Top Colleges to Cut Big Aid Packages?

(MoneyWatch)  For about two years the nation's most elite schools have been letting families participate in a fabulous trade-in opportunity. Parents pay a pittance to a school like Princeton, Harvard and Swarthmore and in return their child gets to earn a bachelor's degree that retails for more than $200,000.

This wildly popular higher-ed deal, however, could be endangered.

Here's a little background: About three dozen elite schools, including the Ivy League institutions, began rolling out amazing financial aid programs roughly two years ago. One aim of the schools was to neutralize pesky politicians, who were furious that some colleges were now charging $50,000.

Specifically, the Ivies and other elite higher-ed fortresses began offering no-loan student aid packages. If you needed assistance, the schools promised that you wouldn't have to take out loans. What made these programs extraordinary was that even families with incomes of $150,000 or higher had a chance at nibbling at these financial aid freebies.

So what's happening now? The endowments of these elite schools are in the toilet so the institutions have less mad money to throw around. Consequently, they are starting to question whether a family making $175,000 really needs student aid when the schools face so many pressing needs.

An article on Bloomberg.com capture the wavering that's begun. Swarthmore College's dean of admission and financial aid said that his school, along with others, is reevaluating its financial aid program and that he can't make any promises for what will happen next year. Pomona College's dean of admissions concedes that the school probably wouldn't have rolled out the no-loan program if it had foreseen Wall Street's implosions.

With the new admission season just beginning, it won't be long before we know if there is a limit to the generosity of elite schools.

Swarthmore image by Perdita. CC 2.0.