Highlights

The dramatic economic disruptions of the Great Recession had a major impact on colleges and universities, their students, and the multifaceted financial aid system that has developed to help students and their families pay for higher education. The data reported in Trends in Student Aid 2013 reveal that the sharp increases in federal grant aid and in student borrowing accompanying the financial crisis have not been repeated. Indeed, while the federal government continues to play a large and increased role in funding students, spending on both federal grants and federal loans decreased in 2012-13.

Types of Student Aid

In 2012-13, 49% of all student aid was in the form of grants — the highest percentage over the past decade. In 2008-09, 44% of student aid was grant aid.

  • In 2012-13, 43% of all student aid was in the form of federal loans — the lowest percentage over the past decade. In 2008‑09, federal loans constituted 49% of student aid.
  • The federal government funded 71% of all student aid and 41% of all grant aid to postsecondary students in 2012-13.
  • In 2012-13, $238.5 billion in financial aid was distributed to undergraduate and graduate students in the form of grants from all sources, Federal  Work-Study, federal loans, and federal tax credits and deductions. In addition, students borrowed about $8.8 billion from private, state, and institutional sources.
  • In 2012-13 undergraduate students received an average of $13,730 per full-time equivalent (FTE) student in financial aid, including $7,190 in grants from all sources and $4,900 in federal loans.
  • Graduate students received an average of $25,730 per FTE student in financial aid, including $7,800 in grants and $16,240 in federal loans.
  • The American Opportunity Tax Credit increased the tax savings for college students and their parents from education credits and tuition deductions from $7.1 billion (in 2012 dollars) in 2008 to $15.6 billion in 2009 and to $20.3 billion in 2011.

Sources of Grant Aid

Federal grant aid to undergraduate students more than doubled in constant dollars between 2002‐03 and 2012‐13, increasing from 21% to 24% of the total $185.1 billion in undergraduate aid.

  • Total grant aid to postsecondary students increased by 29% in inflation-adjusted dollars between 2008-09 and 2009-10 and by another 12% in 2010-11, but did not grow between 2010-11 and 2012-13.
  • Grant aid per FTE student increased by 30% between 2008-09 and 2010-11 and by 1% between 2010-11 and 2012-13.
  • In 2012-13, 45% of undergraduate grant aid came from the federal government, compared to 39% 10 years earlier.
  • Veterans benefits and military aid increased from 19% to 28% of total federal grants over the decade from 2002-03 to 2012-13.
  • In 2012-13, 38% of all grant aid came from colleges and universities, 8% came from state governments, and 13% came from employers and other private sources.
  • While federal grant aid to postsecondary students doubled in constant dollars between 2007-08 and 2012-13, state grant aid grew by only 11%.
  • In 2011-12, state grant aid per FTE undergraduate student ranged from under $200 (in 2012 dollars) in 12 states to over $1,000 in 10 states.
  • Grant aid from colleges and universities in the form of discounts to students grew from $13 billion (in 2012 dollars) in 1992-93 to $22 billion in 2002-03 and to $44 billion in 2012-13.

Pell Grants

The number of students receiving Pell Grants increased from 4.0 million in 1992‐93 to 4.8 million in 2002‐03 and to 8.8 million in 2012‐13.

  • Total Pell Grant expenditures increased from $14.8 billion (in 2012 dollars) in 2002-03 to $37.5 billion in 2010-11, but declined to an estimated $32.3 billion by 2012-13.
  • Only undergraduate students who have an expected family contribution of zero and enroll full time/full year receive the maximum Pell Grant. In 2011-12, 28% of recipients received the maximum $5,550 in Pell funding.
  • The average Pell Grant per recipient was $2,516 (in 2012 dollars) in 1992-93, $3,099 in 2002-03, and $3,650 in
    2012-13. The average grant peaked at $4,028 (in 2012 dollars) in 2010-11.
  • The maximum Pell Grant covered 87% of average public four‑year tuition and fees in 2003-04, but only 63% in 2013‑14. It covered 21% of average private nonprofit four-year tuition and fees in 2003-04, and 19% in 2013-14.
  • The percentage of undergraduate students receiving Pell Grants increased from 23% in 2002-03 to 36% in 2012-13.
  • In 2011-12, about half of all Pell Grant recipients were ages 24 or older.
  • In 2011-12, 30% of independent Pell Grant recipients were enrolled in the for-profit sector, as were 10% of dependent recipients. Two-year public colleges enrolled 39% of independent and 33% of dependent recipients.

