With a new financial aid policy that will offer over $4000 more to some lower and middle-class applicants, Princeton University last month broke from Ivy League convention in a bold move to diversify its campus.

Faced with an elitist image and an increasingly upper-class student body, Princeton abandoned a policy like Harvard's for one that will convert some loans into grants and shrink many families' expected contributions.

As news of the changes spreads, Harvard and other universities are standing pat--with state schools relying on their already-cheaper tuition and Byerly Hall still mostly satisfied with its current system.

Still, some high schools and professional college counselors say that the new policy could give Princeton a competitive edge against less expensive institutions and Ivy League schools with traditional aid systems.

The New Plan

Princeton's governing board approved the new policies late last month. Next fall's first-years will be the first class affected by the changes, which will be gradually implemented over the next four years.

The new policy will eliminate all loans when student's families make less than $40,000 a year--absorbing what had been $4,080 in debt into an increased grant package in some cases.

For families with annual incomes between $40,000 and $57,500, loans will decrease but not disappear, meaning for example that a family making $50,000 will still take out $1,580 in loans.

"We looked at the last two freshman classes and saw a drop in students on financial aid," said Don Betterton, Princeton's director of Financial Aid. That percentage was 39 percent for the class of 2001--at a time when Harvard's percentage hovers in the mid-40s.

"Our main objective was to make Princeton more financial-aid friendly for lower- or middle-income students," Betterton says. "We wanted to counteract sticker shock... so that we can say we truly meet all demonstrated need."

The plan was also geared to benefit middle-class students by eliminating home equity in calculating expected contributions from families making $90,000 or less.

Home equity is an estimate of a house's value, which in financial aid systems like Harvard's is lumped with annual income in calculating a family's ability to pay.

For example, certain families earning $85,000 with high home equity could now pay $2,700 less every year than they would have before.

Princeton officials said last month that the new loan policies will affect 10 to 15 percent of the incoming class, with the homeequity changes helping 30 to 35 percent.

Princeton will pay for this aid increase with a$4-6 million annual budget deficit in the shortterm--absorbed by the largest endowment perstudent in the nation.

Harvard's endowment, now at $11 billion, is farlarger than Princeton's overall, but must supporta far larger number of students due to Harvard'sgreater number of graduate students.