How To Find Interest Free Loans For Students

Taking student loans is unavoidable for most students. It isn’t easy to find interest-free student loans as only a few institutions offer them. Apart from tuition, students and their families have to cover books, school supplies and equipment, room and board, and living expenses such as groceries and transport. Student loans sometimes have high-interest rates but low maximum loan amounts, which pushes most students to take out multiple loans throughout their college career to cover their expenses, leaving them with overwhelming debt. Although rare, interest-free student loans can considerably reduce your debt after graduation and improve your quality of life. 

How To Find Interest Free Loans For Students?

Private foundations

These are private legal institutions created for the sole purpose of assisting those in need. Private foundations don’t rely on public donations; they receive funds from a single entity, a family, an organization, or an individual who, in return, receives tax deductions. Private foundations offering interest-free student loans across the U.S. include the Bill Raskob Foundation and Evalee C. Schwarz Charitable Trust. 

State-specific programs

These are state education agencies offering financial aid to college students. Eligibility requirements for most state-specific programs are restricted to legal residents and in-state schools. Some examples include the Massachusetts No-Interest Loan Program and Scholarship Foundation of St. Louis. 

Religious organizations

These are entities with a religious and spiritual foundation. These can operate as non-profit, voluntary, registered, or unregistered entities. Religious organizations are essential in many communities and are a moral guide for many in society. One religious organization offering interest-free student loans across the country is the International Association of Jewish Free Loans. 

Military specific programs

These initiatives offer financial aid to people who have served in the military and their children. In addition to interest-free student loans, these programs provide housing and home loans, business loans, job training, and accessible or affordable medical care. An example of this program is the Military Officers Association of America Loan. 

Not-for-profit organizations

The purpose of a not-for-profit organization is to advance social causes and benefit the public. As a result, it is tax exempted. Not-for-profit organizations don’t earn revenue and put all funds back into the organization. An example of this organization is A Continuous Charity (ACC). 

Local membership clubs or fraternities

Local membership clubs or fraternities consist of people sharing the same interests and values. Their purpose is to support their community and young people. An example of a local membership club providing interest-free financial aid to students is the Keene Rotary Club’s interest-free loans. 

College or university financial aid programs

College financial aid programs provide financial assistance to students attending that specific institution regardless of their ability to pay. These programs rely on donors to support their students with interest-free student loans, scholarships, and grants. An example of this program is the Griffin Financial Aid Office at Harvard University and the Dean Griffin Hip Pocket Fund at Georgia Institute of Technology.

How can students qualify for interest-free loans?

  • Demonstrate Financial need
    To qualify for interest-free loans, you need to demonstrate financial need. Financial need is the difference between your school’s cost of attendance and how much you can afford. Financial need is demonstrated by subtracting the cost of attendance (COA) from any other financial aid you already have, such as expected family contribution (EFC). The result will determine how much financial assistance you receive.
  • Submit your FAFSA on time
    Students must submit a Free Application for Federal Student Aid (FAFSA) to qualify for federal student loans. FAFSA is also important when applying for interest-free student loans because it shows that you have tried other means to pay for school, you are in need, and determines the kind of financial aid you need, such as scholarships or grants.
  • Be a U.S. citizen or permanent resident
    U.S. citizenship is one of the essential eligibility requirements for most interest-free loans for students. Lenders require applicants to be U.S. citizens or permanent residents with a valid social security number, although some institutions exempt students holding DACA status.
  • Strong academic record
    Having a solid academic record improves your chances of getting a loan. An academic record consists of any document you have received throughout the years you have been in school, such as transcripts, certificates, diplomas, and degrees. A strong GPA also makes you eligible for additional aid, including scholarships and grants.
  • Must attend in-state schools
    Some interest-free student loans require you to be a legal resident of a specific state and attend an in-state college or university, as in the case of state-specific programs funded by the state government.

Alternatives to Interest-Free Loans

Scholarships

Scholarships are forms of financial aid that help graduate and undergraduate students pay for their degrees. Most institutions award scholarships to cover tuition, books, rent, and other living expenses. Scholarships can be merit or need-based and are usually awarded based on academic achievement, leadership and community work, and study area.  

401k Loan

401k loans are borrowed from your retirement savings account. The amount you borrow is established by the type of savings plan your employer has implemented. A 401k loan is a good option for students because they are quick and easy, have flexible repayment terms, and no origination or administrative fees.

Personal Loans

Also known as consumer loans, personal loans are for individual needs. Students can take out consumer loans to cover living expenses such as food, rent, books, and school supplies. Personal loans are hard to get due to their strict eligibility requirements.  

0% APR credit cards

These allow you to buy things and make payments without charging interest for a specific period, usually six to twenty-one months. 0% APR credit cards help students manage and have control of their finances while in school and after graduation. 

FAQs

How do I get an interest-free student loan?

The best way to get an interest-free student loan is to complete your FAFSA on time and maintain a solid academic record. To find interest-free student loans, check state-funded programs where you like and local membership clubs. 

Which bank provides interest-free student loans?

Private banks don’t offer interest-free student loans, but subsidized federal student loans are interest-free while you are in school.

Are federal student loans interest-free?

Federal student loans are not interest-free. Both direct subsidized and unsubsidized federal student loans currently have a fixed interest rate of 4.99%. 

Final thoughts

Interest-free student loans are necessary for the success of a lot of students. They enable them to pay for tuition and other living expenses and reduce the overwhelming debt students have to face during and after college due to accrued interest. While they are rare, interest-free loans for students are worth the extra research it takes to find them and successful.