Highlights

As the nation slowly emerges from the Great Recession, the patterns of student aid are returning to the paths they were on before the economy crashed. The federal government, which dramatically stepped up its subsidies to students in 2009-10 and 2010-11, continues to play an expanded role, but not a growing role. Students continue to borrow at levels that are high by historical standards, but that represent a retreat from the soaring debt levels of a few years ago. New data allow a clear focus on the characteristics of students who are most at risk from debt. As Trends in Student Aid 2015 documents, those who do not graduate are particularly vulnerable. Older, independent students, those who take longer to earn their degrees, African-American students, and those who attend for-profit institutions accumulate more debt than others.

Types of Student Aid

In 2014-15, undergraduate students received an average of $14,210 per full-time equivalent (FTE) student in financial aid, including $8,170 in grants from all sources, $4,800 in federal loans, $1,170 in education tax credits and deductions, and $70 in Federal Work-Study (FWS).
 
  • Graduate students received an average of $26,950 per FTE student in financial aid, including $8,840 in grants, $16,570 in federal loans, $1,490 in education tax credits and deductions, and $50 in FWS. 
  • In 2014-15, undergraduate and graduate students received $238.9 billion in grants from all sources, FWS, federal loans, and federal tax credits and deductions. In addition, students borrowed about $10 billion from private, state, and institutional sources.
  • Total loans declined as a percentage of all student aid plus nonfederal loans from 47% in 2010-11 to 43% in 2014-15. This percentage was 51% in 2003-04 and 55% in 2007-08. 
  • Grants increased as a percentage of all student aid plus nonfederal loans from 45% in 2010-11 to 50% in 2014-15.
    This percentage was 43% in 2003-04 and 41% in 2007-08.
 

Sources of Grant Aid

Grant aid per FTE undergraduate student increased by $2,920 (56%) in 2014 dollars between 2004-05 and 2014-15.
 
  • Grant aid per FTE graduate student increased by $2,990 (51%) in 2014 dollars between 2004-05 and 2014-15.
  • In 2014-15, 37% of all grant aid came from the federal government, 41% from colleges and universities, 14% from
    employers and other private sources, and 8% from state governments.
  • Federal grant aid rose from 32% of all grants to postsecondary students in 2004-05 to 42% in 2009-10, and was 37% of the total in 2014-15
  • Veterans education benefits for undergraduate and graduate students increased from $4.6 billion (in 2014 dollars) in 2006-07 to $12.1 billion in 2010-11. These awards totaled about $15.2 billion in 2014-15.
  • Federal grant aid to postsecondary students increased by 152% in 2014 dollars between 2006-07 and 2010-11, with the largest increase in Pell Grants and veterans/military aid. The total declined by 13% over the four-year period from 2010-11 to 2014-15, when only veterans/military aid increased in real terms.
  • State student grant aid, almost all of which is for undergraduate students, increased by 13% in 2014 dollars between 2006-07 and 2010-11. After adjusting for inflation, states provided about the same amount of aid in 2014-15 as they had four years earlier.
  • In 2013-14, state grant aid per FTE undergraduate student ranged from under $200 in 11 states to over $1,000 in 11 states.
  • Grant aid from colleges and universities in the form of discounts to students grew from an estimated $30.6 billion (in 2014 dollars) in 2006-07 to $41.9 billion in 2010-11, and to about $50.7 billion in 2014-15.

Pell Grants

Total Pell Grant expenditures increased from $16.5 billion (in 2014 dollars) in 2004-05 to $39.0 billion in 2010-11, but declined to an estimated $30.3 billion by 2014-15.
 
  • The number of students receiving Pell Grants increased from 3.7 million in 1994-95 to 5.3 million in 2004-05, and to 8.2 million in 2014-15
  • The percentage of undergraduate students receiving Pell Grants increased from 26% in 2004-05 to 35% in 2014-15.
  • Only undergraduate students who have an expected family contribution of zero and enroll full time and full year receive the maximum Pell Grant. In 2013-14, 27% of recipients received the maximum $5,645 in Pell funding, up from 22% in 2003-04.
  • The average Pell Grant per recipient was $2,411 (in 2014 dollars) in 1994-95, $3,116 in 2004-05, and $3,673 in 2014-15. The average grant peaked at $4,189 (in 2014 dollars) in 2010-11.
  • Despite increasing by 17% in inflation-adjusted dollars between 2005-06 and 2015-16, the maximum Pell Grant covered 74% of average public four-year tuition and fees in 2005-06, but only 61% in 2015-16. It covered 19% of average private nonprofit four-year tuition and fees in 2005-06, and 18% in 2015-16.

