Princeton, in my college list as always. Here's Why?

With its ivy-covered Gothic halls, lavish facilities and meticulously groomed lawns, Princeton University makes no secret of its wealth. But it's the school's endowment that underscores just how much money Princeton actually has.

In sheer dollars, Princeton's nearly $10 billion endowment is fourth-largest nationwide, behind Harvard, Yale and the University of Texas. But unlike those schools, Princeton's enrollment is tiny, 6,300 undergraduate and graduate students combined, which means it has more endowed wealth per capita than any other college in the nation - a whopping $1.3 million per student.

"Princeton's endowment is one every other college in the country dreams of," said Tony Pals, spokesman for the National Association of Independent Colleges and Universities. "It's allowed them to keep their annual tuition increases below the national average year after year and to make investments in financial aid that have yet to be matched by any other school. It's also ensured that Princeton can provide its students with top-notch professors, cutting-edge facilities and the best learning resources in the world. Who wouldn't want that kind of money?"

Established in 1746 - it is one of the oldest colleges in the United States - and blessed with years of fruitful investments, the school has steadily built its endowment over the years, hitting the $1 billion mark in the early 1980s.

Though Princeton has used that money in many ways, its most groundbreaking endeavor was the sweeping overhaul of its financial aid program to attract more low- and middle-income students. Troubled that its student body was so skewed toward affluence, the school announced in 2001 that future aid recipients would no longer have to borrow to pay for college. Any loans to students qualifying for financial assistance would be replaced with grants that would not need to be repaid.

It was an unparalleled initiative - not only among the nation's most elite schools, but among American universities in general.

"The president of Princeton wanted to send the message that the school was open to all, regardless of economic circumstance," said Don Betterton, Princeton's director of financial aid. "We particularly wanted to reach high-ability, low-income students who might never have considered going to a school out of their state, much less an Ivy League school. The trustees firmly believe that low-income students are the most disadvantaged group in the country and need that affirmative action. It's also an important part of our educational mission to have a diverse student body, because students from all walks of life can learn from each other."

The approach worked. The year before the no-loan program went into effect, 38 percent of the freshman class received financial aid directly from the school. This year, the percent is 52, and it will increase to 54 with this fall's incoming Class of 2009. The number of low-income students (defined as having a family income less than $49,900) has more than doubled at Princeton in the last five years. At the same time, the average American student is saddled with $20,000 in debt for college loans.

Princeton's shift has, of course, come with a hefty price tag. Betterton says the new policy costs the school an additional $10 million to $12 million a year. It's the endowment that makes it possible. Of the school's $60 million scholarship budget, more than two-thirds comes from that cache of funds.

To be sure, Princeton also has used its endowment to upgrade facilities - academic, residential, cultural and athletic. And in the near future, the school also plans to use the money to enhance the creative arts on campus, endow professorships, secure computing and library resources and build new dorms and new facilities for the humanities, the sciences and engineering, among other things.

But the investment that has prompted the most notice is the effort to attract poorer students. That change comes at a time when more and more families are staggering from tuition sticker shock.

In the last 10 years, the bill for tuition and fees nationwide has pole-vaulted 86 percent, even as federal grants have fizzled and no longer keep up with the inflation rate.

Consequently, students (and their parents) who once chose colleges for their academic quality are increasingly selecting schools for value - balancing the caliber of education against out-of-pocket cost.

Private college leaders have responded to those concerns by ratcheting up their institutional grants. Twenty years ago, students at a private college received the same amount in federal aid as they did from the college itself. Today, private institutions give out four times as much grant money as the federal government. Overall, the average financial package for a student at a private college amounts to $18,000 a year a combination of loans and grants from federal, state and private sources.

Following Princeton's decision to fully cover its students' financial needs without loans, a handful of other institutions began reevaluating their aid policies, and some made changes, though none as stark as Princeton's. Dartmouth no longer requires loans for students whose families earn less than $45,000 per year, though it extends that offer only for their first year of enrollment. Harvard no longer expects families with incomes below $40,000 to contribute to their children's college tab. Amherst College, Rice University, Yale University and the University of Virginia provide similar plans.

Across the Hudson River, Columbia University, with an enrollment of about 24,000, says it spends more than $40 million on grants. Its endowment, reportedly $4.5 billion, helps foot the bill. Albert Horvath, executive vice president for finance, told the Columbia public affairs office in March the endowment has been growing strongly: Its investment portfolio, the largest part of the endowment, soared 16.9 percent over the past year.

Horvath said the university needs to put resources into financial aid and expensive research facilities for the basic sciences. "Our challenge is balancing long- and short-term needs and goals," he said.

But by and large, schools are headed in the opposite direction. Loans these days make up an increasing portion of student aid packages. Twenty-five years ago, grants made up two-thirds of all available aid, and loans made up one-third. Today, Princeton notwithstanding, those numbers have reversed.