Distribution of Student Aid

In 2012-13, undergraduate students received 52% of their funding in the form of grants, 39% as loans (including nonfederal loans), and 9% in a combination of tax credits or deductions and Federal Work‐Study. For graduate students, these percentages were 30%, 64%, and 6%, respectively.

  • In 2011-12, 41% of Pell Grant recipients were dependent on their parents for support, and 60% of these students came from families with incomes of $30,000 or less.
  • In 2011, 21% of the savings from education tax credits and 57% of the tuition tax deduction benefit went to households with an adjusted gross income (AGI) over $100,000.
  • While 26% of the savings from tax credits went to households with AGI below $25,000 in 2011, only 4% of the tax deduction benefit went to households in this income category.
  • In 1992-93, only 10% of all state grant aid for undergraduates was awarded without regard to the students’ financial circumstances. By 2002-03, this percentage had risen to 23%. Between 2010-11 and 2011-12, it fell from 29% to 26%.
  • In 2011-12, low-income dependent students enrolled full time in public institutions received about five times as much total grant aid, on average, as those from families with incomes of $106,000 or higher ($8,890 vs. $1,760), but only 30% more institutional grant aid ($1,690 vs. $1,280).

Student Borrowing

Total education borrowing fell by 6% in real terms between 2011-12 and 2012-13. Total federal student and parent loans plus nonfederal loans had declined by 2% between 2010-11 and 2011-12.

  • The 9% growth in total annual education borrowing between 2007-08 and 2012-13 followed a 55% increase between 2002-03 and 2007-08.
  • The percentage of undergraduate students taking federal subsidized or unsubsidized student loans increased from 24% in 2002-03 to 34% in 2012-13. A quarter of all students took both subsidized and unsubsidized loans, while 5% took only subsidized loans.
  • Total borrowing from the federal Direct Loan program fell by 3% ($2.9 billion) in 2011-12 and by another 7% ($6.5 billion) in 2012-13. Total borrowing from the PLUS program for parents of undergraduate students fell by 11% ($1.3 billion) over these two years.
  • Because graduate students became ineligible for this program in 2012-13, Direct Subsidized Loans per FTE student declined by 33%, from $2,580 (in 2012 dollars) in 2011-12 to $1,740 in 2012-13; Direct Unsubsidized Loans per student increased by 17%, from $2,970 to $3,480 per FTE student.
  • Over the past decade, the total number of federal student loan borrowers increased by 69%, from 5.9 million in 2002-03 to 10.0 million in 2012-13. Average Direct Loans per borrower increased by 6%, from $7,900 (in 2012 dollars) in
    2002-03 to $8,350 over the decade.
  • In 2012-13, undergraduate borrowers took federal loans averaging $6,760, while graduate students borrowed an average of $17,230.
  • Nonfederal education loans, which are not part of the student aid system, grew from an estimated $10.5 billion (in 2012 dollars) in 2002-03 to $25.5 billion in 2007-08. Since then, student loan volume from banks, credit unions, states, and institutions has declined to about $8.8 billion.
  • The percentage of undergraduate students taking private education loans fell from 14% in 2007-08 to 6% in 2011-12; the percentage of graduate students relying on this source of funds fell from 11% to 4%.

Student Debt

About 60% of students who earned bachelor’s degrees in 2011-12 from the public and private nonprofit institutions at which they began their studies graduated with debt. They borrowed an average of $26,500.

  • In 2012, 40% of borrowers with outstanding education debt owed less than $10,000 and another 30% 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.
  • Among individuals who began their postsecondary studies in 2003-04, 43% had not accumulated education debt by 2009. Another 25% had borrowed less than $10,000, while 2% had borrowed more than $50,000.
  • In 2013, 1.6 million federal Direct Loan borrowers were in repayment plans that limit their payments to a specified percentage of their incomes. These borrowers constituted 11% of those in repayment plans, and they held 22% of the total outstanding debt in repayment plans.
  • By Sept. 11, 2012, 10% of borrowers who entered repayment in 2010-11 had defaulted on their federal student loans. This was the highest two-year cohort default rate since FY 1995, but the default rates were 21% and 22% in 1989 and 1990, respectively.
  • For-profit institutions accounted for 11% of all students enrolled in 2009-10, 32% of those who entered repayment in 2010-11, and 43% of those who defaulted by the end of September 2012.