Americans leave college today with more debt than ever before. Some schools are trying to reverse the trend by instituting a no-loans policy.
Most recently, Michael Bloomberg, the former mayor of New York City, announced he would give $1.8 billion to his alma mater, John Hopkins University, so that the college can substitute loans for scholarship grants. “It will ease the burden of debt for many graduates,” Bloomberg wrote in an Op-Ed for the New York Times.
Student debt burdens Americans more than auto or credit card debt. The average graduate leaves school $30,000 in the red, up from $10,000 in the early 1990s.
Around 300 colleges have a big enough endowment to be able to afford a no-loans policy, said Mark Kantrowitz, an expert on financial aid and the publisher of SavingForCollege.com.
Today, some 70 schools have adopted the policy, he said. “Bloomberg’s donation might trigger a new spike,” he said. At the same time, a number of schools have become tuition-free.
Some students will have to take out loans for living expenses and supplies, even if their tuition bill is covered through grants and work-study opportunities. Still, Kantrowitz found those who graduate from no-loans schools are less in debt than those who hail from other colleges.
For example, the average debt for graduates from Princeton University, the first school to adopt a no-loans policy in the late ’90s, is around $9,000. And about 80 percent leave debt-free.
Kantrowitz has compiled a list of the schools in every state that have done away with student loans.
Some of the colleges and universities include all students in their policy, while others are only extended to low-income students or those from the area.