INNOVATIVE PROGRAMS As colleges put together plans to enroll more low-income students, they must weigh several factors, including tuition, the number of low-income students it expects to enroll, and, for public universities in particular, the state's commitment to providing need-based aid. The University of North Carolina, for example, has a relatively low tuition and, while the numbers might grow, enrolls a relatively small number of economically disadvantaged students. The state has increased its commitment to need-based aid from zero to about $83 million in five years. Knowing all that, financial aid director Shirley Ort calculated that she could offer a Carolina Covenant to any eligible student, whether from in or out of state. Students must come from a family with an annual income at or below 200% of federal poverty level  -- about $40,000. It covers room and board, tuition, fees, books and a laptop, which is required of all students. Federal and state aid covers most of the program's costs -- close to $9 million last year. A quarter of that came from revenues from sales of products with the school's logo; another 10% came from private donations. That pool of money is what enables the university to eliminate loans from its financial aid package. Among other programs: The University of Florida meets full aid of eligible state students, thanks in part to a matching-grant program created this year by the state. The University of Maryland and others not only enable low-income students to graduate debt-free, but cap the amount middle-income students need to borrow. Stanford this year is covering costs for students from families with annual incomes of less than $45,000.   HIGHER EDUCATION Reform: Should government take yardstick to colleges? | Overhaul 'overdue' | Statistics Diversity: Student activities help 'level the playing field' | Black colleges greet Hispanics | Minority enrollment still lags Going global: Foreign enrollment steadies Admissions: Crack the code | Frenzy flagged | 'Getting in' can stress a kid out | Process tests family's will Finances: Tuitions, aid up | Private student loans riskier | Colleges partner with banks | Tips Technology: Wireless needed | Virtual world, real learning | Colleges adapt to savvy youth More

Her mother, Lori Brown, a single parent of seven in Hickory, calls it "a blessing." Steele, 18, her oldest, calls it "a miracle."

The miracle's name is the Carolina Covenant, a UNC program that promises low-income students such as Steele that their college costs are paid off and they can graduate debt-free. Now in its third year, the Covenant serves about 950 students and has become a model for other public universities.

UNC and Princeton, which launched a no-loan program five years ago for any student who qualifies for aid, have been joined by about two dozen universities, most of them large state flagships.

Specifics vary, but all schools share a similar goal: to make sure financial need does not discourage academically qualified students from getting the college education they have earned.

"This is the American dream: the idea that opportunity is available to anyone who seeks it," UNC chancellor James Moeser said at a conference recently. He wants more schools to follow suit, and judging from the talk here, more schools want to do so.

Still, the programs are expensive, and many experts raise concerns about their sustainability. It's no coincidence that some of the best-endowed schools, such as Harvard, Princeton, Stanford and Yale, offer the most generous packages. And few suggest that such programs alone can reverse a longer-term trend toward merit aid, which generally favors affluent students.

Many states, for example, use merit aid, such as Georgia's Hope scholarship, to keep bright high school kids from leaving the state for college. But state aid in general has been declining, and though need-based aid remains the largest share of state aid, it has been shrinking. In 2004-05, need-based aid was 73% of the total, compared with 86% a decade ago, says the National Association of State Student Grant and Aid Programs.

Private institutions, too, have long used merit aid to try to attract top students. A new College Board report finds many public institutions rely on it.

Meanwhile, federal spending on student loans continues to outpace grants. And the purchasing power of the Pell Grant, the federal government's primary program for low-income students, has been declining steadily for decades.

It's not clear whether the tide is turning, but there are signs of hope. Tuesday, Education Secretary Margaret Spellings called for more spending on need-based aid.

"We're scared now in terms of our lack of competitiveness as a country," UNC student aid director Shirley Ort says.

It's too soon to know whether institutional programs will achieve their ultimate goal: to graduate more low-income students. But Covenant students appear on track to succeed. Of those who entered UNC in 2003, 94% remain enrolled. That's higher than the 91% retention rate of students who started a year before the Covenant program began and who would have been eligible had it existed.

UNC officials stress that there's more to the program than money. It also offers academic and social support aimed at ensuring that nobody falls through the cracks. Students attend workshops on financial literacy and dining etiquette, for example. And each student is assigned a faculty mentor.

That connection was important for junior Nichole Nettleton, 20, who early in her college years found she couldn't finish exams on time. With help from Fred Clark, an academic dean and Covenant mentor, she discovered that she has a learning disability and learned to compensate.

"I probably would have still done OK, but I know my grade-point average would be a lot lower" than its current 3.6, she says.

The biggest benefit the Covenant offers, she and others say, is the freedom from having to work long hours and from having to worry about starting life after college saddled with debt.

"It's like a burden lifted off my shoulders," says junior Emerson Evans, 20. "It allows me to really enjoy college to the fullest and grow as a person."