A long-kept Md. secret: interest-free college loans

Once in a while, something that sounds too good to be true is, well, true. Count the Central Scholarship Bureau as one of them.

The Pikesville nonprofit offers scholarships and interest-free college loans of up to $10,000 a year for needy Marylanders. Its aim: Cover the shortfall between the cost of attending college and the financial aid package.


Loans are common. Interest-free loans aren't. And if you're a student or parent of a child in college, you don't need a calculator to know the big savings to be achieved from not having to pay interest on loans.

If you haven't heard of Central Scholarship, you're not alone. Even though it's been awarding grants and interest-free loans for more than 80 years, Central Scholarship still runs across skeptics.


Program director Roberta Goldman says a high school guidance counselor told her a few years ago he had thrown away the nonprofit's brochure, convinced it had to be a scam. More recently, Goldman faced quizzical parents at a college fair.

"A few parents sat down and in so many words said to me, 'What do you mean there is no interest? ... Who funds this? How can that be? Where do you get the money?'" says Goldman. "We live in a day and age of scams, unfortunately, and everybody is on the watch for the next scam."

Central Scholarship is among a small number of nonprofits across the country that offer interest-free loans for students in their communities. It was founded in 1924 after the closing of the Hebrew Orphan Asylum. Local leaders used the orphanage's remaining funds along with other donations to create a program for scholarships and interest-free student loans.

Money to make loans today comes from donations from individuals, endowments and corporations. When borrowers repay, that cash goes into making new loans.

Central Scholarship this school year awarded a record $600,000 in interest-free loans and $300,000 in scholarships. Selection is based on need and merit. For the current school year, 450 students applied and 181 received loans or grants.

Changes made to the program in the past year have increased the number of students eligible and the amount they could receive.

The program now is open to permanent residents across Maryland, not just those in the Baltimore area.

Students can receive up to $10,000 a year in loans, or $40,000 total over four years. The previous total loan limit was $15,000. And the family income limit for eligibility has gone from $75,000 to $90,000.


"We had families that were above our income guidelines but were working three or four jobs to get to that income level," Goldman says. "It just seemed unfair that we couldn't help them with a scholarship or loan because they were working so hard."

Vanessa Scurry's two children are current recipients. Scurry, a secretary at Amtrak, first heard about Central Scholarship in an article in The Sun a decade ago when her children were in elementary school.

"I cut it out and kept it," says the single parent. "I knew I was going to be one of those that needed money."

Her daughter took out a loan last year when she was short $2,000 for her freshman year at Wesleyan University in Connecticut. She took out a $1,500 loan this school year. Scurry's son, a junior at Frostburg State University, also borrowed $1,500 this year.

"It makes a huge difference once you get out of school," the Baltimore mother says. "That's when everything comes down like a ton of bricks. All that money you borrowed and forgot about for four years."

The loans give Scurry peace of mind, too. "My kids won't be as strapped," she says. That means Scurry will be able to focus more on saving for her retirement.


The typical loan is $3,000. A student receiving $12,000 over four years in unsubsidized federal loans would end up paying $4,571 in interest over the life of the loans, says Mark Kantrowitz, publisher of FinAid, an online provider of student loan information. "It makes a difference."

Undergraduate and graduate students are eligible. There's no age limit. Recipients range from age 17 to 61.

To qualify for a loan, you must apply for federal financial aid. You need to have a grade-point average of at least 2.0 on a scale of 4. And you must have a co-signer for the loan so that if you don't repay it, the co-signer would be on the hook.

Central Scholarship will begin accepting applications for the 2008-2009 academic year in January. The deadline is May 31. For more details check out the nonprofit's Web site at

Central Scholarship also administers more than a dozen scholarships ranging from $1,000 to $10,000. These don't have to be repaid. Each has its own quirks, so check out the Web site to see if one fits you.

For instance, the Chesapeake Urology Associates Scholarship Fund is for those studying nursing, medicine or other health-related field. It gave away a total of $15,000 this year to four students.


Dr. Sanford Siegel is one of the urologists sponsoring the scholarship and serves on Central Scholarship's board. And while in medical school in the 1970s, Siegel received Central Scholarship loans.

"I was desperate for money. My father had gotten sick and wasn't working," Siegel says. "I would have had to find a loan somewhere at a much higher interest rate. ... It was manna from heaven."

Central Scholarship has been trying to raise its visibility to both students and donors. Operations director Roy Ringel says the dream is that someday students with need and merit will be able to graduate debt-free.

"We're not there yet," he says. "But we are putting it out there to as many people who have the time to listen to us."

Questions? Comments? Contact Eileen Ambrose at 410-332-6984 or by email at