trends in student aid 2011, college board

8/3/2019 Trends in Student Aid 2011, College Board

1/32

FederalGrant Programsother thanPell

Federal Work-Study

Trends in Higher Education Series

Trends inStudent Aid2011


2/32

2011 The College Board. College Board, Advanced Placement Program, SAT and the acorn logo are registered trademarks o the

College Board. All other products and services may be trademarks o their respective owners. Visit the College Board on the Web:

www.collegeboard.org.

About the College Board

The College Board is a mission-driven not-or-prot organization that

connects students to college success and opportunity. Founded in 1900, the

College Board was created to expand access to higher education. Today, the

membership association is made up o more than 5,900 o the worlds leading

educational institutions and is dedicated to promoting excellence and equity in

education. Each year, the College Board helps more than seven million students

prepare or a successul transition to college through programs and services in

college readiness and college success including the SAT and the Advanced

Placement Program. The organization also serves the education community

through research and advocacy on behal o students, educators and schools.

For urther inormation, visit www.collegeboard.org.

College Board Advocacy & Policy Center

The College Board Advocacy & Policy Center was established to help transorm

education in America. Guided by the College Boards principles o excellence

and equity in education, we work to ensure that students rom all backgrounds

have the opportunity to succeed in college and beyond. We make critical

connections between policy, research and real-world practice to develop

innovative solutions to the most pressing challenges in education today.

advocacy.collegeboard.org
http://www.collegeboard.org/http://www.collegeboard.org/http://www.collegeboard.org/http://www.collegeboard.org/http://advocacy.collegeboard.org/http://advocacy.collegeboard.org/http://www.collegeboard.org/http://www.collegeboard.org/


3/32

TRENDS IN HIGHER EDUCATION SERIES TRENDS IN STUDENT AID 2011 3

For detailed background data and additional inormation, please visit http://trends.collegeboard.org.

The American Opportunity Tax Credit (AOTC), implemented in

2009, increased the subsidies provided to students and amilies

through the combination o education tax credits and deductions

rom about $7 billion in 2007-08 to an estimated $14.8 billion in

2009-10 and 2010-11. Like the 2009-10 increases in Pell Grantsand veterans benets reported in Trends in Student Aid 2010,

these unds help students meet the rising costs o attending

college in an era o persistent economic diculties. However,

state grant aid, grants rom employers and other private sources,

and ederal campus-based aid all provided ewer infation-adjusted

dollars per student in 2010-11 than they had three years earlier.

TYPES OF STUDENT AID

In 2010-11, undergraduate students received

an average o $12,455 per ull-time equivalent

(FTE) student in nancial aid, including $6,539 in

grant aid, $4,907 in ederal loans, and $1,009 ina combination o tax credits and deductions and

Federal Work-Study (FWS).

As a result o the introduction o the American Opportunity Tax

Credit in 2009, education tax credits and tuition deductions

per student increased by more than 80% in infation-adjusted

dollars between 2007-08 and 2010-11.

In 2010-11, $227.2 billion in nancial aid was distributed to

undergraduate and graduate students in the orm o grants

rom all sources, Federal Work-Study, ederal loans, and

ederal tax credits and deductions. In addition, students

borrowed an estimated $7.9 billion in loans rom state and

private sources.

FTE graduate students received an average o $23,955 in

aid, including $6,750 in grant aid, $16,423 in ederal loans,

and $782 in a combination o tax credits and deductions and

Federal Work-Study.

From 2009-10 to 2010-11, grant aid per FTE undergraduate

student increased by an estimated 7% ($441 in 2010 dollars),

while the average amount o ederal loans borrowed per FTE

student declined by 2% ($76 in 2010 dollars).

These changes ollowed increases o 20% in average grant

aid per FTE undergraduate student and 10% in average ederal

loans between 2008-09 and 2009-10. Over the three years rom

2007-08 to 2010-11, both grant aid and ederal loans per student

increased by about 30% in infation-adjusted dollars.

Over the decade rom 2000-01 through 2010-11, both grant aid

and ederal loans per FTE undergraduate student increased at

an average rate o about 5% per year ater adjusting or infation.

About 12 million taxpayers beneted rom education tax

credits and deductions in 2009, and a similar number received

this aid in 2010. In 2010-11, 10.3 million postsecondary

students borrowed Staord Loans and 9.1 million received

Pell Grants. Federal campus-based programs reached many

ewer students. There were 1.3 million Federal Supplemental

Educational Opportunity Grant (FSEOG), 713,000 Federal Work-

Study (FWS), and 493,000 Perkins Loan recipients in 2010-11.

SOURCES OF GRANT AID

In 2010-11, 46% o all grant aid (and 51% o

undergraduate grant aid) came rom the ederal

government. Ten years earlier, only 29% o all

grant aid (and 34% o undergraduate grant aid)was ederal.

In 2010-11, 36% o all grant aid came rom colleges and

universities, 9% came rom state governments, and 10%

came rom employers and other private sources.

The maximum ederal Pell Grant o $5,550 was $134 (2%)

higher in constant 2010 dollars in 2010-11 than in 2009-10.

It was $1,387 (33%) higher in 2010-11 than in 2000-01. The

maximum grant did not increase or the 2011-12 academic year.

Although the maximum Pell Grant is the most requently

discussed descriptor o these grants, students must have $0

expected amily contributions and enroll ull-time/ull-year in

order to receive this amount. Only about 22% o recipients

received the maximum grant o $5,350 in 2009-10. In 2010-11,

when the maximum grant was $5,550, the average grant was

$3,828.

Institutional grant aid dollars per FTE undergraduate student

increased at an average rate o about 3.1% per year over the

2000-01 to 2010-11 decade, ater adjusting or infation.

Highlights

AVERAGE AID per FTE Undergraduate Student in Constant

2010 Dollars, 1995-96 to 2010-11

$0

$4,000

$8,000

$2,000

$6,000

AverageAid

inConstant2010Dollars

Academic Year

10-1107-0805-0603-0401-0299-0097-9895-96

Undergraduate Students

$2,967 $2,999$3,759

$4,907$3,346

$3,979$4,706

$6,539Average Grant Aid per FTE

Average Federal Loans per FTE
http://trends.collegeboard.org/http://trends.collegeboard.org/


4/32

4 TRENDS IN STUDENT AID 2011 TRENDS IN HIGHER EDUCATION SERIES


DISTRIBUTION OF STUDENT AID

The distribution o subsidies rom ederal

education tax benets changed considerably with

the introduction o the American OpportunityTax Credit in 2009. The percentage o savings

rom credits and deductions going to taxpayers

with incomes below $25,000 increased rom 5%

in 2008 to 17% in 2009. The percentage o savings

going to those with incomes above $100,000

increased rom 18% in 2008 to 26% in 2009.

Unlike other education tax credits, the American Opportunity

Tax Credit is partially reundable or lers who do not owe

taxes. This increases the benets or low-income students and

amilies. At the other end o the spectrum, the income limitis higher on the new credit, reducing the tax liability o many

higher-income taxpayers.

