PHILADELPHIA -- The University of Pennsylvania today announced a far-reaching new financial aid initiative that will eliminate loans for financially eligible undergraduate students regardless of family income, making it possible for students from a broad range of economic backgrounds to graduate debt-free.
The new program is the latest step in Penn’s effort to widen access for students from all economic backgrounds, expanding its no loan program beyond low and lower-middle income families to include middle and upper-middle income families. Currently, one-half of the approximately 4,000 Penn undergraduates who receive aid have a loan as part of their need-based financial aid package. The new initiative will substitute grants for loans for all Penn undergraduate students who are eligible for financial aid.
“This is a transformative moment for higher education and for Penn,” said Penn President Amy Gutmann. “Making a Penn education accessible to exceptionally talented students from the broadest array of economic backgrounds possible is fundamental to our mission. No longer will students need to think twice about applying to Penn for fear that they will emerge with overwhelming debt. This represents a tremendous commitment—and enormous investment—on Penn’s part to increasing access for thousands of students. Talented, hardworking young people should not be deterred from pursuing their dreams for fear of being a financial burden to their families.”
The new Penn program will be phased in beginning September 2008, and will include all eligible undergraduates, not just entering freshmen. Effective that year, students with calculated family incomes under $100,000 will receive loan-free aid packages, while families above that level will receive a 10 percent reduction in need-based loans.
By fall 2009, all undergraduate students eligible for financial aid will receive loan-free aid packages, regardless of family income level.
“We have previously addressed the needs of low income and lower middle income families, but now must respond to the needs of our middle and upper middle income families, who are facing the highest levels of debt,” Gutmann said. “We want to send a clear message to them that Penn is committed to supporting them as they seek to provide the best educational opportunities for their children.”
Gutmann said the new initiative will be financed in large part from funds raised by Making History, The Campaign for Penn, the University’s five-year, $3.5 billion fundraising campaign, which includes a $350 million goal for undergraduate financial aid endowment.
Penn currently spends more than $90 million per year of its resources for grant aid to undergraduate students. When the new initiative is fully implemented, that figure will increase more than 20 percent, to more than $110 million.
“For many years, the Trustees have made the affordability of a Penn education a high institutional priority. The total elimination of student loans as part of our aid package is a critical next step in that process. We are pleased to join President Gutmann in supporting this important new program,” said James Riepe, chairman of Penn’s Board of Trustees. “The Trustees are committed to the funding of this initiative and are excited about the impact it will have on thousands of our students. This is a proud moment in our institution’s 267-year history.”
Of the handful of other colleges and universities that have adopted no-loan policies in their financial aid packages, Penn has the largest undergraduate enrollment (10,160).
Since 2003, Penn’s undergraduate financial aid endowment has more than doubled. Endowment income, however, can fund only 17 percent of the cost of the current aid program. The balance of financial aid funding comes from the University’s unrestricted operating budget. Both undergraduate and graduate financial aid are priorities for the University’s Making History capital campaign.
The new initiative expands Penn’s long-standing commitment to its need-blind admissions policy, which means students are accepted based on academic achievement, regardless of their ability to pay. Penn guarantees that any accepted student who matriculates with demonstrated financial need will receive a financial-aid package that meets the full extent of the student’s need for a full four years. Fewer than 50 private institutions across the nation have need-blind admissions policies and even fewer have financial aid based exclusively on need. Penn does not offer athletic or merit scholarships. Forty percent of Penn’s undergraduate students receive need-based financial aid from the University.
Penn also has recently launched a new outreach program targeting hundreds of schools and thousands of students from low and middle-income families -- who might never have considered applying to Penn -- to let them know that if they are accepted to Penn, they will receive a financial aid package with no loans. Penn is already seeing success in its efforts to improve access for lower income families, with a doubling of admitted high-need students with loan-free aid packages in the last year.
Penn Expands Financial Aid Program to Eliminate Loans: Fact Sheet