Pathways4Parents  

PHILADELPHIA - The University of Pennsylvania on Monday joined Harvard and other elite private colleges in announcing loan-free financial aid packages aimed at middle- and upper-middle-class students.

All financially eligible undergraduates will receive grants instead of loans beginning in fall 2009, Penn officials said.

"Our aim is to send a signal out to every family who would not otherwise believe they could afford our tuition and fees that we're affordable to students from every economic background," Penn President Amy Gutmann said.

Penn costs about $46,000 a year for tuition and room and board. The school must continue charging such fees to those who can afford it in order to offer financial aid to less affluent students, Gutmann said.

Penn, an Ivy League school, will phase in the changes starting in September by eliminating loans for students with family incomes under $100,000. At the same time, it will reduce need-based loans by 10 percent for students whose families make more than $100,000.

The new loan-free policy continues a trend among top-tier schools to replace loans with grants in financial aid packages.

Harvard University and Swarthmore College announced similar policies this month. Yale University is expected to announce enhanced financial aid in January.

When fully implemented in 2009, Penn's new initiative will affect about 2,600 students and cost the school an extra $12.5 million a year, officials said.

The no-loan policy will be financed mainly through the university's $3.5 billion fundraising campaign.

Penn already covers tuition and room and board for students whose families earn $60,000 or less per year.

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