The 31% o FTE undergraduate students enrolled in public

two-year colleges received 32% o the total Pell Grant unds

in 2009-10. The 12% enrolled in or-prot institutions received

25% o all Pell Grants unds.

In 2009-10, 39% o Pell Grant recipients were dependent on

their parents or support, and 63% o these students came

rom amilies with incomes o $30,000 or less.

In 1985-86, 9% o all state grant aid or undergraduate

students was awarded without regard to the students

nancial circumstances. By 2005-06, this percentage had

risen to 28%; it remained constant through the 2009-10

academic year.

State grant programs dier considerably across states. In 14

states (and Puerto Rico), nancial circumstances infuence the

distribution o all state grant aid. Georgia, South Dakota, and

the District o Columbia consider nancial circumstances or

less than 10% o their state grant aid dollars.

Between 90% and 93% o institutional grant aid at the most

selective private nonprot our-year colleges and universities

was used to meet students nancial need in each year rom

2007-08 through 2010-11. At less selective institutions in

this sector, more o the grant aid goes to students without

nancial need.

STUDENT BORROWING

Total education borrowing, including ederal

student and parent loans, as well as nonederal

loans, increased by about 2% rom 2009-10 to2010-11. Borrowing per FTE student declined by

about 2% overall, ater adjusting or infation.

Over the decade rom 2000-01 to 2010-11, total borrowing

increased by 57% per FTE student, including both

graduate and undergraduate students, and by 56% per FTE

undergraduate student.

Estimated education loan borrowing rom private sources

declined or a third consecutive year, and was at about $6

billion in 2010-11, 66% lower than in 2005-06. Other nonederal

borrowing, including loans rom states and institutions,increased slightly, but total nonederal loans declined rom

about $19.9 billion in 2005-06 to $7.9 billion in 2010-11.

In 2010-11, 34% o undergraduates took out Staord Loans.

Twenty-six percent used both subsidized and unsubsidized

loans. In other words, almost three-quarters o all

undergraduate Staord borrowers had both types o loans

and 83% o subsidized borrowers also had unsubsidized loans.

In 2009-10, about 55% o public our-year college students

who graduated rom the institutions at which they began their

studies graduated with debt. They had borrowed an average o

$22,000. About two-thirds o those earning bachelors degrees

rom private nonprot institutions had debt averaging $28,100.


5/32



Contents

3 Highlights

6 Ten-Year Trend in Student Aid

and Nonederal Loans per FTE

FIGURE 1 Ten-Year Trend in Student Aid and Nonederal Loans per FTE

7 Introduction

10 Total Student Aid

Adjusted or Infation

TABLE 1 Total Student Aid and Nonederal Loans in Constant Dollars over Time

11 Total Undergraduate and

Graduate Student Aid by Type

FIGURE 2A Undergraduate Student Aid by Source and Type

FIGURE 2B Graduate Student Aid by Source and Type

12 Types o Grants FIGURE 3 Total Federal, Institutional, Private and Employer, and State Grants over Time

13 Types o Loans FIGURE 4 Total Federal and Nonederal Loans over Time

14 Federal Aid Recipients FIGURE 5 Number o Federal Aid Recipients by Program, 2010-11

15 Federal Aid Recipients FIGURE 6 Percentage o Undergraduate Students Borrowing Staord Loans over Time

16 Federal Aid by Sector FIGURE 7 Percentage Distribution o Federal Aid Funds by Sector, 2009-10

17 Total Grants and Total Loans FIGURE 8A Undergraduate Student Grant and Loan Percentages over TimeFIGURE 8B Graduate Student Grant and Loan Percentages over Time

18 Student Debt FIGURE 9A Cumulative Debt Levels o 2009 Bachelors Degree Completers by SectorFIGURE 9B Cumulative Debt Levels o 2009 Bachelors Degree Non-Completers by Sector

19 Student Debt FIGURE 10A Average Debt Levels o Public Sector Bachelors Degree Recipients over TimeFIGURE 10B Average Debt Levels o Private Nonprot Sector Bachelors Degree Recipients

over Time

20 Total Aid per Full-Time

Equivalent Student

FIGURE 11A Average Aid per FTE Undergraduate Student over Time

FIGURE 11B Average Aid per FTE Graduate Student over Time

21 Education Tax Creditsand Tuition Deductions

FIGURE 12A Distribution o Education Tax Benets by AGI, 2008 and 2009FIGURE 12B Total Education Tax Benets over Time

22 Pell Grants FIGURE 13A Pell Grants: Total Expenditures, Maximum and Average Grants, and Numbero Recipients over Time

FIGURE 13B Maximum and Average Pell Grant over Time

FIGURE 13C Maximum Pell Grant as Percentage o Total Charges over Time

23 Pell Grants FIGURE 14A Total Enrollment and Percentage Receiving Pell Grants over TimeFIGURE 14B Percentages o Students and o Aid Applicants Receiving Pell Grants, 2007-08

24 State Grants FIGURE 15A Need-Based and Non-Need-Based State Grants per FTE Student over TimeFIGURE 15B Percentage o State Grants Based on Need by State, 2009-10


6/32



FIGURE 1 Ten-Year Trend in Student Aid and Nonederal Loans per Full-Time Equivalent (FTE) Student Used to Finance

Postsecondary Education Expenses in Constant 2010 Dollars, 2000-01 to 2010-11

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

10-1109-1008-0907-0806-0705-0604-0503-0402-0301-0200-01

Academic Year

Constant2010Dollars

Federal Campus-Based Programs

Nonfederal Student Loans

Education Tax Benets

Unsubsidized FederalStafford Loans

Subsidized FederalStafford Loans

Private and Employer Grants

Institutional Grants

Federal Pell Grants

State Grants

Federal Parent Loans (PLUS)and Grad PLUS Loans

Other Federal Programs

Total nancial aid per ull-time equivalent (FTE) student increased 62%, rom $8,567 (in constant 2010dollars) in 2000-01 to $13,914 in 2010-11. In addition, students borrowed an average o about $563 per

FTE in 2000-01 and about $482 in 2010-11 rom nonederal sources.

NOTE: See Notes and Sources or a list o programs included in other ederal programs.

SOURCE: Table 1.

Contents Continued

25 State Grants FIGURE 16A State Grant Expenditures as Percentage o Total State Support or HigherEducation, 2009-10

FIGURE 16B State Grant per FTE Undergraduate, 2009-10

26 Institutional Grant Aid

Public Institutions

FIGURE 17A Public Sector Institutional Grant Aid over Time

27 Institutional Grant Aid

Private Institutions

FIGURE 17B Private Nonprot Sector Institutional Grant Aid over Time

28 College Savings Plans FIGURE 18 Section 529 College Savings Plan Assets over Time

29 Notes and Sources


7/32



In an era o persistently high unemployment, amily incomes

that ail to keep up with infation, savings that have been eroded

by declining stock market values, and rising college prices,

student nancial aid is more important than ever. Despite

prevalent questions about whether and or whom college is

really worth it, most people agree that their lives and theirchildrens lives will be much easier i they successully complete

postsecondary credentials. Without a strong and well-designed

system o subsidies or students, these opportunities are out

o reach or many who could benet rom them. Moreover, it is

increasingly evident that the complexities o existing nancial aid

policies and programs make it dicult or many o those who

most need the help to understand and navigate the system.

