The recent focus on student debt makes reliable data about how much students are borrowing, how borrowing patterns differ among students across different types of institutions and at different levels of enrollment, and about changes over time particularly important. While total student borrowing has grown rapidly over the past decade, the rate of growth has decreased in recent years.
The total volume of education loans disbursed doubled from $55.7 billion (in 2011 dollars) to $113.4 billion between 2001–02 and 2011–12. Over these years, the number of Stafford Loan borrowers almost doubled, while the average amount borrowed from subsidized and unsubsidized Stafford Loans combined increased by 8%, from $7,627 (in 2011 dollars) to $8,230.
The growth rate in education loans from 2001–02 to 2011–12 was slower than over the previous decade, when the total grew 150%, from $22.3 billion (in 2011 dollars) to $55.7 billion. Moreover, the total volume of education loans disbursed increased by 64% in inflation-adjusted dollars between 2001–02 and 2006-07, and the growth rate slowed to 24% over the next five years.
Types of Student Aid
In 2011–12, undergraduate students received an average of $13,218 per full-time equivalent (FTE) student in financial aid, including $6,932 in grant aid from all sources, and $5,056 in federal loans.
- Graduate students received an average of $25,152 per FTE in aid, including $7,417 in grant aid and $16,796 in federal loans.
- In 2011–12, $236.7 billion in financial aid was distributed to undergraduate and graduate students in the form of grants from all sources, Federal Work-Study (FWS), federal loans, and federal tax credits and deductions. In addition, students borrowed about $8.1 billion from private, state, and institutional sources to help finance their education.
- An estimated 13.1 million tax filers benefited from federal education tax credits and deductions in 2010—more than the number of students benefiting from any other federal aid program in 2011–12. About 9.4 million students received Pell Grants and about 10.4 million tookout Stafford Loans.
- There were 1.4 million recipients of the Federal Supplemental Educational Opportunity Grant (FSEOG), 684,000 Federal Work-Study (FWS) participants, and 524,000 Perkins Loan recipients in 2011–12.
- The American Opportunity Tax Credit (AOTC), introduced in 2009, increased the total tax savings for college students and their parents claiming education credits and tuition deductions from $7.0 billion (in 2011 dollars) in 2008 to $15.4 billion in 2009 and to $18.8 billion in 2010.
- Veterans benefits and military aid increased from 19% to 27% of total federal grants over the decade from 2001–02 to 2011–12.
Sources of Grant Aid
Federal grant aid almost tripled in constant dollars between 2001–02 and 2011–12, increasing from 20% to 26% of the total $185.1 billion in undergraduate aid.
- In 2011–12, 44% of all grant aid (and 49% of undergraduate grant aid) came from the federal government. Ten years earlier, only 32% of all grant aid (and 37% of undergraduate grant aid) was federal.
- In 2011–12, 37% of all grant aid came from colleges and universities, 9% came from state governments, and 10% came from employers and other private sources.
The number of students receiving Pell Grants, the central federal grant program providing funding for low- and moderate-income students, increased from 2.7 million in 1981-82 and 3.8 million in 1991–92 to 4.3 million in 2001–02 and to 9.4 million (37% of all undergraduates) in 2011–12.
- Total Pell Grant expenditures increased from $12.7 billion (in 2011 dollars) in 2001–02 to $37.0 billion in 2010-11, but declined to an estimated $34.5 billion in 2011–12.
- Only undergraduates students who have an expected family contribution of zero and enroll full-time/full-year receive the maximum Pell Grant. In 2010-11 (when some students could receive more than one grant in a 12-month period), 31% of Pell Grant recipients received at least $5,550 in Pell funding—the maximum for a single award. In 2008-09, 25% of Pell Grant recipients were awarded the maximum Pell Grant of $4,731 (in current dollars).
- The average Pell Grant per recipient was $2,094 (in 2011 dollars) in 1981-82, $2,538 in 1991–92, $2,925 in 2001–02, and $3,685 in 2011–12.
- The $5,550 maximum Pell Grant in 2011–12 was about equal to the 1976—77 maximum grant of $1,400 after adjusting for inflation. The number of recipients in 2011–12 was five times as high as it was in 1976—77.
- About half of all 2010-11 Pell Grant recipients were age 24 or older. Sixty percent of Pell Grant recipients are independent students.
