(Warning: This article may feel confusing the first time you read this. You may feel your brain hurting. You may feel like, Why didn’t anyone explain this to me before? All I can say is, Right back at ya. Read, read, and re-read until you feel like you understand EVERYTHING I’ve said here.)

People are always so surprised when I tell them that I don’t have any student loan debt from Princeton. And I didn’t get internal scholarships. And I didn’t get outside scholarships. And I don’t have a trust fund. And my parents didn’t save for college (though I’m sure they wish they would’ve). What? What? What? Is this a magic trick?

Here’s the lowdown. College is expensive, BUT some of the best schools in the country have billions of dollars in their endowments (aka bank accounts) and provide very generous financial aid to admitted students. 

We call these schools, “No Loan” Schools. And if you want to avoid college debt, you should apply to a few.  These schools fall into 3 main categories:

1. No Loans for All Incomes

Examples: Princeton, Swarthmore, Washington and Lee

How it works: When your family fills out the FAFSA (Free Application for Federal Student Aid), the government will issue you a dollar amount called your Expected Family Contribution or “EFC”. Your EFC is how much money the government believes your family should be able to contribute yearly toward college.  

The university you’re applying to takes your EFC and creates a new calculation called your “Demonstrated financial need”. Demonstrated financial need is: the cost of attending their university minus Your Expected Family Contribution.

A “no loan for all incomes” school covers 100% of every student’s demonstrated financial need through grants, scholarships, and work-study (also known as a campus job placement). Your entire financial aid pack- age will be in the form of free money that you never have to pay back. 

Here’s an example:

Trevor’s parents’ combined income is $100,000 per year. Trevor has a few other siblings, so after filling out the FAFSA, the government determined that Trevor’s EFC is $9,000 per year. Derek is applying to a college that costs $50,000 per year. Therefore, Derek’s demonstrated finan- cial need for that college is $41,000. The college offers him $41,000 in grants, scholarships, and work-study. Trevor and his family are only required to pay their EFC, $9,000 per year.

2. No Loans for Lower Incomes, Some Loans for Higher Incomes

Examples: Cornell University, Duke University, Williams College

How it works:  These colleges cover 100% of students’ demonstrated financial need, but usually only those whose family income is under 75k – 80k per year. For students whose families earn more than $75,000, the university will offer grants, scholarships, work-study, and institutional or federally-subsidized loans to cover demonstrated financial need. Institutional or federal loans are a much better option for students than loans from private lenders, because they come with lower interest rates and softer repayment policies than those from private lenders.

Example One: Trevor is applying to a college that costs $50,000 per year and his demonstrated financial need is $41,000. The college offers him $39,000 in grants, scholar- ships, and work-study. It also offers a $2,000 loan. Trevor and his family are also required to pay their EFC, $9,000 per year.

Example Two: Avery’s parents’ combined family income is $60,000 per year. After submitting the FAFSA, the government determined that Avery’s EFC is $0. Avery is applying to the same college as Trevor, which costs $50,000 per year. Avery’s demonstrated financial need is $50,000. The college grants her $50,000 in grants, scholarships, and work-study.

3. Some Loans for All Income Levels

Examples: Boston College, Emory University, Georgetown University

Schools with this policy cover 100% of every student’s demonstrated financial need through grants, scholarships, work-study, and loans. Although this policy might seem less enticing than the other two, it still offers an incredible deal considering how much more free aid is offered.

Example One: Trevor is applying to a college that costs $50,000 per year and his demonstrated financial need is $41,000. The college grants him $33,000 in grants, scholar- ships, and work-study, and $8,000 in loans. Trevor and his family are also required to pay their EFC, $9,000 per year.

Example Two: Avery is applying to a college that costs $50,000 per year and her demonstrated financial need is $50,000. The college grants her $43,000 in grants, scholar- ships, and work-study, and $7,000 in loans. Since the gov- ernment determined that Avery’s EFC is $0, she will only need to pay back the $7,000 in loans she takes out each year.

4. Honors Colleges 

Another option is to apply to Honors Colleges at any other schools you apply to. The reason is because students in the Honors College have higher graduation rates, receive more attention and opportunities, and are considered for more scholarships/grants than non-Honors College students. Graduating from college in 4 years (most American’s don’t) is one of the simplest ways to avoid unnecessary debt. 

So now you know how to avoid debt, but do you want to learn how to get into these schools? My book the Outlier Effect will teach you how to get into your dream school and afford to go.