initiative
Covers full tuition and fees Students with family incomes of $35,000 or less. 2007-2008
Michigan State University
(Spartan Advantage)
Replaces loans with grants and work study. Low income students with family incomes at or below the federal poverty line. 2006-2007
North Carolina State University
(Pack Promise)
Caps need-based loans at $2,500 per year, replacing the remainder with grants and work-study. Undergraduate students with family income less than 150% of the poverty line. Requires the family to have "limited assets". 2007-2008
Northern Illinois University
Huskie Advantage Program
Replaces loans with grants in the financial aid package. New freshmen who are Illinois residents and eligible for the Illinois MPA Grant and the federal Pell Grant. 2009-2010
Northwestern University Replaces loans with grants in the financial aid package. Students with the greatest financial need. Roughly 80% will have family incomes under $55,000. Students must be Pell-eligible with financial need greater than 80% of the cost of attendance. 2008-2009
Caps total need-based loans (Perkins and subsidized Stafford) at $20,000 over four years. All students receiving Northwestern Scholarship assistance. 2008-2009
Pomona College Replaces loans with grants in the financial aid package. All students. 2008-2009
Princeton University Replaces loans with grants. Students from low-income families. 1998-1999
Eliminates loans, replacing them with grants. All students who qualify for financial aid. 2001-2002
Rice University Eliminates loans from the financial aid package. Students with a family income under $30,000 2005-2006
Caps total loans for four years of college at about $11,600. Students with a family income of $30,000 to $60,000.
Eliminates loans from the financial aid package. Students with financial need and family income less than $80,000. 2009-2010
Caps total loans for four years of college at about $10,000. Students with financial need.
Sacred Heart University Free tuition Undergraduate students from Fairfield County, Connecticut, high schools with family income below $50,000. 2008-2009
South Texas University Free tuition and fees Undergraduate students who are Texas residents and whose families earn $25,000 or less a year. The FAFSA must be submitted by the school's March 1 priority deadline. 2007-2008
Stanford University Eliminates parent contribution. Families with annual incomes below $45,000. 2006-2007
Eliminates loans from the financial aid package, replacing them with grants. Students are still expected to contribute $4,500 in earnings from work, with $2,500 from working during the academic year and $2,000 from working during the summer. All families 2008-2009
Eliminates the parental contribution and no tuition or room and board charges. Families with annual incomes below $60,000.
No tuition. Families with annual incomes below $100,000 and typical assets (less than $250,000 in non-retirement assets with home equity capped at 1.2 times annual income).
Swarthmore College Replaces loans with grants in the financial aid package. Families with annual incomes below $60,000. 2006-2007
Replaces loans with grants in the financial aid package. All families. 2008-2009
Texas A&M University Free tuition and fees New resident undergraduate freshmen from Texas whose families earn an AGI of $30,000 or less a year (System Promise Program) or $30,000 to $60,000 a year (Aggie Assurance). The FAFSA must be submitted by April 1. The recipients must maintain at least a 2.5 GPA. 2009-2010
Texas State University - San Marcos
Bobcat Promise
Free tuition and fees New resident undergraduate freshmen from San Marcos High School whose families earn an AGI of $35,000 or less a year. The FAFSA must be submitted by April 1. The recipients must maintain at least a 2.0 GPA. 2009-2010
Free tuition and fees New resident undergraduate freshmen from Texas whose families earn an AGI of $25,000 or less a year. The FAFSA must be submitted by April 1. The recipients must maintain at least a 2.0 GPA. 2009-2010
Tufts University Eliminates loans from the financial aid package Students from families with income below $40,000 2007-2008
University of Arizona
Arizona Assurance
Eliminates loans from the financial aid package. Includes a $2,400 work-study job. Does not cover transportation and personal expenses. Arizona residents with family income less than or equal to $42,400 who are Pell Grant recipients. Candidates must have historically low income with typical assets. Candidates whose income is low for just one year are ineligible. Will be phased in starting with the freshman class entering in 2008-2009. 2.0 GPA required. 2008-2009
University of California System
Blue and Gold Opportunity Plan
Provides scholarships and grants to cover the systemwide fees for University of California undergraduate students. The plan is limited to the first four years (two for transfer students). Students may still have to borrow for other college costs. The system tries to cap loans at $5,000. Students with financial need and family income less than $60,000 (median for California households). 2009-2010
University of California at Berkeley
Berkeley Middle Class Access Plan (MCAP)
Caps the parent contribution part of the expected family contribution (EFC) at 15% of earnings. US families with annual gross income from $80,000 to $140,000 and typical assets (less than $200,000 in assets, not counting the value of the family home and savings in qualified retirement plans). 2012-2013
University of Chicago
Odyssey Scholarships
Eliminates loans from the financial aid package. Includes a minimum student contribution of $1,980 and work-study of $2,200 to $3,000. Students with family income less than $60,000. 2008-2009
Cuts loans in the financial aid package in half, capping them at $3,000 per year. Includes a minimum student contribution of $1,980 and work-study of $2,200 to $3,000. Students with family income between $60,000 and $75,000.
University of Florida
Florida Opportunity Scholarships
Eliminates loans from the financial aid package. Florida residents with family income less than $40,000 whose parents did not earn a bachelor's degree. 2006-2007
University of Illinois at Urbana-Champaign
(Illinois Promise)
Replaces loans with grants and work-study Illinois residents with zero EFC and family income below the poverty line. 2007-2008
University of Louisville
(Cardinal Convenant)
