Beginning next year, the College will eliminate loans in all financial aid packages in favor of scholarships. The College's Board of Trustees approved the decision this summer.

Once implemented, the new policy will not only affect incoming students in the Class of 2012, but currently enrolled students as well.

"Our concern was that students who expect to have to take out large loans to come to Amherst were being scared away from applying or choosing not to attend Amherst if admitted," said President Anthony Marx. "In addition, we were concerned that students who did choose to come to Amherst and took out significant loans were having their career choices constrained by debt."

Scholarship resources derive from the College's endowment, alumni gifts and operating budget. As its resources have expanded, the College has increasingly taken measures to make tuition more affordable for low-income families.

The College began reducing loans in the mid 1980s, and, in 1999, became the first college in the U.S. to abolish loans for low-income students. The policy was initially confined to students with family incomes under $40,000, but was extended to include incomes lower than $60,000 two years ago.

"What we've eliminated already and reduced since 1999 has cost about $1.4 million a year in additional scholarship funds. This [new policy] will add about another $1.6 million so when looking at our overall scholarship budget, it's a noticeable increase but not unworkable. We certainly planned for it," said Director of Financial Aid Joseph Case.

According to Tom Parker, Dean of Admission and Financial Aid, following graduation, students interested in non-profit work, graduate school or professions with modest salaries feel compelled to change career plans.

"We see the same thing in the medical profession. Many doctors come out of medical school with staggering amounts of debt, and feel they have to choose specialties instead of general practice," Parker said. "We want students to have flexibility to do whatever they want."

Currently, students apply for federal loans such as Stafford and Perkins loans as well as Amherst College Student Loans as part of customized financial aid packages that also include scholarships, grants and job opportunities. Starting in the 2008-09 academic year, the loan component of the package will be replaced with scholarships. The average financial aid package for the Class of 2011 is valued at $32,000.

Case said that the current default rate for the Stafford loan program is zero and the Perkins program has recently been no more than 2.5 percent, which he said is comparatively low. One student defaulting produces about .5 percent for Amherst.

"Does this mean most students will never borrow? No," said Case. "Students may come back and say, 'here is a circumstance I would like to borrow for,'" Case explained, citing the purchase of a computer as an example.

Case said that students may also elect to borrow if they fail to accumulate the target amount of summer savings that the financial aid office typically expects of students. And since financial aid packages include employment, students might later opt to borrow rather than work during a given period.

Many students also privately take out additional loans separate from those that are integrated into their College financial packages.

While several other institutions have begun to reduce or eliminate loans for low-income students, only two others, Princeton University and Davidson College, have removed loans altogether.

"We wanted to buck the national trend of growing debt," said Princeton University Director of Financial Aid, Robin Moscato. "It has become a very serious issue. It still is and we decided to do something about it."

Fifty-four percent of Princeton's entering class receives financial aid. This percentage has fluctuated in the 53 to 55 percent range over the past several years, Moscato said. "It has made a huge difference here at Princeton," said Moscato. "The percentage of undergraduates on financial aid has gone up and the economic diversity of the student body has improved greatly. Students love graduating with little or no debt."

Moscato said that the only objections to the no-loan policy that have come to her attention concern the "philosophical discussion about whether students should make a personal investment in paying for college tuition."

Presently 53 percent of the College's students receive financial aid. Amherst was one of the first colleges in the country to offer financial aid that is "need-blind" for prospective students, meaning that a student's financial circumstances do not affect his or her admission.

Marx said that the College will continue to offer need-blind financial aid to over half of its students.

"This is an absolute plus," he said. "We anticipate that higher percentages of students will qualify for financial aid and that our commitments to geographic, ethnic, racial, economic diversity and to the full range of interests and specialization will continue."