Brown University has initiated a $120 million campaign to drop all loans from financial aid packages awarded to their undergraduates.

Student debt is at an all-time high — the average outstanding balance is $34,144, up 62 percent over the last 10 years — and Brown will become the sixteenth U.S. institution, and the sixth in the Ivy League (excluding Cornell and Dartmouth), to offer all of its undergraduates a loan-free education.

In 2016, the average Brown student graduated with a debt of $23,810, compared with $8,908 for Princeton, which adopted the no-loans policy in 2001.

The plan aims to replace financial aid packages with grants that do not have to be repaid. All undergraduates — domestic and international — will be included, university President Christina Paxson said.

"If we're successful in raising one quarter of the total amount — $30 million — by December, Brown will eliminate loans in financial aid awards for all current and incoming students starting with the 2018-19 academic year," Paxson said in a statement.

The university plans to add $4.5 million to its financial aid budget each year to cover its 6,500 undergraduates.

Currently, Brown has a no-loans financial aid policy that is extended only to students who qualify for a Pell Grant or whose family earnings fall below $60,000. Brown was the second university to adopt that plan after Princeton in 1998.

Of the estimated 4,200 U.S. colleges and universities, only 58 have no loans for low-income students and just 15 have no loans for any of their undergraduates, said Mark Kantrowitz, publisher and vice president of strategy at Cappex.com.

Brown's move is the latest in an effort to make higher education more affordable. In April, New York state made tuition free for community colleges and public four-year schools for state residents with annual incomes up to $100,000. In June, the University of Michigan announced it will offer up to four years of free tuition for in-state students with a family income of up to $65,000.

Most prior moves to help students with debt are specifically aimed at low-income families. Only a few American universities, including Springs College and College of the Ozarks, are tuition-free for students from all socioeconomic backgrounds.

Brown's plan to eliminate loans may help its own students, but the real question is, will other institutions follow?

"One of the reasons Ivy League schools can do these programs is not only because they have large endowments but also because they have very few low-income students," Kantrowitz said. "Longer term, I would expect to see more focus on free tuition, as opposed to no loans."