IHEP Report in Favor of No-Loan Policies

A new report from the Institute for Higher Education Policy — Economic Diversity Among Selective Colleges: Measuring the Enrollment Impact of No-Loan Programs — deals with research questions about what US colleges can do to increase attendance of low-income students while remaining highly selective, and why it is important that they pursue the goal.

It has been 15 years since several private and public institutions introduced ‘no-loan’ financial aid programs for their four-year college degrees. Instead of student loans, incoming undergraduates whose family income was less than the national median would receive non-repayable grants and scholarships. There has been a significant spread of no-loan policies in the years since, but no comprehensive report on the impact they have had, or if they achieve their goals of increasing economic diversity among the undergraduate base for highly selective colleges. The IHEP report seeks to address this research gap.

The overall conclusion of the report is that the introduction of no-loan programs at US colleges has been beneficial and produced positive results; however, there is still more work to be done to move towards greater economic diversity.

“No-loan programs that are well thought out are a step in the right direction. And although some institutions may be backing away from offering these aid packages, these policies give hope to the idea that colleges and universities can become more inclusive of accepting our nation’s brightest students who by chance come from low-income households,” says IHEP President Michelle Asha Cooper, Ph.D. “By removing cost barriers, as outlined in this brief, colleges and universities may someday become more representative of our nation’s economic diversity.”

The report’s recommendations include: Targeting eligibility requirements to Pell-eligible students; Increasing the visibility of the programs by actively publicizing them as part of a wider outreach effort to low-income students; Resisting the temptation to skim from the financial aid program; and pushing for the implementation of Federal or state incentives to encourage more colleges to adopt the no-loan policies.

The report notes that while many colleges aspire to emulate the no-loan models delivered by top-class institutions, they run into funding problems when designing their own no-loan pledges:

Most colleges and universities (private or public) do not have the financial resources to be as generous as highly selective institutions and therefore modify their policies. Two in every three no-loan institutions (69 percent) restrict their no-loan aid to students from low (43 percent) or moderate (26 percent) income levels.

The Institute for Higher Education Policy (IHEP) is a non-profit organization which promotes access to and success in higher education for all students. IHEP develops policy and practice research to aid education leaders and policymakers in dealing with the many education challenges facing the nation.