Distribution of Student Aid

In 2013-14, 44% of Pell Grant recipients were dependent students; three-quarters of this group came from families with incomes below $40,000.
 
  • In 2013-14, 23% of all Pell Grant recipients were over the age of 30.
  • In 2013, 24% of the savings from education tax credits and deductions went to households with an adjusted gross income (AGI) over $100,000. Another 24% went to households with AGI below $25,000.
  • In 1993-94, only 10% of all state grant aid for undergraduates was awarded without regard to students’ financial circumstances. By 2003-04, this percentage had risen to 26% and in 2013-14 it was 24%.
  • In 2011-12, 12% of full-time undergraduate students at private nonprofit four-year institutions and 9% of those at public four-year institutions received grant aid from all sources combined that exceeded their federally determined financial need.
  • In 2011-12, full-time private nonprofit four-year undergraduate students received about two-thirds of their grant aid from their institutions; public four-year students got one-quarter of their grant aid from their institutions.
  • In 2011-12, full-time undergraduates in for-profit institutions received 64% of their grant aid from federal grant programs and 21% from aid to veterans and active military members.

Student Borrowing

In 2014-15, total annual education borrowing declined for the fourth consecutive year. Overall, students and parents borrowed 14% less in 2014-15 than in 2010-11.
 
  • In 2014-15, the average undergraduate who borrowed from the Stafford Subsidized Loan Program borrowed $3,750, 9% less than in 2010-11; the average undergraduate who borrowed from the Stafford Unsubsidized Loan Program borrowed $4,125, 11% less than four years earlier.
  • The percentage of undergraduate students taking federal subsidized or unsubsidized student loans increased from 28% in 2004-05 to 36% in 2014-15. Just 9% of students (and 24% of borrowers) took only subsidized loans.
  • Total borrowing from the federal Direct Subsidized Loan and Unsubsidized Loan Programs fell by 20% ($19 billion in 2014 dollars) between 2010-11 and 2014-15. Total borrowing from the PLUS program for parents of undergraduate students fell by 9% ($1 billion); Grad PLUS borrowing increased by 2% ($200 million).
  • Nonfederal education loans (loans from banks, credit unions, states, and institutions) grew from an estimated $17.7 billion (in 2014 dollars) in 2004-05 to $25.6 billion in 2007-08. In 2014-15, the volume of these loans was about $10.1 billion.

Student Debt

Among borrowers who entered repayment in 2011-12, 9% of those who completed their programs and 24% of those who did not graduate defaulted on their student loans within two years of entering repayment.
 
  • Student loan default rates are consistently two to three times as high for borrowers who attend for-profit and public two-year institutions as for those who attend private nonprofit and public four-year institutions.
  • In the third quarter of 2014-15, 14% of borrowers with outstanding federal student loans were in default. These borrowers held 9% of total outstanding debt.
  • In 2013, 47% of outstanding education debt was held by households currently in the top quartile of the income distribution and 11% was held by the lowest income quartile.
  • In 2014, 39% of borrowers with outstanding education debt owed less than $10,000, and another 28% owed between $10,000 and $25,000; 4% of borrowers owed $100,000 or more. This debt includes borrowing for both undergraduate and graduate studies.
  • In 2015, 3.9 million federal Direct Loan borrowers were in repayment plans that limit their payments to a specified percentage of their incomes. These borrowers constituted 20% of those in repayment plans; they held 37% of the total outstanding debt in repayment plans.
  • Only 11% of dependent 2011-12 bachelor’s degree recipients borrowed $40,000 or more, compared to 25% of independent students without dependents and 29% of independent students with dependents.
  • Ten percent of 2011-12 bachelor’s degree recipients who graduated within four years borrowed $40,000 or more. Among those who were in school for six years, 17% borrowed this much.
  • In 2011-12, 32% of black bachelor’s degree recipients accrued $40,000 or more in student debt, compared to 7% of Asian graduates, 16% of whites, and 17% of Hispanics.
  • Among 2011-12 bachelor’s degree recipients, 48% of those from the for-profit sector borrowed $40,000 or more, compared to 20% from private nonprofit institutions and 12% of those who earned their degrees in the public sector.
  • Loans issued to students enrolled in for-profit institutions increased from 13% of total outstanding federal student loan balances in 2003-04 to 21% in 2013-14.
  • About 61% of students who earned bachelor’s degrees in 2013-14 from the public and private nonprofit four-year institutions at which they began their studies graduated with debt. They borrowed an average of $26,900, an increase of 17% over a decade, after adjusting for inflation.