Replaces loans and work-study with grants in the financial aid package. Kentucky residents with family income below 150% of the poverty line. 2007-2008
University of Maryland, College Park
(Maryland Pathways)
Replaces loans with work-study and grants in the financial aid package. Zero EFC students 2007-2008
Caps four-year debt at $15,900 Students with need-based loans.
University of Michigan at Ann Arbor Eliminates loans from the financial aid package, replacing them with M-PACT scholarship funds. Includes $2,500 in work-study. Michigan residents with a zero EFC who are pursuing a first bachelor's degree. 2006-2007
University of Minnesota system
Founders Opportunity Scholarship
Replaced with University of Minnesota Promise Scholarship in Fall 2009
Matches the Pell Grant to cover 100% of tuition and required fees. Minnesota residents. Phased in with each new incoming class, until fully implemented in 2008-2009. 2005-2006
Award amounts range from $500 to $3,500 per year for four years for freshman undergraduate students and $500 to $1,500 per year for two years for transfer students. Minnesota residents with family income up to $100,000/year enrolled on a full-time basis (at least 13 credits per semester) in a Bachelor's degree program. 2009-2010
University of North Carolina at Chapel Hill
Carolina Covenant
Eliminates debt in the financial aid package Students from families with incomes up to 200% of the poverty line. (A 150% threshold was in effect in 2003-2004.) 2003-2004
University of Pennsylvania Eliminates loans from the financial aid package. Students from families earning less than $50,000. 2006-2007
Eliminates loans from the financial aid package. Students from families earning less than $60,000. 2007-2008
Eliminates loans from the financial aid package. Students from families earning less than $100,000. 2008-2009
Eliminates loans from the financial aid package. All students 2009-2010
University of Tennessee
Tennessee Pledge
Replaces loans with grants in the financial aid package to cover tuition, fees, room and board. Work and loans are still required for books and supplies, transportation and personal expenses. Tennesse resident undergraduate students with family income less than or equal to $27,000 (150% of the poverty line). Minimum 2.0 GPA required. 2005-2006
University of Texas at El Paso
UTEP Promise
Full tuition scholarship for four consecutive years. Students with family income of $30,000 or less who are Texas residents and qualify for in-state tuition. Students must complete 30 credit hours each year and earn a 2.0 or higher GPA. 2006-2007
University of Toledo
Blue and Gold Scholar Award
Full tuition scholarship. Students graduating from one of six public school districts in Ohio (Akron, Cincinnati, Cleveland, Columbus, Dayton or Toledo) with a 3.0 GPA, filing the FAFSA by April 1 and demonstrating eligibility for the Pell Grant. 2009-2010
University of Vermont Replaces loans with grants in the financial aid package. Limited to tuition and fees. Pell-eligible Vermont undergraduate students. 2008-2009
University of Virginia
AccessUVA
Eliminates loans from the aid package. Students from families with incomes up to 200% of the poverty line ($37,700 for a family of four in 2004). 2004-2005
University of Washington Full tuition and fees (but not room and board). Students from families earning less than or equal to 65% of the state median income (about 235% of the federal poverty level) who qualify for Pell Grants or State Need Grants. 2007-2008
Vanderbilt University
(press release)
Replace need-based loans with grants in the financial aid package. All students receiving need-based student aid. 2009-2010
Vassar College Eliminates loans from the financial aid package, replacing them with grants. Students from families with annual incomes less than $60,000. 2008-2009
Washington University in St. Louis Eliminates loans from the financial aid package, replacing them with grants. Students from families with annual incomes less than $60,000. 2008-2009
Washington and Lee Financial aid package based on institutionally determined need does not include loans. "Loan assistance will be offered only to offset any additional educational expenses." All students applying for financial aid by the deadlines. 2008-2009
Wellesley College Replaces loans with grants in the financial aid package. Students from families earning $60,000 or less per year 2008-2009
Reduces loans in the financial aid package by one-third, to a maximum of $8,600 over four years. Students from families earning $60,000 to $100,000 per year
Limits loans to a maximum of $12,825 over four years. Students from families earning more than $100,000 per year
Wesleyan University Replaces loans with grants in the financial aid package. Students from families earning $40,000 or less per year 2008-2009
Williams College Replaces loans with grants in the financial aid package. All students 2008-2009
Bill Wagner, Interim President, announced on January 31, 2010 that Williams College will "reintroduce modest loans for some aided students, beginning with the class that enters in the fall of 2011". Current students will not be affected, nor will students entering in fall 2010. He added "As before, families below a certain income, and with typical assets, will not be expected to borrow at all. Others will be offered loans on a sliding scale up to a maximum size that will again be among the lowest in the country." 2011-2012
Yale University Eliminates the parent contribution Families earning less than $45,000. 2005-2006
Significantly reduces the parent contribution Families earning between $45,000 and $60,000.
Replaces loans with grants in the financial aid package All students 2008-2009
Eliminates the parent contribution Families earning less than $60,000
Limits the parent contribution to 1% to 10% of family income Families earning more than $60,000 and less than $120,000
Limits the parent contribution to 10% of family income Families earning more than $120,000 and less than $200,000
Increase grants to families with more than one child in college, limit tuition increases to the Consumer Price Index, reduce student contribution to $2,500 and shelter the first $200,000 of family assets All families
Replaces loans with grants in the financial aid package All students 2010-2011
Eliminates the parent contribution Families earning less than $65,000
Limits the parent contribution to 1% to 10% of family income Families earning more than $65,000 and less than $130,000

