Princeton University announced this week that it will spend $5 million to replace student loans with scholarships for undergraduates receiving financial aid next year. Calling it a step toward reducing student debt, administrators extended the offer to all financial aid recipients, not just incoming freshmen.

An additional $6 million will be spent improving graduate financial aid programs by increasing stipends, improving medical coverage and increasing the number of students who will receive scholarships.

The expansion was made possible by Princeton’s $8 billion endowment.

This money has been raised through a five-year campaign celebrating the university’s 250th anniversary and its annual giving program, said Marilyn Marks, media relations manager at Princeton.

“Alumni were very generous,” she said.

Often competing for the same students, peer institutions such as Harvard and Yale are under pressure to meet or raise Princeton’s offer, according to school newspaper reports.

Despite some financial aid increases this year, Northwestern’s endowment of more than $2.87 billion just isn’t enough to fund such a huge change, said Rebecca Dixon, associate provost for university enrollment.

“We’re a bigger, more expensive institution to operate,” Dixon said.

Princeton undergraduates will pay about $26,160 for tuition next year. The current undergraduate tuition at NU is $24,648, and graduate tuition ranges from $23,301 to $31,685. Many students are forced to borrow thousands of dollars to cover tuition, room and board, books and personal expenses.

This year, 65 percent of Princeton freshmen receiving financial aid are also receiving loans. Seniors completing their undergraduate degrees owe on average between $15,000 and $20,000. The average NU undergraduate accrues only about $13,000 in debt at the end of four years, but many students consider this a huge financial burden.

“My goal is to hopefully get scholarships, but it’s getting harder and harder to find them,” McCormick freshman Nola Akiwowo said.

Akiwowo plans to attend medical school after graduation. But in order to cope with her debt, she may have to work for a few years before continuing her education.

“Then, I’ll have to pay off med school loans,” Akiwowo said. “I am not looking forward to this.”

NU has made improvements to its financial aid program in recent years, phasing in a policy that allows scholarships from sources outside of the university to be used toward reducing student loans, Dixon said. Such scholarships are no longer deducted from students’ grants, as they were in the past.

Also effective this year was a decision to raise work-study wages to $7 per hour. Dixon said the university applies a formula when calculating financial aid while also considering each student’s personal circumstances and needs.

“Every student given financial aid is given close scrutiny,” Dixon said. “NU is more considerate than many other schools. It’s an advantage to our students that we’ve always had good packages.”