In an effort to make Penn more affordable for thousands of middle-class families, the University expanded its financial aid policy so that it will eventually allow eligible students to attend college without having to pay back a single loan.
On Dec. 17, the University announced that beginning in fall 2008, student loans will be eliminated from financial aid packages offered to undergraduate students with family incomes under $100,000.
By fall 2009, student loans will be eliminated from all financial aid packages-- regardless of income level.
"This is a proud moment in our institution's 267-year history," Board of Trustees chairman James Riepe said in a University press release.
The expansion, part of University President Amy Gutmann's campaign to make Penn more affordable, will be funded by the anticipated increase in the University's endowment due to the Capital Campaign. The University plans to expand grant-aid spending by $20 million.
"Talented, hardworking young people should not be deterred from pursuing their dreams for fear of being a financial burden to their families," Gutmann said in the press release.
Director of Student Financial Aid Bill Schilling added that loans will still be available for eligible students that choose to borrow money instead of contribute to their aid package via work-study or family contribution.
"With this, students will have a lot more flexibility and be able to graduate with fewer loans-which will give them more freedom down the road," Schilling said.
Joanne Hanna, the director of development for undergraduate financial aid, said the University's announcement will benefit both middle-income and lower-income applicants.
She added that students often overlook Ivy League schools in the college application process because of the price tag.
This specific move is geared to benefit the middle-income class.
"There is such a large number of students that don't even think about Penn in that group," Hanna said.
Last March - when the University promised loan-free packages to applicants with family incomes less than $60,000 - marked the most recent improvement to the financial aid program.
Penn's December announcement followed Harvard's announcement of a similar financial aid expansion by only four days - although Schilling said Penn's announcement was "definitely" not a response to Harvard's.
Still, Hanna added that she was surprised by Penn's announcement.
"I'm very aware of how under-endowed we are, and it was remarkable to me that we found ourselves in a financial position to [launch the initiative]."
She also acknowledged that peer schools have made similar moves in the recent past.
"We need to stay as competitive as we can," she said.