About a dozen colleges offer free tuition, including Cooper Union, Deep Springs College, College of the Ozarks and the Webb Institute. College of the Ozarks does not allow students to borrow from federal, state or private student loan programs.

The Georgia HOPE Scholarship provides funding for tuition, fees and books ($150) for Georgia residents with a 3.0 or higher GPA attending public or private colleges in Georgia. At some public colleges like the University of Georgia this may result in the elimination of loans from the financial aid packages of some low-income students (e.g., students eligible for a full Pell Grant).

The Project on Student Debt's Financial Aid Pledges to Reduce Student Debt has a similar list of schools that have instituted policies to eliminate or limit debt in the financial aid packages of low and middle income students. Their list was initially based on the list compiled by FinAid.

Increasing Competition Among Elite Colleges

The following histogram shows the number of colleges eliminating loans from the financial aid packages of low income students each year. It counts both colleges that first introduced such policies in the specified academic year as well as colleges that improved their policies.

1998-1999
1
1999-2000
1
2000-2001
0
2001-2002
1
2002-2003
0
2003-2004
1
2004-2005
2
2005-2006
4
2006-2007
10
2007-2008
20
2008-2009
37
2009-2010
13
2010-2011
0
2011-2012
1
2012-2013
1

To date, 75 colleges have adopted no-loans policies and 1 college has adopted a significant reduction in loans for low income students. 2 of these colleges have completely ended their no loans financial aid policies.

Other Resources

Some colleges who are unable to afford to eliminate loans from the financial aid packages have instead opted to adopt level or guarantee tuition rates where the tuition or cost of attendance is locked in for four years.

See also the list of place-based Promise Scholarship Programs.

 

 
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