The array o programs that provide nancial aid has evolved in

recent years, with some o the changes receiving considerable

attention and others going relatively unnoticed. Trends in

Student Aid 2010reported on a 67% increase in expenditures

(in constant dollars) or the Pell Grant program, the ederal

governments oundation unding or low-income collegestudents. The increase resulted rom a combination o legislated

changes designed to cushion the impact o the recession

on students, deterioration in the nancial circumstances o

students and amilies that generated increased nancial need,

and growth in enrollments as a result o weakened labor market

opportunities. Over the past year, Pell Grants have received quite

a bit o attention rom Congress, rom the Obama administration,

and rom the media. Questions about the sustainability o this

program as currently structured must be addressed even as the

centrality o the program in supporting the national goals or

increasing educational attainment becomes clearer.

This year, the most notable increase in subsidies or students on

which we report came through changes in the tax code. Since1998, students and parents have beneted rom education tax

credits, through which the ederal government reimburses them

or part o the tuition they have paid. Since 2002, there has also

been a deduction in the ederal income tax code that subsidizes

tuition payments or some taxpayers. With the introduction o the

American Opportunity Tax Credit in 2009, the subsidies available

through the tax code a contribution o the ederal government

to college expenses increased rom an estimated $6.8 billion in

2008 to $14.7 billion in 2009 (the latest tax year or which data are

available). Unlike Pell Grants, the subsidies the ederal government

provides through the tax code are not based on ability to pay. The

new tax credit increased the proportion o the benets going to

low-income students by introducing reundability, allowing those

with no tax liability to benet. But taxpayers with incomes up to

$180,000 are eligible or the new credit, and the percentage o

the tax savings going to taxpayers with incomes above $100,000

increased rom 18% to 26% in one year.

Trends in Student Aidprovides inormation on these and other

developments in college nancing patterns.

TRENDS IN STUDENT AID

Trends in Student Aid, an annual College Board publication

since 1983, is a compendium o detailed, up-to-date inormation

on the unding that is available to help students pay or college.

This report sorts aid into grants, loans, tax benets, and Federal

Work-Study assistance. It documents unding rom ederal

and state governments, colleges and universities, employers,

and other private sources. It examines changes in unding

levels over time, reports on the distribution o aid across

students with dierent incomes and attending dierent types o

institutions, and tracks the debt students incur as they pursuethe educational opportunities that can increase their earnings,

open doors to new experiences, and improve their ability to

adapt to an ever-changing society.

Trends in Student Aiddoes not attempt to evaluate student aid

programs or policies; rather, it provides detailed inormation

that can inorm policymakers, researchers, and others in their

eorts to assess and improve the eectiveness o student

aid. The accompanying website makes data easily available

or reerence and downloading. The text that accompanies the

graphs and tables in Trends in Student Aiddoes not summarize

all o the inormation reported, but it points to key ideas and

should help readers to interpret the data.

Trends in College Pricing, a companion report, relies on data

rom the College Boards Annual Survey o Colleges(ASC) to

provide inormation on changes in undergraduate tuition and

ees, room and board, and other estimated expenses related

to attending colleges and universities. Although data or Trends

in Student Aid 2011 extend through the 2010-11 academic

year, Trends in College Pricing 2011 includes inormation on

published prices or the 2011-12 academic year.

TOTAL STUDENT AID

Table 1 reports on the total unds available to postsecondary

students, both undergraduate and graduate, to supplement

amily and student payments over the decade rom 2000-01

to 2010-11. Together with students savings and earnings, aswell as support rom parental earnings, savings, and borrowing

rom other sources, these unds contribute to making higher

education nancially accessible. Increases in total unds are

important indicators o the resources being devoted to student

assistance. But these gures may create an overly optimistic

view o the benets available to individual students because

they dont account or increases in the number o students.

Figure 1 shows the unds detailed in Table 1 both student aid

dollars and the money students borrow rom nonederal sources

on a per-FTE-student basis. Between 2000-01 and 2010-11,

total FTE postsecondary enrollment increased by 43%, with

4.3 million more FTE undergraduates and over 600,000 more

graduate students enrolled at the end o the decade. The 132%

increase (ater adjusting or infation) in total nancial aid over

the decade amounted to a 62% increase in aid per FTE student.

The gures in Table 1 have been adjusted or infation. Similar

tables in current dollars (unadjusted), broken down between

undergraduate and graduate students, and including data back

to 1963, are available online.

TYPES OF STUDENT AID

From the students perspective, grant aid, which is a pure

subsidy not requiring repayment, is the most desirable orm

o nancial aid. Education tax credits and deductions are also

Introduction


8/32



pure subsidies, although the act that the savings generally

materialize months ater the bills have been paid makes them

less eective in acilitating college access.

A variety o orms o loans are described in this publication.

Subsidized Staord Loans and Perkins Loans provide thegreatest benet or students because the government pays the

interest while the student is in school. Unsubsidized Staord

Loans and PLUS Loans or parents o undergraduate students

and or graduate students also carry a ederal guarantee and

interest rates that are controlled by legislation. In contrast,

nonederal education loans rom banks and other lending

institutions and, on a smaller scale, states and postsecondary

institutions, are generally not subsidized at all. Their value is

in providing liquidity or students who have no other means

o accessing unds. We report on nonederal student loans

because o their importance, but we do not include them in our

measures o student aid because they do not carry subsidies.

A small amount o student aid comes rom the Federal Work-Study (FWS) Program, under which the ederal government

provides unds to institutions to subsidize the wages they pay

to some student workers with documented nancial need.

Although these unds are packaged along with grants and loans

to help students pay their bills, rom the students perspective,

they are wages received or services perormed.

As Figures 2A and 2B reveal, the composition o aid received

by graduate students is quite dierent rom the composition

o the aid on which undergraduates rely. Grants constituted

53% o the aid received by undergraduates in 2010-11, but only

28% o the aid received by graduate students. Federal loans

made up 69% o graduate student aid, compared to 39% o

undergraduate aid. The teaching and research assistantshipsrom which many graduate students benet are a orm o

compensation and are not included here.

