College in the US is expensive—too expensive, in fact, for the average student to afford on their own. According to the National Center for Education Statistics, about 86% of first-year students at 4-year colleges were receiving some financial aid as of a couple of years ago. Financial aid is good in all its forms, right? If it helps college students afford their educations, what could be the problem?
Unfortunately, not all financial aid is created equal, and not all schools can afford to give out “good” student aid. Here, I’ll briefly talk about the types of financial aid available (the “good” kinds and the “bad” kinds) before laying out the colleges with the best financial aid programs in the country.
Financial Aid Basics: the Good, the Bad, and the Ugly
Financial aid comes from a variety of sources and in a variety of forms. Ultimately, all of this money is meant to cover your college expenses—these costs include tuition, room, board, fees, transportation, and personal expenses. Your total, or Cost of Attendance, will vary depending on where you’re planning on going to school. You can get more detailed information on all of these costs in our guide to college expenses.
So what counts as financial aid? There are three main types of aid that you should be aware of:
Grants are sums of money that you don't have to pay back. They're usually awarded based on financial need. Grants can come from the federal government or from your school.
Loans are sums of money that you borrow to fund your education. You pay back the sum after graduation, in addition to paying back interest charges. Ultimately, you pay back more than you borrow. Loans can come from the federal government (like Direct loans and Perkins loans) or from a private lender like a bank.
Like, grants, scholarships are sums of money that you don't have to pay back. They can come from private sources (like corporations) or from your school. They can be awarded based on merit only or based on a combination of merit and financial need. Athletic scholarships and academic merit scholarships are sometimes awarded by schools to extremely competitive applicants. These awards are given to entice students to accept an offer admission; financial need isn't necessarily considered in these cases.
Now that you know about the different forms of financial aid, we can talk about what aid types are more helpful than others.
These types of aid won't always be wrong for everyone, but they shouldn't be your first resort.
I define bad financial aid as aid that's a good short-term solution, but a burdensome in the long term. Financial aid packages are less appealing when they offer the majority of their financial aid in the form of loans. What this means is that you’re still responsible for those college expenses, only you’ll have to pay them after you graduate instead of right now. You’re also responsible for interest charges, which are especially high when loans have high rates and/or are unsubsidized.
Private loans are not included on schools’ financial aid packages because the loan lenders are banks, not the schools. If your out-of-pocket cost is too high (i.e. if grants/scholarships don’t cover enough of your college expenses), you may consider turning to student loans to cover the difference.
Private loans may be viable financial options for some students. I'm not saying that private loans are evil and that no one should ever take out student loans from banks. They should, however, be the last option you consider after grants, scholarships, and low-interest/subsidized loans.
A "Bad" Financial Aid Package
Less desirable financial aid packages will comprise mostly of loans, particularly high-interest loans. In these cases, a school can't or won't cover a student's unmet need, so the onus to find funding is put on the student. What this usually means is that the student has to take out loans to cover the cost of his or her education.
The average student debt for graduates of 4-year BA programs in the US is about $24,000. For some students, even this average debt amount may seem unmanageable.
These aid options tend to be better options; they're more sustainable in the long run.
I define good financial aid as aid that's a helpful and sustainable financial solution for both the short and long term. Basically, good financial aid enables you to afford the education you need without hindering you professionally, financially, or personally after you graduate. Here are examples of aid that fit this definition:
Any free money is good money. Because you don't have to pay back any money that you receive from grants, this award type won't hinder you in any way after you graduate. Like I mentioned earlier, they can come from both public and private sources. Check out our Pell Grant guide to learn more about federal grant options.
Scholarships are similar to grants—because it's essentially free money, you won't have to worry about repayment at any point. The major difference between grants and scholarships is that scholarship applicants are almost always evaluated on merit, even if the scholarship is need-based. To get started with your scholarship search, check out our guides to top awards for high school juniors and high school seniors.
The bad news: loans aren't as fun as grants or scholarships. You have to pay back the money + interest. The good news: loans can still be viable and manageable solutions for students who can't afford a school's net price after any grants or scholarships.
What makes a loan a good financial option? Low-interest rates, primarily. Many federal loan programs have low-interest rates, including Direct loans and Perkins loans. You may be able to get private loans with low-interest rates if you have good credit - generally, though, federal loans are better financial options. Start learning about federal Direct Subsidized, and Direct Unsubsidized loans.
