Graduating students stand in the packed quarters of the Harvard commencement in the Tercentenary Theatre of Harvard Yard, May 29, 2014.
One result of Harvard's generous aid policy: Only 3% of students take out federal loans. Lane Turner—The Boston Globe via Getty Image

How to Find a College That Won't Drown You In Debt

Sep 17, 2014

By Kim Clark

Lost in all the bloviating about the country's $1.2 trillion in outstanding student loans is this surprising truth: There are scores of colleges where students generally have no problems with onerous debt—because the schools charge comparatively low prices, or have generous scholarship programs, or help steer graduates to sufficiently high-salaried jobs that loan payments aren't a problem. The trick, of course, is to find those schools when you're first applying to college instead of later, when you're already in over your head with debt.

To help identify these schools, MONEY analyzed the debt-related data for each of the 665 institutions in our Best Colleges rankings, looking at student and parent loans, default rates, and salaries after graduation to find the ones that keep borrowing the most manageable for their graduates—or help students graduate debt-free. Many of the names that emerged, as you would expect, are public colleges that charge low tuition to state residents. Public colleges with especially low debt loads and defaults include the campuses of the California State University and City University of New York systems, as well as public colleges in low-tuition states such as Florida, Louisiana, North Carolina, Texas and Virginia.

But many private schools also demonstrated their ability to keep loans from getting out of hand, as our list of the top 100 private colleges for student borrowers shows. Most of these schools have far more applicants than they can accept. But 21—including schools such as the University of Denver, Southern Methodist University in Dallas, and Lewis & Clark College in Portland—accept at least half of their applicants.

To find other school options that won’t leave you overburdened by loans after you graduate, focus your college search on places that have one or more of these key characteristics shared by the best schools for student borrowers:

Low sticker prices. You shouldn't automatically rule out a college that has a high published price for tuition, fees, room, and board, since about 85% of private-college students get scholarships that can substantially reduce this “sticker” price. Still, MONEY’s analysis did find a correlation between a school's published price and how much its students typically owe when they graduate—schools with lower sticker prices tended to have graduates who had borrowed less.

Often these colleges have a specific purpose or philosophy that helps keep a lid on prices. Several schools on the best-for-borrowers list, for instance, are religiously-oriented institutions that keep tuition low to serve their community. Brigham Young University, for example, charges members of the Church of Jesus Christ of Latter Day Saints just $5,000 a year for tuition. Non-members are charged $10,000.

Two other schools on the list, Berea College and College of the Ozarks, are “work” colleges that require students to take jobs on campus in exchange for free tuition. At College of the Ozarks, for example, students generally put in 15 hours a week during the school year, plus two 40-hour weeks when school is not in session. If they want to work off the costs of a dorm room and meals in the cafeteria, they can spend another 12 weeks working full-time for the college during the summer. “You don’t have to borrow,” says college spokeswoman Elizabeth Hughes. "You can work your way through college here."

You can find find other low-cost colleges on this Education Department list.

Generous aid policies. Each college has its own rules to determine which students get scholarships. A college with a high sticker price might award you enough in grants to avoid having to borrow—if your combination of grades, talents, and financial circumstances fits its scholarship profile. In general, you have a better shot if your grades and standardized test scores are higher than the averages for that particular school and, in some cases, if you intend to pursue a major that is not among the most popular at that institution.

To get a sense of how magnanimous a school’s aid program is, you can look at MONEY’s estimate of the institution's “net price,” which is the price you pay after scholarships have been subtracted. Also potentially helpful: this list of colleges that claim to meet full need. Other useful net price estimating tools can be found at Collegeabacus.org and Costoflearning.com.

Among the schools that routinely keep student borrowing comparatively low are elite private colleges. These schools distribute their scholarships primarily according to how much a student’s family can afford to pay versus merit—and then define a family's ability to pay rather broadly. At Harvard, for instance, families that earn less than $65,000 a year are not expected to pay anything; households earning up to $150,000 don't pay more than 10% of their annual income; and families that earn more may get aid, depending on their particular circumstances. As a result of this generous definition of “need,” just 3% of Harvard undergraduates end up taking out federal student loans in any given year.

Good job prospects. Research has shown that graduates are much more likely to find their debts manageable if their monthly paycheck is at least 10 times their debt payment, says Mark Schneider, president of College Measures, a higher education research firm, and an advisor to MONEY’s college rankings. That means bills of $200 or even $300 a month shouldn’t be much of a problem if you’re earning at least $3,000 a month.

Most of the private schools that are best for student borrowers produce graduates that go into high-paying fields or who earn more than the averages in lower-paying jobs. More than 40% of the students at Harvey Mudd College take out loans each year, for instance, and the typical attendee graduates owing more than $11,000. But since Harvey Mudd only offers degrees in science, math and engineering, the average salary of recent graduates has topped $70,000, making those loan payments seem manageable.

Unfortunately, it’s not easy to predict what your earnings will be, say, five years from now. You might change majors. The job market could change. And the data currently available is spotty. The PayScale.com early career earnings data upon which MONEY partially bases its rankings are earnings reported by full-time employees with up to five years’ work experience, which means those averages are likely higher than you’ll make right after graduation.

Still, a rough measure is better than none at all. Check out average salaries for recent grads of the 665 schools in our Best College rankings or go to Payscale.com for additional data on alumni earnings.

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