Distribution of Student Aid
The composition of student aid is very different for undergraduates than for graduate students. In 2011–12, the 25.5 million undergraduates received 51% of their aid in the form of grants, 40% as loans, and 9% in a combination of tax credits or deductions and Work-Study. For the 3.9 million graduate students, these percentages were 29%, 68%, and 3%, respectively.
- In 2010-11, 40% of Pell Grant recipients were dependent on their parents for support, and 58% of these students came from families with incomes of $30,000 or less.
- Of the savings from tax credits, 23% went to households with incomes between $100,000 and $180,000 in 2010; 60% of the tuition tax deduction benefit went to households with incomes between $100,000 and $160,000.
- Because the AOTC is partially refundable, 24% of the savings from tax credits went to households with Adjusted Gross Income (AGI) below $25,000 in 2010. Only 3% of the tax deduction benefit went to households in this income category.
- The 30% of FTE undergraduate students in public two-year colleges received 34% of all Pell Grant funds in 2011–12. The 12% enrolled in for-profit institutions received 21% of the total.
- The 20% of FTE postsecondary students in private nonprofit four-year colleges received 45% of the campus-based federal aid funds in 2011–12. The 26% in public two-year colleges received 10% of the FSEOG, Work-Study, and Perkins Loan funds.
- In 1985-86, 9% of all state grant aid for undergraduate students was awarded without regard to the students' financial circumstances. By 2005-06, this percentage had risen to 28%; in 2010-11, it was 29%.
- In 2010-11, state grant aid per full-time equivalent (FTE) undergraduate student averaged $660, but ranged from under $100 in eight states to over $1,000 in eight states.
- Ninety-two percent of institutional grant aid at the most selective private nonprofit four-year colleges and universities was used to meet students' financial need in each year from 2007-08 through 2011–12. At less selective institutions in this sector, more of the grant aid goes to students without financial need.
Total education borrowing, including federal student and parent loans, as well as nonfederal loans, declined by 4% in real terms between 2010-11 and 2011–12—the first decline in at least 20 years. However, the 2011–12 total of $113.4 billion was 24% higher than five years earlier.
- From 2001–02 to 2011–12, average total borrowing per FTE student for undergraduate and graduate students combined increased by 55% in inflation-adjusted dollars.
- The percentage of undergraduate students taking federal Stafford Loans increased from 23% in 2001–02 to 35% in 2011–12. Three-quarters of 2010-11 Stafford borrowers took a combination of subsidized and unsubsidized loans; 17% took only subsidized loans.
- The average amount borrowed by undergraduates from the Stafford Loan program declined from $5,767 (in 2011 dollars) in 2001–02 to $5,538 in 2006-07, but increased to $6,676 by 2011–12.
- Nonfederal education loans, which are not part of the student aid system and do not involve subsidies, grew from an estimated $7.9 billion (in 2011 dollars) in 2001-02 to $25.2 billion in 2007-08. Since that year, student loan volume from banks, credit unions, states, and institutions has declined to about $8.1 billion.
Only 2% of students who first enrolled in 2003-04 had borrowed more than $50,000 from federal and nonfederal sources combined by 2009. Over 40% did not borrow and another 25% borrowed $10,000 or less.
- Among students who first enrolled in 2003-04 and earned bachelor's degrees by 2009, 2% had last attended for-profit institutions. Among those who had borrowed $75,000 or more, 18% had last attended for-profit institutions.
- In 2010-11, about 57% of public four-year college students graduated with debt. They had borrowed an average of $23,800 (in 2011 dollars). About two-thirds of those earning bachelor's degrees from private nonprofit institutions had debt averaging $29,900.
- Among public bachelor's degree recipients, borrowing grew more rapidly from 2005-06 to 2010-11 than it had the preceding five years, but among private nonprofit graduates, the growth in borrowing was slower in the more recent years.
- By September 30, 2011, 9.1% of borrowers who entered repayment in 2009-10 defaulted on their federal student loans. This was the highest cohort default rate since 1996, but the default rates were 21% and 22% in 1989 and 1990, respectively.
- For-profit institutions accounted for 12% of all students enrolled in 2008-09, 28% of those who entered repayment in FY 2009, and 47% of those who defaulted by the end of September 2011.