Subsidized loans can save you some serious money in the long run because they don't accrue interest while you're in school and for 6-10 months after you graduate. See exactly how much money you'll save with a subsidized versus an unsubsidized loan. The Perkins loan is one special example of a subsidized loan - not only do you forgo interest charges while you're in school, but you could also be eligible for loan cancellation.
A "Good" Financial Aid Package
Ultimately, good financial aid packages are made up of a healthy percentage of grants and/or scholarships. If loans are included, they’ll be low interest (5% or lower) and may even be subsidized. They'll cover some of your financial need and maybe throw a scholarship or grant your way.
The best financial aid packages will cover all of your financial need. What this means is that the school itself funds your education after any federal grants without making you take out loans.
In the next section, you'll get a list of schools that claim to meet all of its students’ financial need - the best kind of financial aid.
Colleges With Best Financial Aid
The following is a list of schools that claim to meet all of its students’ financial need without having them take out any loans. 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. (Note that there are other schools that are need-blind that offer small loan amounts as part of their aid package.)
You don’t necessarily need to be low-income to have all of your financial need met. For example, Harvard doesn’t ask families for any contribution if family income is less than 65k, and families will only need to contribute up to 10% of their income if they make between 65k and 150k. Aid amounts operate on a sliding scale for families that make more than 150k. Students with the most financial need tend to get the most aid because many of these schools’ financial aid initiatives are based on removing barriers to college access based on finances.
If you're interested in any of the schools listed, just click the link to get information on admissions requirements:
Brown University (No loans for family income less than $100,000)
Dartmouth College (No loans for family income less than $100,000)
Duke University (No loans for family income less than $40,000; sliding scale after that)
Haverford College (No loans for family income under $60,000)
Lehigh University (No loans for family income under $75,000; sliding scale after that)
MIT (The first $3,400 of financial need is the students' responsibility, which can be met with loans, but no loans will be included in the aid package beyond that)
Northwestern University (All first-year aid packages are loan-free)
Rice University (No loans for family income below $80,000; small loans above that)
University of North Carolina - Chapel Hill (low-income North Carolina students may qualify for aid without loans through the Carolina Covenant)
Vassar College (No or limited loans for low-income families)
Washington University in St Louis (no loans for family income below $75,000)
Wellesley College (no loans for family income below $60,000; sliding scale after that)
Williams College (no loans for family income below $75,000)
Why Do These Schools Offer the Best Financial Aid?
You might have noticed that the schools on the list above are all pretty competitive private institutions. These private schools tend to be pretty elite, with strong alumni networks. Successful alumni tend to donate more to their alma maters, leading to more financial aid funding and better financial aid programs.
They may have higher sticker prices than many public schools, but they tend to be less expensive than public schools for many students due to their financial aid programs. Many of the above schools only offer need-based aid. They don’t offer merit-based scholarships because, like I mentioned earlier, their financial aid initiatives focus on removing barriers to education access. They don’t have to offer merit-based scholarships to entice applicants because their applicant pool is already so strong.
What If You're Not Eligible for Need-Based Aid?
Some students may want to seek out financial aid even if they aren't eligible for many need-based programs. If you're one of these students, there's one important thing you need to know: if financial aid isn't need-based, then it's merit-based. There are a couple of ways you can earn money for college regardless of financial need.
1. Apply for merit-based scholarships. Many scholarship programs don't consider applicants' financial need at all when giving out awards. Start your scholarship search with our guide to awards for high school seniors - just read over eligibility requirements carefully to make sure financial need isn't taken into account.
2. Apply to schools where merit-based aid is common. Few public universities or top private schools offer large amounts of merit-based aid—public universities can’t afford to, and top private schools don’t have to. That being said, there are schools where merit aid is much more common. These schools use merit-based aid to stay competitive by attracting strong applicants. The following schools tend to award merit aid to a high percentage of students:
Now that you know where to send in your college applications, you can start putting together a strategy for your financial aid applications. To get an overview of the financial aid process, check out our simple guide to applying for financial aid.
If you already have a financial aid strategy, check out our detailed info on submitting your FAFSA.
Looking for other ways to go to college without taking out loans? Check out these 13 amazing full-ride scholarships you could get.
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Francesca graduated magna cum laude from Harvard and scored in the 99th percentile on the SATs. She's worked with many students on SAT prep and college counseling, and loves helping students capitalize on their strengths.