No-Loan Universities and $27.8Bn of Loan Originations
It is slightly amusing that No-Loan institutions have originated $27.8bn of loans between 2010-2023 (84% of those loans went to Graduate Students). In any case, No-Loans Institutions are doing incredible financial aid work, and I wanted to explore the various financial configurations that can power No-Loans pledges.
Let’s jump straight into the chart ^^above because I’m interested in whether there are various approaches to “get-the-money-for” No-Loan pledges. Most straightforwardly, a university can sign a No-Loan pledge if it has a gigantic endowment. But as I write this, there are 27+ universities with No-Loan pledges, and only a few of them have gigantic endowments. How are the rest of them doing it?
What is “No-Loan?"
"No-Loan” in this context has a very particular meaning: No-Loan universities pledge that low-income undergraduate students will be given grants, not loans, to finance their undergraduate studies. Signing one of these pledges is a very big deal because it removes a lot of financial anxiety from the college application process and increases application volume.
Methodology
I pulled this data from 27 “No-Loan” universities to visualize the mix of loans and grants that they originate - this is fun to look at because it gives us a sense as to whether there is an “over-arching” formula that powers No-Loan pledges. Looking at our summary chart above as “the mold” we can then we can look at individual universities andexplore whether there are one-off formulations that look quite different than the mold. Note: an Appendix, with all 27 universites, is below.
The chart above surprised me, and is somewhat weird and counterintuitive: “No Loans” universities are, on the whole, originating lots of loans (to graduate students). Also interesting is the shape of graduate loans from these institutions; in our sample of 27 no-loan institutions below, GRADPLUS balances are 5x PLUS balances. Here is more detail, in table form:
| Program | Cumulative Originations (2010-2023, in 2024 dollars) |
|---|---|
| Direct Loans (UG and Grad) | $15,116,956,536 |
| PLUS Loans | $2,023,392,372 |
| GRAD PLUS Loans | $10,665,441,862 |
| Total Loans | $27,805,790,770 |
Now I think there are at least two ways to explain the chart above:
- It’s a visual on how to on-ramp to a “No Loan” pledge. “No-Loan” in this context means “Make a Lot of Graduate Student Loans.” Universities with large enough Graduate Student enrollments can cross-subsidize a fraction of their Undergraduates and that is how to toe-in to a “No-Loan” policy.
- It’s a misleading chart. We can’t really see what the Endowment is doing; universities with gigantic endowments can power up their Undergraduate and Graduate enrollment without really touching Federal Financial Aid. The universities with gigantic endowments will barely register in the chart above.
Now let’s dive a little more into 2. Columbia and Princeton are both wealthy Ivy-league universities with Graduate Students, althougth Columbia has a larger Graduate Student population (including a business school, a law school, and a medical school). Both have signed No-Loan pledges, but the ways they are using the Federal Financial Aid system are different. Below is a side-by-side visual, with some information in the tootlips.
Columbia and Princeton are taking almost opposite approaches.
Columbia is issuing a lot of loans to graduate students , whereas Princeton is originating mostly Pell Grants, on behalf of the Department of Education. The charts are so starkly different that the “Yellow Slice” on the Columbia chart has more height (in terms of dollars) than the entire Princeton chart.
But I would argue these difference are actually good: they illustrate that there are multiple financial routes to enact a No-Loan pledge. Universities don’t have to have an endowment as large as Princeton’s to sign a No-Loan pledge.
We can also push on this analysis: among no-loan institutions, are some more no-loan than others?
Appendix:
Note, this is not an exhaustive list of no-loan colleges. “No-Loans” is not a criteria reported into IPEDS or the College Scorecarda; instead it is often tucked away in admissions pagess or press releases. The criteria for being “no-loan” seems a little wobbly as well, as different institutions report different family income thresholds under which they will not originate loans.
1. Columbia University
2. University of Pennsylvania
3. Northwestern University
Cool to see that PLUS loan originations have fallen 64% ($19.5m -> $7.0m)!
4. Johns Hopkins University
Also nice to see PLUS originations falling 54%.
5. Emory University
6. Harvard University
7. University of Chicago
PLUS loan originations fell 45%, which is great
8. Vanderbilt University
9. Yale University
PLUS loan originations have risen (slightly) which is surprising to see.