FEDERAL AID

The allocation o ederal student aid unds diers across

programs. Need-based aid relies on the inormation provided

by students and parents on the Free Application or Federal

Student Aid (FAFSA) and the ormula known as Federal

Methodology (FM). Pell Grants are distributed based on

the expected amily contribution (EFC) determined by this

ormula and do not depend on the charges at the particular

school attended. Subsidized Staord Loan eligibility is based

on both the EFC and the cost o attendance at the students

institution. A subsidized Staord Loan recipient attending a

high-priced institution might not have received that loan had

she opted instead or a less expensive institution. Campus-

based ederal unds including FWS, Federal Supplemental

Educational Opportunity Grants (FSEOG), and Perkins Loans

are also need-based. However, these unds are distributed to

institutions based on a complex ormula, and the institutions

allocate them to students with nancial need. Unsubsidized

Staord Loans are available to all students regardless o their

nancial circumstances; PLUS Loans require only the absence

o adverse credit, a criterion that has aected more applicants

in recent years. Figure 7 illustrates the distribution o these

various orms o aid to students at dierent types o institutions.

GRANT AID

Grant aid comes rom the ederal government, state

governments, employers and other private sources, and rom

colleges and universities in the orm o discounts rom the

published price. As Figure 3 shows, ederal grants, which

accounted or 29% to 34% o total grant aid rom 2000-01through 2008-09, increased to 44% in 2009-10 and 46% in

2010-11. Despite increasing by 86% (in constant dollars) over

the decade, institutional grants declined rom 43% o the total

in 2000-01 to 41% in 2005-06, and to 36% in 2010-11. Even with

strained state budgets and declining unding or higher education

in many states, total state grant unds, which declined by 1% (in

constant dollars) between 2007-08 and 2008-09, increased by

9% between 2008-09 and 2009-10, and by 2% between 2009-

10 and 2010-11. Figures 15B and 16B detail some o the variation

across states in their grant unding or college students.

Students whose amily incomes are too low to generate any

expected amily contribution qualiy or the maximum Pell

Grant, which is the most requently cited descriptor o Pellunding levels. About two-thirds o 2009-10 Pell Grant recipients

qualied or the maximum grant o $5,350, but only about 28%

both qualied and enrolled ull-time, ull-year, actually receiving

this amount. The average grant is a better representation o

the subsidy received by the typical Pell Grant recipient. In

2010-11, when the maximum Pell Grant was $5,550, 9.1 million

students received an average o $3,828 rom the program.

This distinction will be particularly important to keep in mind as

discussions continue about how to protect the Pell program as

the ederal government seeks decit-reducing savings.

In addition to total and per-student amounts o grant aid,

Trends in Student Aidreports on the distribution o grant aid

among students. Some students have the nancial resourcesnecessary to pay tuition and ees, as well as other costs

associated with going to college, without serious diculty. For

many others, postsecondary education would be out o the

question without generous subsidies. As both college prices

and the other expenses associated with college attendance

continue to rise more rapidly than income, more students and

potential students all into the second category.

Federal grants are targeted at low- and moderate-income

students, but both states and institutions requently consider

actors other than, or in addition to, nancial circumstances

in allocating their aid. Figures 15A and 15B show changes

over time and variation across states in the distribution o

need-based and non-need-based grant aid. The trend toward

allocating state grants without regard to nancial circumstances

has leveled o, and 14 states consider ability to pay in the

allocation o all o their grant unds. Figures 17A and 17B put a

similar ocus on institutional grants.

LOANS

The ederal government is the primary source o education loans

and oers several dierent types o loans. As o July 1, 2010,

the ederal government no longer guarantees education loans

made by banks and other private lenders, but unds these loans

through the Federal Direct Student Loan Program (FDSLP). Major

ederal education loan programs include those or undergraduate


9/32



students with documented nancial need (subsidized

Staord Loans), or all undergraduate and graduate students

(unsubsidized Staord Loans), or graduate students only

(GradPLUS), or parents (PLUS), and or students with high need

at some institutions (Perkins). The conditions and interest rates

vary by program. As part o the August 2011 debt ceiling deal,the ederal government eliminated in-school interest subsidies

on Staord Loans or graduate students. Although a portion o

Staord Loans or some undergraduates will still be interest-ree

while they are in school, beginning in 2012-13 interest will accrue

on all o the loans taken by graduate students.

O particular importance are the available repayment options

and consumer protections. The Income-Based Repayment (IBR)

plan limits required payments to a manageable percentage o

income above 150% o the poverty line. I more students took

advantage o this option, inadequate earnings would not lead

them to deault on their student loans.

The private loan market is an important supplementary sourceo unds or students, but the loans generally have higher

interest rates over the long term and less avorable repayment

terms than ederal loans. For example, they are not covered

by the ederal IBR plan. The recent diculties acing credit

markets in general, combined with increases in the availability

o ederal student loans, are refected in diminished use o

private education loans. There is no reliable source or exact

inormation on total borrowing rom these sources. Since 1995-

96, the College Board Trendssta has conducted an annual

survey o private lenders to compile the best possible estimate

o this lending. This year, we beneted rom the assistance

o the Consumer Bankers Association, which provided the

inormation on total private student loans compiled through

MeasureOne. We also surveyed the major credit unions thatextend student loans to obtain a national estimate rom these

lenders. The totals or nonederal loans also include inormation

rom states on the loans they make to students.

This year, or the rst time, we include an estimate o the

loans that institutions provide to their students. The National

Association o Student Financial Aid Administrators (NASFAA)

worked with us to survey its members and to collect data on the

volume o institutional lending in recent years. Combining these

data with inormation rom the National Postsecondary Student

Aid Study(NPSAS), we estimate that students borrowed about

$720 million rom their institutions in 2010-11. Like our estimates

o institutional grant aid and grants rom private sources

(compiled with the assistance o the National Scholarship

Providers Association) our estimates in this area are less precise

than most o the data we report on student nancial aid.

Interpreting the growth in total education loan volume is

dicult because it is in part a refection o increases in

enrollment and declines in the availability o other appealing

sources o borrowing, such as home equity loans. The real

concern about student loans is the amount o debt that

individual students accumulate. Student loans make it possible

or many students who could not otherwise pay or college to

gain the postsecondary experience they need to improve their

lie prospects. Just as most small business start-ups would be

impossible to launch without loans that can be repaid out o

uture earnings, many students would be unable to invest in

themselves without debt nancing. Although postsecondary

education has a higher success rate in terms o uture earnings

than small businesses, excessive debt and barriers to managing

that debt create major diculties or many students. TheIncome-Based Repayment plan has the potential to signicantly

diminish the hardships acing students. However, even i all

students or whom it would be helpul participated, at least

as currently structured, IBR would not eliminate all o the

problems related to student debt.

New data rom the NCES Beginning Postsecondary Students

Longitudinal Study(BPS) allow us to examine not only the

debt levels o college graduates, but also o those who let

school without a degree. Figure 9 reports that among students

beginning their studies in 2003-04, about 19% o bachelors

degree completers and about 13% o students who last

attended a our-year institution but did not complete a bachelors

degree accumulated more than $28,000 in student debt.There is considerable variation across sectors, both in terms o

how many students complete their degrees and in terms o debt

levels. Among dependent students who last attended a our-year

or-prot institution, 15% had earned bachelors degrees by 2009.

