Do you want a college degree, but fear a truckload of student loan debt? The cost of attending college is often a huge deterrent for would-be students, but how would you like to earn a college degree and graduate debt-free?
A new trend that is gaining popularity — no-loan financial aid — can help you do just that. According to a Washington Post article, there is a growing shift from loans to grants being awarded by colleges. Student loans often sit idle — no payments and no interest — while you are attending school, but after you graduate, you have to start making payments. A grant, on the other hand, is free money because you never have to repay a grant.
Every college charges a certain amount for tuition, but every student can only afford to pay a certain amount, which, in many cases, is much less than what the college is charging. Therefore, in order for students to attend college, many of them must take on a considerable amount of debt. In an effort cut down on student debt, help underprivileged students, and encourage more people to attend college in general, an increasing number of schools are working to lessen and even eliminate student debt by offering capped loans and work-study programs. Also, the average family income that is considered to be in need of aid is increasing in order to make more students eligible for aid. Many colleges, including private universities such as Princeton and Harvard, are making "no-loan" aid pledges. This eliminates student loans, allowing students to graduate without incurring massive debts.
However, don’t get your hopes up too high when you hear "no-loan" aid. According to another Washington Post article, "no-loan" does not necessarily mean "free school." The majority of these no-loans require the family of the student to pay an expected contribution, which is often based on the family’s household income.
But even with the payment stipulation, there are two upsides to the expected contribution:
- Predictable cost. The family is able to calculate the cost by determining the household income and then figuring up the amount, usually a percentage, required by the college.
- The cost is less than what the college charges. Generally, the expected contribution is a low percentage of the household income. Therefore, even though the cost may be thousands of dollars, it will be thousands of dollars less than full tuition, room, and board.
In the job market, a college degree is a highly valuable commodity that makes treading water much easier when you’re dropped into the job market pool, so the fear of debt shouldn’t keep you from earning a degree. Now, these no-loan pledges are making college degrees more affordable and therefore, more attainable for more people. Even though the education is still not entirely free, no-loan pledges allow students to graduate debt-free, eliminating much of the pressure that causes graduates to take the first job they can in order to start paying off their loans as fast as possible. Instead, they are now able to explore their options and find the job they want.
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