Williams College announced Thursday that it was joining a small group of colleges that have completely eliminated the use of loans in financial aid packages, meeting all demonstrated need with grants.

Princeton University eliminated all loans in 2001. While in recent years there have been a flurry of efforts by elite private universities and flagship publics to eliminate loans for students below certain income levels, it is rare to eliminate loans for everyone. But this spring, Davidson College announced such a move and in the summer, Amherst College followed suit.

In a sign of the growing interest in doing away with loans, Wesleyan University will today announce that it is eliminating loans for those with family incomes of up to $40,000, while setting new loan limits for other students. And a spokesman for Bowdoin College said that institution is considering a change in loan policy, but has not made any decision.

Williams already had a policy of providing enough aid so that the lowest income students would not need to borrow. But students with larger family incomes were borrowing either $3,800, $7,800, or $13,800 -- depending on income -- over their four years at the college. Morton Owen Schapiro, president of Williams, noted in his message to the campus on the change that the shift comes at a time that the college is admitting many low-income students. The freshman class is the first in the college's history where more than half qualify for college aid.

The additional grants are expected to cost Williams about $1.8 million annually, which Schapiro called "a sound investment of college resources in the growing diversity of our student body and in the future of our financial aid students, who now will be free to make post-graduation plans without the inhibition of college debt."

Williams has the second largest endowment of a liberal arts college in the United States (more than $1.46 billion in the last report, for 2006, from the National Association of College and University Business Officers), while some of the other colleges considering or making changes have smaller endowments. Wesleyan by comparison had a $619 million endowment in the NACUBO study.

The Wesleyan announcement will be made at the inaugural of Michael S. Roth as president there. Until now, aid packages at the college have included the assumption that students would borrow $26,000 over four years. In addition to eliminating the loans for those with family incomes of up to $40,000, the new approach to aid will result in other students' loans being between $10,000 and $19,000 over four years.

Wesleyan estimated that the additional grants will cost it $3.2 million annually, and that endowment funds would be raised to cover the costs. In early discussions with donors, Roth said that more than $10 million in commitments for student aid have been made.

At Davidson, officials said that they were encouraged by the results of their decision to eliminate loans completely. Davidson announced the change in the spring, just before sending out admissions offers, so the shift had no impact on who applied.

Christopher J. Gruber, vice president and dean of admissions and financial aid, said that the college's yield (the percentage of accepted applicants who enroll) increased last year to 41.6 percent, from 39.4 percent the year before. Given that the change probably wouldn't have affected the decisions of the wealthiest admitted applicants, Gruber said he thought the elimination of loans made a significant difference.

"There are first year students on our campus who never would have made it," he said. While Davidson previously worked with students to come up with packages, he said that some families were scared off by loans. "It's about getting past the perception that it wasn't affordable," he said.

This admissions cycle, Davidson is promoting the new policy to prospective students and as of this week, applications are up 17 percent from where they were a year ago. Gruber said he's thrilled to see Williams and others eliminating or reducing loans. "This really isn't about being in the lead. It's about giving students opportunity," he said.

Davidson's endowment (just over $421 million in the last NACUBO survey) is smaller than that of Williams or Wesleyan, and Gruber said that his college's experience suggested that institutions could find ways to finance these changes.

Beyond endowment, the cost of these shifts also depends on the percentage of students enrolled who are from the lowest income families. Many public institutions enroll far greater shares of low income students than do competitive private colleges.

According to data from the Economic Diversity of Colleges Web site (which predate the recent round of policy changes), the percentage of students eligible for Pell Grants (which go to low-income students) was 13 percent at Amherst, 7 percent at Davidson, 12 percent at Wesleyan, and 11 percent at Williams.