Two-thirds o these graduates had at least $28,000 in education

debt. About 15% o dependent and 16% o independent

students who last attended a our-year or-prot institution, but

did not earn a bachelors degree, borrowed more than $28,000.

Figure 10 tracks over time the average debt levels o bachelors

degree recipients in the public and private nonprot sectors who

earned their degrees at the institutions at which they began

their studies, and indicates that about 56% o these public

our-year college graduates now complete their undergraduatestudies with student debt averaging about $22,000.

THE CONSUMER PRICE INDEX

We provide much o our data in constant dollars, adjusting

values or changes in the Consumer Price Index (CPI). We use

the change in the CPI rom July 2009 to July 2010 to compare

the value o aid in 2009-10 to the value in 2010-11. While the

CPI adjustment is necessary to make meaningul comparisons

o values over long periods o time, comparisons o one-year

changes in constant dollars may be conusing. Recent large

fuctuations in energy prices have led to an unusually volatile CPI.

The 5.6% increase in the CPI rom July 2007 to July 2008 was

the highest annual infation rate since 1982. As a result, constant

dollar increases or 2008 were small relative to current dollar

increases. Between July 2008 and July 2009, the CPI declined by

2.1%, which resulted in constant dollar increases that were larger

than current dollar increases. The CPI increased by 1.2% between

July 2009 and July 2010, and by 3.6% rom 2010 to 2011.

The tables supporting all o the graphs in theTrends publications,

PDF versions o the publications, PowerPoint fles containing

individual slides or all o the graphs, and other detailed data

on student aid and college pricing are available on our website

athttp://trends.collegeboard.org. Please eel ree to cite or

reproduce the data in Trends or noncommercial purposes with

proper attribution.
http://trends.collegeboard.org/http://trends.collegeboard.org/http://trends.collegeboard.org/http://trends.collegeboard.org/http://trends.collegeboard.org/


10/32



Total Student Aid Adjusted or Infation

TABLE 1 Total Student Aid and Nonederal Loans Used to Finance Postsecondary Education Expenses in Constant 2010

Dollars (in Millions), 2000-01 to 2010-11

Academic Year

00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10Preliminary

10-1110-Year

% Change

Federal ProgramsGrants

Pell Grants $10,038 $12,252 $14,092 $15,065 $15,136 $14,162 $13,731 $15,361 $18,129 $30,362 $34,762 246%SEOG $796 $849 $878 $901 $887 $869 $826 $807 $751 $767 $758 -5%LEAP $50 $68 $80 $78 $76 $73 $69 $68 $63 $64 $64 26%Academic Competitiveness Grants $259 $323 $337 $485 $548

SMART Grants $220 $214 $198 $363 $384Veterans $2,074 $2,313 $2,800 $3,149 $3,467 $3,544 $3,530 $3,639 $4,147 $8,621 $10,872 424%Military and Other Grants $1,105 $1,221 $1,271 $1,517 $1,685 $1,674 $1,729 $1,790 $1,775 $1,785 $1,678 52%Total Federal Grants $14,064 $16,702 $19,120 $20,711 $21,251 $20,321 $20,364 $22,202 $25,399 $42,448 $49,065 249%

LoansPerkins Loans $1,444 $1,522 $1,768 $1,942 $1,901 $1,778 $1,734 $1,448 $953 $828 $971 -33%Subsidized Staord $20,669 $21,361 $23,641 $26,127 $27,425 $27,268 $26,798 $30,455 $32,735 $38,530 $39,692 92%

(FDLP) ($6,430) ($6,294) ($6,640) ($6,726) ($6,554) ($6,105) ($5,569) ($6,135) ($8,209) ($15,158) ($39,692) 517%(FFELP) ($14,239) ($15,067) ($17,001) ($19,402) ($20,871) ($21,163) ($21,228) ($24,320) ($24,527) ($23,373) ($0) -100%

Unsubsidized Staord $16,537 $18,032 $20,574 $23,235 $25,145 $26,341 $26,085 $28,667 $40,065 $47,136 $46,088 179%(FDLP) ($4,670) ($4,836) ($5,215) ($5,257) ($5,254) ($5,181) ($4,767) ($5,156) ($9,240) ($18,052) ($46,088) 887%(FFELP) ($11,867) ($13,196) ($15,359) ($17,977) ($19,891) ($21,160) ($21,318) ($23,511) ($30,825) ($29,084) ($0) -100%

PLUS $4,657 $5,063 $5,888 $7,389 $8,475 $9,130 $10,950 $11,276 $11,908 $14,766 $17,113 267%(FDLP) ($1,492) ($1,554) ($1,847) ($2,148) ($2,303) ($2,367) ($2,400) ($2,415) ($3,445) ($6,348) ($17,113) 1047%(FFELP) ($3,165) ($3,509) ($4,041) ($5,241) ($6,173) ($6,764) ($8,551) ($8,861) ($8,463) ($8,418) ($0) -100%

Other Loans $146 $144 $152 $149 $162 $175 $172 $130 $118 $118 $131 -11%Total Federal Loans $43,453 $46,121 $52,023 $58,842 $63,108 $64,692 $65,738 $71,976 $85,779 $101,379 $103,995 139%

Federal Work-Study $1,185 $1,268 $1,329 $1,312 $1,245 $1,172 $1,117 $1,113 $1,103 $1,261 $1,171 -1%Education Tax Benefts $5,310 $5,690 $6,370 $6,860 $7,060 $7,140 $7,050 $6,990 $10,620 $14,830 $14,830 179%

Total Federal Aid $64,012 $69,781 $78,842 $87,724 $92,665 $93,326 $94,269 $102,280 $122,902 $159,918 $169,061 164%

State Grants $6,013 $6,415 $7,011 $7,103 $7,613 $7,627 $8,122 $8,371 $8,326 $9,036 $9,207 53%Institutional Grants $20,490 $20,810 $21,380 $23,480 $24,920 $26,600 $28,080 $29,430 $30,740 $34,580 $38,110 86%Private and Employer Grants $7,380 $7,870 $8,510 $9,130 $9,810 $10,520 $11,180 $12,090 $11,850 $10,680 $10,840 47%

Total Federal, State,Institutional, and Private Aid $97,895 $104,875 $115,742 $127,437 $135,008 $138,073 $141,651 $152,171 $173,817 $214,214 $227,219 132%

Nonederal Loans $6,430 $7,640 $10,000 $12,820 $16,700 $19,850 $22,600 $24,270 $11,760 $8,550 $7,870 22%(State- and Institution-Sponsored) ($1,380) ($1,500) ($1,530) ($1,680) ($1,740) ($2,000) ($2,250) ($2,190) ($1,560) ($1,670) ($1,870) 36%(Private Sector ) ($5,050) ($6,140) ($8,470) ($11,140) ($14,960) ($17,850) ($20,350) ($22,080) ($10,210) ($6,880) ($6,000) 19%

Total Funds Used to FinancePostsecondary Expenses $104,325 $112,515 $125,742 $140,257 $151,708 $157,923 $164,251 $176,441 $185,577 $222,764 $235,089 125%

NOTE: The latest available data or education tax benets are or calendar year 2009. Estimates or later years are based on these data. Components may notsum to totals because o rounding.

