In a nod to the rising cost of college tuition and the burden of massive student loan debt on graduates, a growing number of universities are stepping up with "no-loan" aid pledges.
More than 50 colleges -- including elite private schools and flagship state universities in Virginia and Maryland -- have eliminated or capped loans in their financial aid portfolios for some or all students, promising enough aid in grants and work-study to cover most of the gap between what they charge and what each student can afford to pay.
At a handful of private universities with sizable endowments, including Princeton, Harvard and the University of Pennsylvania, the goal is quite literally to eliminate loan debt for most graduating seniors.
"It's going down, and it's going down dramatically," said Amy Gutmann, president of Penn. "A typical family earning $90,000 a year attends Penn tuition-free. A typical family earning $40,000 a year attends Penn with tuition, room and board covered."
Although the pledges ease the crisis of paying for school, most require families to pay a portion, called the expected family contribution. It is a predictable sum that considers household income and assets. A family with an income of about $120,000 a year might be expected to contribute $30,000 a year toward college costs; a family with half that much might be asked to contribute $12,000.
"No loan doesn't mean no cost," said Lauren Asher, president of the nonprofit advocacy group Institute for College Access & Success.
Aid pledges help, but a college education remains a long-term investment. Parents either plan for the expense and sock away money, perhaps in a tax-advantaged 529 plan, or they leave the student to carry the debt burden into adult life. Many colleges with aid pledges still expect students to carry some loan debt, even if their families have saved for their schooling. It's a higher-education maxim that students with a financial stake in their education are more likely to complete it.
"I recommend a one-third rule, where one-third of projected costs will be paid from past income [savings], one-third from current income and financial aid and one-third from future income [loans]," said Mark Kantrowitz, a financial aid expert and publisher of the Web sites and .
There is, in fact, variation in how colleges calculate a family's fair share of college expenses. Asher's group estimates a family with an annual income of $120,000 will be asked to contribute about $16,000 a year toward Harvard or Yale, $33,000 toward Amherst or Swarthmore and $39,000 toward Duke.
To some families, the "expected" annual tab comes as a surprise.
"The issue that I deal with most is that there is often a gap -- or chasm -- between what families believe is their need and what formulas proclaim," said Sally Rubenstone, a senior adviser at the college admissions Web site College Confidential.
Princeton started the no-loan trend by eliminating loans in financial aid packages for low-income students in the 1998-99 academic year and for all students in 2001. Other selective universities followed, with a flurry of aid pledges approved in 2006 through 2008.
The pledges were big investments at a time of rising endowments. Those funds got hammered in the recession. Two colleges, Williams and Dartmouth, scaled back their no-loan commitments this year. Other colleges have stuck with their pledges, despite the cost.
Penn's aid pledge, phased in over four years, pushed the university's financial aid budget to $149 million for the coming academic year, an increase of 78 percent in Gutmann's six-year tenure. But it's an investment, she said. "From our view, it maximizes our eminence as a university."
Strapped public universities are focusing their more limited largesse on students from low-income families, on the theory that middle-class families can afford some debt.
The wave of no-loan pledges hasn't halted the steady rise in student loan debt nationally. Kantrowitz estimated that the share of four-year students graduating with debt rose to 66 percent in 2008 from 46 percent in 1993, and that average debt rose in that span to $23,186 from $9,297, based on an analysis of federal data.