Hello,
I have a general question about schools that claim to offer no loans. (University of Chicago, Columbia…)
Prepscholar says, “What that means is that your family will only be asked to pay what they can afford, and the school will cover the rest of the costs with their institutional financial aid funding”
This sounds great and all, but it almost sounds too good to be true- or this is only offered to select admitted students. My question is, if you apply to one of these no-loan schools and get accepted, does all of your tuition get covered with grants and scholarships? I guess I’m just a bit confused because while doing my college searches a lot of these schools won’t pay for all of your tuition… I know in my case my parents will be able to contribute very little towards the tuition.
So for an example, if one of these schools offers you, let’s say, $30,000 towards tuition of a $60,000 school, where does the other $30,000 come from if the family can’t pay that? Since these schools don’t offer loans…
The colleges will calculate what THEY think your family can afford based on income and assets, # of kids in college atone time and some other factors. Then they will pay something between nothing and nearly everything (often there is an expectation that the student contribute something via summer and/or on-campus work), with any difference to be paid by you and your parents.
A nice thing about no-loan schools is that you can still borrow (up to $5500 a year, a little higher later) to help pay the amount they calculate your family can pay, if necessary.
They don’t put loans in your financial aid package, but you can still take them if you need to (they are federal loans).
In your example the school would pay $30K and the family would pay $30k, about $5k of which could be the student Direct loan, and the rest from income/savings or a parent loan.
I hope that’s clear @astromae2001
But the trick is to get admitted to those elite schools.
It still means that the COLLEGE decides what you can afford as a family. So if your parents make a decent income and have savings, but don’t want to contribute because of living in a high cost of living area or supporting relatives overseas or just not wanting to part with cash for college, your family will still be expected to pay, and you might need to take out loans to attend.
But if your family is genuinely low income, doesn’t own rental property, doesn’t have trusts, etc, then the Net Price Calculator should give you a decent idea of what you would pay. You should run that – your FAFSA EFC is not the same thing, and schools generally give you a higher EFC than FAFSA does. The school will attempt to give you a package with no loans based on that. It may consist of school grants & scholarships, Pell grants if you are eligible, work study (pretty much guarantees you a campus job – you work and get paid in a paycheck from the job, and use the money for whatever you need to – books, spending money, transportation home, your portion of tuition, etc), and then money you or your family have to pay. Most colleges also expect you to work over the summer and have some summer earnings that can be used.
They do it for all students that they decide to admit. The schools that do this have huge endowments. They tend to be extremely selective. The trick is to get admitted. But there are only a few of these schools around. There is another tier of schools that meet need but expect you to take out your federal loans (not too onerous, a total of $27,000 over 4 years, and with fairly good consumer protections for you as a borrower). Then there are gobs of schools that don’t meet need at all. They often give you some grants, but even with your federal loans and what your family can pay, you will likely be “gapped” and have to figure out how to come up with more money. Additional loans, etc.
These great schools first calculate your total cost of attendance - which includes tuition, fees, room & board, books, travel, personal expenses etc. This often varies by student, because travel can vary quite a bit. My S went to Columbia, and his estimated travel expense from New England was less than what Stanford budgeted for my D.
They next figure out what they think you can afford, out of savings and income, and potentially a work-study grant.
They typically provide a grant for the rest. They typically do not specify whether the grant applies specifically to tuition, whatever, because if they did, it might have tax implications.
But remember, just because a school calculates that you and your family can afford to pay a certain amount - suppose it was 15K. This does not mean your family would necessarily agree with that number. And the different no-loans schools will all often have very different numbers. One huge difference we found is that several no-loans, meet full needs schools will include home equity as part of family assets - they expect you to tap into them, but others exclude it, or exclude a significant portion of it.
Have you run the NPC at these schools? When you say “I guess I’m just a bit confused because while doing my college searches a lot of these schools won’t pay for all of your tuition” - how are you going about this? The approach these schools takes is very different for each student, depending on their own unique family situation etc.
So, going to these no-loan colleges (that is, if you can get accepted!) would still be considered to have more financial benefits than say, a public university? My general understanding is that public universities don’t offer much financial aid, unless you’re in state.
Everything depends on your individual financial situation.
If your home-state public U without any aid at all comes to 30k, and Famous Name U after your aid package comes to 35k, then your home-state U still is cheaper.
Each college and university has a Net Price Calculator at its website. Run those. That is the best way to get a notion of what your aid package could look like if you are admitted.
It depends on a lot of factors. If you are from a wealthy family, you’ll get no aid at the elite schools that give fabulous need based financial aid, but you might get a merit scholarship that could bring the cost down materially.
My pups could have had full tuition merit scholarships at Flagship State, but the total net COA after scholarships would still have been much higher there than at Stanford and the Ivies, etc… Because we are much poorer than many families.
There are many people at Stanford and the Ivies who are full pay. There are also many who are not paying anything because they got a full ride. There are not many at the publics who get full rides.
When you get down to it, it does not matter where anyone else is going nor what anyone else is paying, what matters is the net cost to you and your family.
Yes, it often will be a better deal financially in terms of what you pay. But that is one reason that they have low acceptance rates (less than 10%). Because so many students want the best financial aid.