The ederal government provided 65% o all student aid in 2000-01, 68% in 2005-06, and 74% in 2010-

11. The ederal aid programs that have grown most rapidly in recent years are Pell Grants, grants to

veterans, and education tax credits. Borrowing through the unsubsidized Staord and PLUS Loan

programs also increased sharply over the decade.During the 2010-11 academic year,

$227.2 billion in nancial aid was distributedto undergraduate and graduate students inthe orm o grants rom all sources, FederalWork-Study, ederal loans, and ederaltax credits and deductions. In addition,students borrowed about $7.9 billion romprivate, state, and institutional sources tohelp nance their education.

Between 2005-06 and 2010-11, ederal grantaid to undergraduate and graduate studentscombined increased by 141% ater adjusting

or infation, and savings to taxpayersthrough ederal tax credits and deductionsor education increased by 108%.

Subsidies to parents and studentsrom ederal education tax creditsand deductions more than doubled,rom almost $7 billion in 2007-08 to anestimated $14.8 billion in 2009-10, as aresult o the introduction o the partiallyreundable American Opportunity TaxCredit.

The Federal Family Education LoanProgram (FFELP), through which banksand other private lenders receivedsubsidies to issue ederally guaranteed

education loans, was discontinued as o

June 30, 2010. The loan volume rom thisprogram moved to the Federal Direct LoanProgram (FDLP). Total Staord studentloans under the two programs combinedwere $85.7 billion (in 2010 dollars) in 2009-10 and $85.8 billion in 2010-11.

Private education loans, which are notpart o the student aid system and do notinvolve subsidies, grew rom $5.1 billion in2000-01 to $22.1 billion in 2007-08. Sincethat year, student loan volume rom banks,credit unions, and other private lenders

has declined to $6 billion.


11/32

TRENDS IN STUDENT AID 2010 11TRENDS IN HIGHER EDUCATION SERIES TRENDS IN STUDENT AID 2011 11


Total Undergraduate andGraduate Student Aid by Type

The 17% o undergraduate aid in the orm o

institutional grants in 2010-11 constituted 32%

o all undergraduate grant aid. The ederal

government provided 51% o undergraduate

grant aid.

The 17% o graduate student aid in the orm o

institutional grants in 2010-11 constituted 60%

o all grant aid or graduate students. Colleges

and universities also provided ellowships and

assistantships to many graduate students.

The 9% o graduate student aid in the orm o

grants rom employers and other private sources

constituted 30% o all grants to graduate students.

ALSO IMPORTANT:

In all 2010, an estimated 14.3 million (87%) o the

16.3 million ull-time equivalent (FTE) postsecondary

students were undergraduates, and 2.1 million (13%)

were graduate students.

Graduate students include both those enrolled in

masters or doctoral programs and those in proessional

programs in elds such as law and medicine, who aremuch more dependent on student loans.

Undergraduate and graduate students are distributed

dierently across sectors. Thirty-nine percent o FTE

undergraduate enrollment is in the public our-year

sector, 31% is in public two-year colleges, 16% is in

private nonprot our-year institutions, and 12% is in the

or-prot sector, with a small share in other institutions.

Forty-eight percent o FTE graduate enrollment is in the

public our-year sector, 41% is in private nonprot our-

year institutions, and 10% is in the or-prot sector.

Undergraduate students are considered dependent,

with their aid eligibility a unction o their own and

their parents nancial circumstances, unless they areat least 24 years o age or are orphans or wards o

the court, homeless unaccompanied youth, married,

veterans, on active duty, or have legal dependents.

In contrast, all graduate students are independent or

purposes o ederal nancial aid, so their eligibility or

need-based aid depends only on their own income and

assets or most programs.

FIGURE 2A

Undergraduate Student Aid by Source and Type (in Billions), 2010-11

FIGURE 2B

Graduate Student Aid by Source and Type (in Billions), 2010-11

Private and Employer Grants ($6.6)

Institutional Grants ($29.7)

State Grants ($9.1)

Federal Education Tax Creditsand Deductions ($13.4)

Federal Loans ($70.0)

Federal Work-Study ($1.0)

Federal Pell Grants ($34.8)

Federal Grant Programsother than Pell ($13.1)

4%

$177.6Billion

17%

5%

8%

39%

1%

20%

7%

Undergraduate Aid

Private and Employer Grants ($4.2)

Institutional Grants ($8.4)

State Grants ($0.1)

Federal Education Tax Creditsand Deductions ($1.5)

Federal Loans ($34.0)

Federal Work-Study ($0.1)

Federal Grant Programs ($1.2)

$49.6Billion

Graduate Aid

9%

17%

3%

69%

2%


12/32



Types o Grants

Ater adjusting or infation, ederal grant aid was about two and a hal times greater in 2010-11 than

a decade earlier. Total grant aid increased rom $47.9 billion (in 2010 dollars) in 2000-01 to $107.2 billion

in 2010-11.

Because postsecondary enrollment

increased by 43% over the decade,

the 124% increase in total grant

aid generated a 58% increase in

infation-adjusted grant dollars per

FTE student.

Federal grant aid increased rom

29% o all grants to postsecondary

students in 2000-01 to 31% in

2005-06 and 46% in 2010-11.

Ater declining or two consecutive

years, grants to students rom

employers and private sources

increased slightly in infation-

adjusted dollars in 2010-11, to

an estimated $10.8 billion.

Total state grant aid to students

grew 2% in infation-adjusted dollars

in 2010-11, ollowing an increase o

9% in 2009-10. State grant aid grew

by 21% (in constant dollars) rom2005-06 to 2010-11, compared to

27% rom 2000-01 to 2005-06.

ALSO IMPORTANT:

Pell Grants constituted about 70% o ederal grant aid

over the entire 2000-01 to 2010-11 decade. Veterans and

military aid increased rom 20% to 25% o total ederal

grants over these years.

The large increase in ederal grant aid in 2009-10

resulted rom a combination o policy changes, growth

in enrollment, and economic conditions that increased

unemployment and reduced amily and student

nancial capacity.

FIGURE 3 Growth o Federal, Institutional, Private and Employer, and State Grant Dollars in Constant 2010 Dollars,

2000-01 to 2010-11

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

$110

Grants(inBillions)in

Constant2010Dollars

Academic Year

10-1109-1008-0907-0806-0705-0604-0503-0402-0301-0200-01

$107.2

$96.7

$76.3

$72.1

$67.7$65.1$63.6

$60.4

$56.0$51.8

$47.9

46%44%

33%31%30%31%33%34%34%32%29%

36%

36%

40%

41%41%41%39%39%

38%40%

43%

10%

11%

16%

17%17%

16%15%15%

15%15%

15%

9%

9%

11%

12%

12%12%12%

12%

13%

12%13%

State Grants

Private and Employer Grants

Institutional Grants

Federal Grants

NOTE: Percentages may not sum to 100 because o rounding.

