Harvard University’s plan to overhaul its financial aid policy to eliminate all student loans and reduce the cost of college for almost all middle- and upper-middle-class families could pressure other universities to keep up in the financial aid race.

Under the new policy announced yesterday, families with annual incomes of between $120,000 and $180,000 will be asked to contribute 10% of their annual income toward tuition to Harvard. The initiative builds on a policy instituted last year that allows families with incomes of less than $60,000 to pay nothing toward their children’s tuition. The new package also replaces all loan funding with university grants.

“This is a huge investment for Harvard,” the president of Harvard, Drew Faust, said in a statement, “but there is no more important commitment we could make.” Harvard spends more than $98 million a year on scholarships, and the initiative would increase financial aid spending by $22 million.

Advocates for student aid said yesterday they hoped other universities would feel positive peer pressure to follow suit.

“It’s not only the Harvards of the world that can afford to adopt policies to reduce student debt,” the executive director of a nonprofit group, Project on Student Debt, said in a statement. “Public universities and smaller liberal arts colleges, with humbler endowments and more low-income students, can also limit the use of loans.”

In 2004, when Harvard first announced that low-income families — those earning less than $40,000 a year — would not be expected to pay for college, many Ivy League schools followed its lead. Brown University reportedly put aside a $100 million gift to replace loans with grants for 135 students. Yale University eliminated student loans for students from families with annual incomes of less than $45,000 a year.

Project on Student Debt now lists 33 colleges and universities that have instituted financial aid programs that avoid or minimize student loans. The list includes Columbia University, which in 2006 eliminated loans for undergraduates whose families earned less than $50,000 a year. Columbia is also in the middle of a $4 billion capital campaign, and is raising $425 million to strengthen its financial aid endowment for undergraduates.

The list does not include New York University, where students say it is particularly difficult to qualify for financial aid. A spokesman for NYU, John Beckman, could not be reached last night for comment.