Out of state public schools (1) often don’t give much if any need based aid to OOS students, and (2) charge OOS students a higher tuition rate. Since state universities are subsidized by state taxpayers, they charge in-state students less to attend. But realistically, if you have the stats to get into one of the elite schools that don’t have loans, you very likely have the stats to get scholarships at your own state flagship, which might turn out to be very inexpensive then. Or there are a few public schools that give great scholarships for high stats (University of Alabama, for example). And some state universities will give merit scholarships and/or in-state tuition to students with high stats. Ohio State, for example, gives merit to high stat out of state students. Some states give scholarships to their students who are high stats and attend in-state schools, too (Georgia, Florida for example).
Even if you are in-state, some public universities are expensive even for in-state students because their state does not subsidize them much and/or they don’t have a large endowment. Pennsylvania is an example of this.
3puppies,
Thank you for all the insight! What I meant by that statement is that I see all the time whether on College Confidential or other places, that students were only offered some financial aid, not all. When you get your acceptance letters, that’s when you decide which school offered you the best. I’ve always been taught by various family members that loans are an absolute PAIN and steer clear from them. My parents have therefore been trying to tell me to go to public universities that aren’t that expensive (and therefore sometimes not regarded nearly as much). I’ve always recognized though that sometimes private schools will give out more financial aid- wherein my parents say “Yeah, in loans you’ll be paying for your whole life!”
While I’m not trying to discredit my parents (Obviously, they know more about finances- although neither had to deal with college finances, as they didn’t go and none of my older siblings have gone either), I do realize I need to go to schools that offer good need based aid, and so when I saw this list of no-loan colleges I jumped! Especially UChicago, as that’s the school I’m aiming for, right below Cornell.
Schools will base their aid on what they decide your family can pay… not what the family decides. Try the net price calculators at your schools of interest and see if the numbers look realistic.
Each college has a net price calculator on their website. Run each one to see what they say. But if your family has a small business, your parents are divorced, they own rental property, or have trusts – things like that can make the NPC like you will get more aid than they actually will award. You definitely need a safety or two – schools you know you can get into and will surely be able to afford and are willing to attend. Often those are in state publics. Start by finding those, then move on to looking at other schools.
Get your parents to sit down with you and fill out this form: https://financialaid.uchicago.edu/college-aid-calculator
…that will tell you what U Chicago expects your family to pay. If your parents are divorced or your family owns a business it will be less accurate, but still worth doing.
Need-based aid is based on (surprise) need. Different families, due to different financial circumstances, have different levels of need. Therefore, the amount of need-based aid offered will vary from student to student.
That’s poppycock. The colleges do NOT award need based aid based on “what the family can afford”. They base need based aid on a formula using income and assets provided by the student via whatever financial aid application submissions the school requires.
And many folks find that the amount of that family contribution exceeds what they think they can afford. The schools will NOT provide need based aid to cover the family contribution. Some folks need loans to cover that family contribution amount.
There was student a few years ago on CC who was appealing his financial aid from Yale. His parents had bought a beach house the year before and now cannot afford to pay their EFC. Solution: sell the beach house.
Generally, OP, you are right in that it is better to avoid loans if you can do so. However, your parents might be mistaken if they are advising you to stick to publics only because they are cheaper to begin with. It is not uncommon for parents not to understand this, especially because the process is so very different than it was 30 or so years ago when our generation was applying. We had advised our D to avoid loans, and it would have been possible, but she decided she wants to double major, and she will take summer classes to attain this. But it means she will not have any summer earnings, so she is taking a loan to cover what she would have earned in the summer. This was a conscious choice of hers, and right for her situation.
@thumper1 , I respectfully disagree, in part, with your assessment
To me, albeit I am coming from a grateful recipient of substantial need based aid, they are basing need on “what they believe the family can afford”. For our truly high need level, this ends up being the same thing. The way you describe it as “poppycock” gives the impression that these are always different figures.
@3puppies
When you added the word “believe” to the statement…it became accurate. Need based aid is indeed awarded based on what the colleges believe you can afford to pay.
Need based aid is not awarded based on what the family can afford to pay. Lots of families have other debts that make paying the calculated family contribution something they can NOT afford to pay.
That’s what I meant.
Maybe I can offer some insight. I just complete the FAFSA for my DD’s senior year at Penn, a “no loan” institution. Based on 2016 taxes of about $111K income, our EFC came out to $25,000 (sticker price is $72K.) From the previous years experience, Penn does a little better, and has given a grant of about $44K each year. We make up the rest with loans. BTW - I know the math doesn’t add up, but we don’t pay “sticker price,” which is heavily padded. No travel expenses (she has a car.) Basically no books (online downloads.) She lives off campus. No meal plan. Etc…
OP - you really need to run the NPCs with your family’s financial information to see if any school will be a financial reality. A lot of families are surprised at just how high their EFC is. You may be high need and find a school that “meets full need” works for you. Or you may find that your family is expected to pay over 1/3 of your gross income towards college. If you live in a high tax area, have high medical bils and need to save for retirement, paying that much is unrealistic without loans. (And since they take into account home equity, I believe they really do expect you to take loans even if the school’s package doesn’t include them.)