SOURCE: Table 1.


13/32



Types o Loans

In 2010-11, nonederal loans, which usually have less avorable repayment terms than ederal loans,

constituted only about 7% o education borrowing. From 2005-06 through 2007-08, nonederal loans

accounted or about a quarter o this borrowing.

FIGURE 4 Growth o Federal and Nonederal Loan Dollars in Constant 2010 Dollars, 2000-01 to 2010-11

NOTE: Nonederal loans include loans to students rom states and rom institutions, in addition to private loans issued by banks, credit unions, and Sallie Mae.Earlier editions o Trends in Student Aidhave not included estimates o institutional loan volume and have excluded some types o student loans made bystates. However, Figure 4 includes estimates or these loan sources or all years. Percentages may not sum to 100 because o rounding.

SOURCE: Table 1.

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

$110

Loans(in

Billions)in

Constant2010Dollars

Academic Year

10-1109-1008-0907-0806-0705-0604-0503-0402-0301-0200-01

$111.9$109.9

$97.5$96.2

$88.3$84.5

$79.8

$71.7

$62.0

$53.8

$49.9

35%35%34%32%

30%32%34%36%38%40%41%

41%43%

41%

30%

30%31%32%32%

33%34%33%

9%

6%

8%

5%

8%

4%

8%

3%

10%

3%11%11%

10%

9%

9%

9%

7%8%

12%

25%

26%23%

21%

18%

16%

14%13%

Nonfederal Loans

Perkins and Other Federal Loans

Grad PLUS Loans

Parent PLUS Loans

Unsubsidized Stafford Loans

Subsidized Stafford Loans

1%1%

1%

2%

2%2%3%

3%

3%

3%3%

Over the course o the decade rom 2000-01 to 2010-11,

subsidized loans, on which the government pays the interest

while students are in school, declined rom 41% to 35%

o all education borrowing, and rom 56% to 46% o all

Staord Loans.

Some colleges and universities make loans to students and

parents to supplement their ederal loans. While no precise

measure o these loans is available, reports rom institutions

indicate that institutional loans have grown rom about $500

million in 2007-08 to about $720 million in 2010-11. For-prot

institutions have increased their lending to students over thistime period, while other institutions have reduced this activity.

Ater growing at an average annual rate o about 17% or three

years (rom $52.9 billion in 2010 dollars in 2006-07 to $85.7

billion in 2009-10), total Staord Loan volume grew by only an

estimated 0.1% in 2010-11, to $85.8 billion.

ALSO IMPORTANT:

The private student loan market has consolidated in recent years,

with a number o smaller lenders leaving the business and some

larger lenders selling their loans to others. The estimate o $6 billion

o private loans or 2010-11 combines inormation rom the Consumer

Bankers Association/MeasureOne with data rom credit unions.

Dependent undergraduate students can borrow up to $5,500 in

Staord Loans (including a maximum o $3,500 in subsidized loans)

in their rst year o study, and up to $6,500 (including up to $4,500 in

subsidized loans) in their second year. The limit or the third year and

beyond is $7,500 (including up to $5,500 in subsidized loans).

Graduate students can borrow up to $20,500 per year in Staord

Loans. The lietime maximum or graduate students is $138,500,

including their undergraduate borrowing. The total limit or subsidized

loans is $65,500. Beginning in 2012-13, all Staord Loans or graduate

students will be unsubsidized.


14/32



Federal Aid Recipients

Federal education tax credits and deductions beneted about 12 million tax lers in 2009-10. The Pell

Grant program reached 9.1 million students in 2010-11, but other ederal grant and work programs

assisted many ewer students.

Pell Grants aided 9.1 million

students in 2010-11, compared

to 8.1 million in 2009-10 and 6.2

million in 2008-09. The number o

Pell Grant recipients was 2.3 times

as high in 2010-11 as in 2000-01.

In 2010-11, 9% o Pell Grant

recipients also received an Academic

Competitiveness Grant (ACG),

averaging $697 per recipient. About

2% o Pell Grant recipients receiveda SMART Grant, averaging $2,560

per recipient. As o the 2011-12

academic year, these grants are no

longer available.

FSEOG aided 1.3 million students in

2010-11, compared to 1.2 million in

2000-01. The average ederal grant

under this program decreased rom

$678 (in 2010 dollars) to $566 over

the decade.

Ater declining rom 713,000 in

2000-01 to 678,000 in 2008-09,

the number o Federal Work-Study

(FWS) recipients increased to

733,000 in 2009-10 as a result o

ederal stimulus unds provided

by the American Recovery

and Reinvestment Act o 2009

(ARRA). The number o programparticipants declined again to

713,000 in 2010-11.

Perkins Loans aided 493,000

students in 2010-11, down rom a

peak o 756,000 in 2003-04. The

average loan per recipient declined

rom $2,568 (in 2010 dollars) in

2003-04 to $1,969 in 2010-11.

ALSO IMPORTANT:

In addition to the $758 million o Federal Supplemental

Educational Opportunity Grant dollars reported here,

colleges and universities distributed about $200 million

to students in institutional matching unds under this

program. These dollars are included in the institutional

grant gures reported in Table 1.

In 2009-10, only 105,000 o the 19.5 million students

who completed the Free Application or Federal

Student Aid (FAFSA) submitted the paper application

rather than ling electronically. (The Federal Pell Grant

Program End-o-Year Report, 2009-10, Table 16)

NOTE: Both undergraduate and graduate students are eligible or tax benets, Perkins Loans, and Federal Work-Study (FWS). Federal Pell Grants, FederalSupplemental Educational Opportunity Grants (FSEOG), Academic Competitiveness Grants (ACG), and SMART Grants go to undergraduates only. Data on taxbenets are or 2009-10 (in 2010 dollars) and are based on data or tax year 2009. Data on post-9/11 veterans benets are based on benets paid rom Aug. 1,2009 through June 15, 2011.

SOURCES: Internal Revenue Service, Statistics o Income; Annual Publications, U.S. Department o Education, Oce o Postsecondary Education; unpublisheddata rom the Veterans Administration.

FIGURE 5 Number o Recipients o Federal Aid by Program (with Average Aid Received), 2010-11

FSEOG($566) FederalWork-Study($1,642)

FederalPell Grant($3,828)

ACG($697) Post-9/11 GI BillVeterans Benets($7,282)

SMART($2,560)Perkins Loan($1,969)Federal EducationTax Benets($1,236)

Federal Aid Programs (with Average Aid per Recipient)

NumberofRecipients

0

4,000,000

2,000,000

8,000,000

6,000,000

12,000,000

10,000,000

12million

9.1

million

1.3

million

713,0

00

609,0

00

150,0

00

493,0

00

786,0

00


15/32



Federal Aid Recipients

In 2010-11, 34% o undergraduates took out ederal Staord Loans. Twenty-ve percent o students

or 74% o all Staord borrowers used both subsidized and unsubsidized loans. O the 30% o

students who took out subsidized Staord Loans, 83% also took out unsubsidized loans.

