Trends in Higher Education

Total Aid

In 2008-09, undergraduate students received an average of $10,185 in financial aid per full-time equivalent (FTE) student, including $5,041 in grant aid and $4,585 in federal loans. Graduate students received an average of $22,740 in aid, including $7,558 in grant aid and $14,598 in federal loans.

Grant Aid

Average grant aid per undergraduate FTE increased by $1,439 from $3,602 (in 2008 dollars) in 1998-99 to $5,041 in 2008-09.

  • In 2008-09, 39% of undergraduate grant aid came from colleges and universities, and 36% came from the federal government.
  • The average annual rate of growth in total federal grants (in constant dollars) declined from 9% between 1998-99 and 2003-04 to 3% over the next five years. The average annual rate of growth in total state grants declined from 8% to 3%.
  • Institutional grant dollars per FTE student increased by 7%, from $1,718 to $1,840 (in 2008 dollars) from 1998-99 to 2003-04, and by 19% to $2,190 over the next five years.
  • Although the maximum Pell Grant is the most frequently discussed description of these grants, only about 25% of recipients qualified for the maximum grant in 2007-08. In 2008-09, when the maximum grant was $4,731, the average grant was $2,973.
  • Year-to-year changes in the maximum Pell Grant have been very uneven in recent years, ranging from a 7% decline in constant dollars in 1993-94 to an 11% increase in 2001-02.
  • In 2009-10, the maximum Pell Grant covers 35% of average tuition, fees, room and board at public four-year colleges and universities, and 15% of total charges at private four-year colleges.
  • In 2007-08, 58% percent of Pell Grant funds went to undergraduate students who were independent. Among dependent Pell Grant recipients, 62% came from families with annual incomes below $30,000.
  • Students from families with incomes below $32,500 received an average of $760 (in 2007 dollars) more in state grant aid in 2007-08 than in 1992-93, an increase of 92%. Students from families with incomes of $100,000 or higher received an average of $320 more, an increase of 457%.
  • At private colleges with tuition exceeding $30,975 in 2007-08, the proportion of tuition and fees covered by institutional grant aid ranged from about 40% for students from families with incomes below $60,000 to 16% for those from families with incomes of $100,000 or higher.
  • In 2007-08, public four-year institutions distributed almost two-thirds of their institutional grant aid without regard to financial circumstances. Students from the lowest-income families received an average of $570 in non-need-based and $760 in need-based institutional grant aid. Students from upper-middle-income families received an average of about $840 per student in non-need-based and $310 in need-based institutional grant aid.

Student Borrowing

From 2007-08 to 2008-09, total education borrowing increased by about $4 billion, or 5% in current dollars. Federal borrowing increased by about $15 billion, but nonfederal loans declined by about $11 billion.

  • In 2007-08, 35% of undergraduate students took out federal Stafford Loans and 65% did not. Among full-time undergraduates, 50% took out Stafford Loans and 50% did not.
  • In 2008-09, 88% of students enrolled in for-profit institutions used Stafford Loans, compared to 55% in private not-for-profit four-year institutions, 42% in public four-year institutions, and only 10% in public two-year colleges.
  • About 15% of undergraduate students borrowed from nonfederal sources in 2007-08. Included in this number are the 4% of students who borrowed from these private sources without also using federal loans.
  • Subsidized Stafford Loans, on which the government pays the interest while the student is in school, exceeded unsubsidized Stafford Loans by 50% in 1998-99 and by 12% in 2003-04. By 2008-09, unsubsidized Stafford volume exceeded subsidized Stafford volume by 22%. Among students who received a subsidized Stafford Loan in 2007-08, 58% also borrowed through the unsubsidized Stafford program.
  • Among 2007-08 bachelor’s degree recipients, 34% graduated with no education debt, but 10% had borrowed $40,000 or more. The median debt for all bachelor’s degree recipients was $11,000 and the median for the two-thirds who borrowed was $20,000.
  • Among students who earned bachelor’s degrees at public four-year colleges and universities in 2007-08, 38% graduated with no education debt and 6% graduated with debt greater than $40,000. Among those who earned their bachelor’s degrees at for-profit institutions, only 4% had no education debt, while 24% had borrowed $40,000 or more.

Other Sources of Funds

Total assets in state-sponsored Section 529 college savings plans declined by 19% in current dollars during calendar year 2008, and by another 4.3% during the first three months of 2009. The average value of individual accounts declined 24% in current dollars during 2008, and another 4.7%, to $8,944, during the first three months of 2009.

  • The approximately $6.8 billion in federal education tax credits and deductions in 2008 reduced tax bills by an amount equal to about 30% of all federal grants to postsecondary students.