Do Interest-Free Student Loans Exist?

Written by: Kristyn Pilgrim
Updated: 8/17/20

According to Marketplace, roughly 70% of college students end up financing some portion of their education through student loans. On top of repaying the amount borrowed, students will also have to pay interest on their loans, adding to their debt upon graduation.

While interest rates rise and fall with the market, the average interest rates for 2020 fall between 4% and 7%, which could add thousands of dollars to your student loan. That’s why it’s a good idea to secure a student loan with a low interest rate.

But is it possible to find student loans with 0% interest? In some cases, yes, but these loans can be difficult to find. We’ll explore your best options below.

What Are Interest-Free Student Loans?

Interest-free student loans are funds lent to students to finance educational costs that do not accrue interest. While the loan must still be repaid after graduation, students can save hundreds or thousands of dollars in interest with this type of loan.

These loans are more difficult to come by and may have repayment stipulations attached to them. To help, we’ll walk you through some of the most common interest-free student loans, eligibility requirements, and how to apply.

National Interest-Free Student Loan Programs

Interest-free student loans are typically offered by foundations, nonprofits, and religious organizations. Here are three national interest-free student loans:

1. Bill Raskob Foundation Loans

The Bill Raskob Foundation offers student loans with no interest to students attending accredited colleges and universities. Students across the country can apply for this interest-free student loan. Loan amounts vary.

To be eligible, you must:

  • Be an American citizen
  • Be a sophomore or higher (first-year students cannot apply for this loan)
  • Only apply for one degree of study (i.e., this loan can fund a bachelor’s degree but not a bachelor’s and master’s degree)

You can apply online here.

2. Evalee C. Schwarz Charitable Trust for Education Loans

The Evalee C. Schwarz Charitable Trust offers no-interest loans to undergraduate and graduate students who show financial need and display strong academic promise. All students (including high school seniors) can apply for this loan, except for students seeking law degrees. Loan amounts vary.

To be eligible, you must:

  • Be an American citizen
  • Fill out a FAFSA application
  • Show financial need and qualify for government aid in the form of a grant 
  • Show strong academic performance and have test scores in the top 15% across the country
  • Be enrolled in a college or university in the state where you live

You can apply online here.

3. Military Officers Association of America Loan

If your parent served in the military, you could be eligible for a Military Officers Association of America (MOAA) interest-free loan. Several programs are available, including their $7,000 interest-free loan and Designated Scholar Program ($6,500 interest-free loan, plus a $500 grant).

To be eligible, you must:

  • Be an American citizen
  • Be younger than 24 years of age
  • Have a parent currently serving in active duty in the military or eligible for MOAA membership
  • Have a high school GPA of 3.0 or higher
  • Register with Selective Service (if male)

State- and Location-Specific Interest-Free Student Loan Programs

Many interest-free loan programs are offered through state programs or location-specific organizations to help students in designated areas receive more affordable educational funding. You should look into your specific state’s financial aid options to find out what funding is available, but here are a few notable interest-free loan programs to consider.

1. Abe and Annie Seibel Foundation Loan

This interest-free loan program is part of the Minnie Stevens Piper Foundation and is offered to students who have graduated from a high school in Texas who are also pursuing full-time higher education studies at an accredited Texas university.

To be eligible, you must:

  • Be an American citizen
  • Reside in Texas
  • Attend a Texas college with the desire to complete a bachelor’s degree
  • Be in the top 10% of your high school class or have a minimum 1100 SAT score or 23 ACT score
  • Maintain a 3.0 GPA throughout college

To apply, you’ll need to reach out to the Minnie Stevens Piper Foundation to request an application. You can call 210-525-8494 or email to receive your application packet.

2. The Scholarship Foundation of St. Louis

If you live in the St. Louis metropolitan area, you should check into the city’s student loan program. Approximately 500 students from the area receive interest-free loans for higher education pursuits each year. Applicants can receive renewable interest-free loans up to $11,000 per year. Students pursuing all areas of study (except ministry) are encouraged to apply.

To be eligible, you must:

  • Be an American citizen
  • Reside in St. Louis (and have proof of status for the past two years)
  • Enroll in an accredited college or university anywhere in the United States
  • Have an EFC under $15,000 (some exceptions apply)
  • Must demonstrate strong academic performance

You can apply online here.

3. Massachusetts No-Interest Loan Program

If you’re a Massachusetts resident, you might be eligible for an interest-free student loan through the state. This program offers residents requiring financial assistance no-interest loans designed to be repaid within 10 years of graduating. Students can receive between $1,000 and $4,000 per academic year.

To be eligible, you must:

  • Be an American citizen
  • Reside in Massachusetts (and have proof of status for the past year)
  • File a FAFSA
  • Enroll full time at an accredited college or university anywhere in the United States 
  • Demonstrate financial need

When you fill out your FAFSA, the state will automatically consider you for this interest-free loan program.

4. Leo S. Rowe Pan American Fund

This foundation is part of the Organization of American States (OAS) that helps citizens from Latin America and the Caribbean fund their educational pursuits in the United States. Applicants can receive interest-free loans up to $15,000 through this fund.

To be eligible, you must:

  • Be a citizen of a Latin American country or the Caribbean
  • Include your visa information and a copy of your passport
  • Submit recent copies of your transcripts
  • Fill out an I-20 or DS-2019 form (your school will provide this form)
  • Provide an I-94 from the Immigration and Naturalization Service (INS)
  • Provide paperwork detailing all financing being provided for your education
  • Provide a letter of recommendation from an academic adviser or professor
  • Enclose a recent bank statement from yourself and your guarantor (or both)
  • Provide a completed form from your Foreign Student Adviser

You can apply online here.

Affiliate Interest-Free Student Loan Programs

Many interest-free loan programs are offered through affiliations, such as religious organizations, to members or qualifying individuals. Here are some programs you can look into for financial assistance.

1. International Association of Jewish Free Loans

This interest-free loan program offers loan opportunities for Jewish-American students studying in the U.S. Different loan programs are available, depending on where you live in the country.

To be eligible, you must:

  • Be an American citizen
  • Reside in the state of your loan program
  • Be a member of the Jewish community

You can apply online at your respective program’s website.

2. Rotary Club Loan Programs

Many Rotary Clubs across the country offer interest-free loan programs, such as the Keene Rotary Club’s interest-free loans for New Hampshire Cheshire County residents. Maximum amounts and eligibility requirements vary. Look into your local Rotary Club to learn more.

Let Help You Fund Your Education without Interest

Looking into interest-free loans is a great way to borrow money without accruing interest along the way. However, there are many more resources available for students in the form of grants and scholarships.

Let help you maximize your financial aid so that you can minimize your student loan debt.