Subsidized loans are available only to students with documented

nancial need, and the government pays the interest on these

loans while the student is in school. Unsubsidized Staord

Loans are available to all undergraduate and graduate students.

The percentage o undergraduate students taking out ederal

Staord Loans during the academic year increased rom 22%

in 2000-01 to 28% in 2005-06, and to 34% in 2010-11.

On average, undergraduate students who took out Staord

Loans borrowed $5,628 (in 2010 dollars) in 2000-01, $5,538 in

2005-06, and $6,744 in 2010-11.

NOTE: Based on unduplicated undergraduate headcount enrollment, which counts each student only once even i they enroll in more than one institution andeach borrower only once, even i they take multiple loans. Enrollment or 2010-11 is estimated based on preliminary IPEDSnumbers. Percentages may not sumto 100 because o rounding.

SOURCES: NCES, Enrollment in Postsecondary Institutions and Financial Statisticsand Postsecondary Institutions and Price o Attendance in the United States,Annual Publications, U.S. Department o Education, Oce o Postsecondary Education; NSLDS; calculations by the authors.

FIGURE 6 Percentage o Undergraduate Students Borrowing Federal Staord Loans, 2000-01, 2005-06, and 2010-11

AcademicYear

(PercentageofParentswithPLUSLoans)

0% 20% 40% 60%

Percentage of Students

80% 100%

2000-01 (2.5% with PLUS)

2005-06 (3.6% with PLUS)

2010-11 (3.4% with PLUS)

Average Stafford inConstant 2010 Dollars$5,628



Both Subsidized and Unsubsidized LoansUnsubsidized OnlySubsidized OnlyNo Stafford Loans

78%

72%

66%

10%

11%

5%

4%

5%

4%

8%

13%

25%

ALSO IMPORTANT:

In 2010-11, the parents o about 3.4% o undergraduate students took

out PLUS Loans averaging $11,784.

Most student borrowers hold loans with a variety o interest rates.

Interest rates on unsubsidized Staord Loans are xed at 6.8%. The

interest rate on subsidized Staord Loans declined rom 6.8% to 6.0%

or loans issued in 2008-09, 5.6% in 2009-10, 4.5% in 2010-11, and

3.4% or loans issued in 2011-12. Without urther Congressional action,

the rate will return to 6.8% in 2012-13.

Subsidized and unsubsidized Staord Loans carry dierent repayment

protections. For example, under Income-Based Repayment, thegovernment will pay the interest or up to three years or borrowers

whose incomes are too low to cover interest payments on their

subsidized loans, but this is not the case or unsubsidized Staord Loans.

The Budget Control Act o 2011 eliminated the in-school interest

subsidy on Staord Loans or graduate students, eective July 1, 2012.


16/32



Federal Aid by Sector

Since its inception in 2009, the Post-9/11 GI Bill provided 36% o its benets to the 12% o FTE students

enrolled in or-prot institutions. Students in this sector received less than 10% o the ederal unds

provided through the Academic Competitiveness Grant, SMART Grant, and campus-based programs.

Students in or-prot institutions received 25% o all Pell Grant

dollars in 2009-10, compared to 13% a decade earlier (not

shown in Figure 7).

In 2009-10, the 12% o FTE students enrolled in or-prot

institutions received 25% o the subsidized and 28% o the

unsubsidized Staord Loans, compared to 10% and 8%,

respectively, or the 27% o all FTE students enrolled in public

two-year colleges.

The 31% o FTE undergraduate students in public two-year

colleges received 32% o Pell Grant unds in 2009-10, but

much lower percentages o other orms o ederal aid.

The 20% o FTE postsecondary students enrolled in private

nonprot colleges and universities received 46% o all

campus-based aid in 2009-10. Graduate students and parents

o undergraduate students in these institutions borrowed 53%

o all PLUS Loans.

FIGURE 7 Percentage Distribution o Federal Aid Funds by Sector, 2009-10

0% 20% 40% 60% 80% 100%

Percentage of Aid

For-ProtPrivate NonprotPublic Four-Year All PublicPublic Two-Year


17/32



Total Grants and Total Loans

From 2000-01 to 2005-06, loans increased rom 43% to 48% o the student aid rom all sources plus

nonederal loans that undergraduate students used to nance their education. By 2010-11, that share

had declined to 42%.

In 2010-11, grants provided 51% o

undergraduate unding. Federal education tax

credits and deductions, and a small amount o

Federal Work-Study unding, accounted or about

7% o total unds.

Rapid increases in ederal grant aid since 2008-09,

combined with very small increases in education

loans in both 2008-09 and 2010-11, explain the

increasing grant-to-loan ratio or undergraduate

students since 2007-08.

Over the ve years rom 2005-06 to 2010-11,

ederal education tax credits and deductions

or undergraduate students increased by an

estimated 117% in infation-adjusted dollars.

Grant aid rose 70%, compared to 31% or

ederal and nonederal loans combined.

Grant aid comprised 33% o the unds used by

graduate students in 2000-01, but has fuctuated

between 26% and 28% o the total rom 2003-04

through 2010-11.

FIGURE 8A

Grants and Loans as a Percentage o Funds rom Total Aid and Nonederal

Loans or Undergraduate Students, 1995-96 to 2010-11

FIGURE 8B

Grants and Loans as a Percentage o Funds rom Total Aid and Nonederal

Loans or Graduate Students, 1995-96 to 2010-11

Percentages in Figures 8A and 8B are shown as a

portion o the total amount o postsecondary unding

described in Table 1, including nonederal loans in

addition to nancial aid (grants, ederal loans, tax

credits and deductions, and Federal Work-Study).

In addition to the sources included here, students

rely on unds rom their amilies and rom their own

earnings and savings; they also borrow rom other

sources. Graduate students also receive ellowships

and research assistantships, which are considered

compensation.

SOURCE: Trends in Student Aid website(http://trends.collegeboard.org), Tables 4A and 4B.

0%

20%

40%

60%

80%

100%

Percentage

ofTotal

Funds

Academic Year


10-1107-0805-0603-0401-0299-0097-9895-96

47%

43%46%

42%

51%50% 48%

51%

Grants

Loans

0%

20%

40%

60%

80%

100%

Percentage

ofTotalFunds

Academic Year

Graduate Students

10-1107-0805-0603-0401-0299-0097-9895-96

30%

33%

27% 27%

69%

63%

70% 69%Loans

Grants

ALSO IMPORTANT:

The relative stability o the ratio o grants to loans over

time indicates that loans have not replaced grants in

unding postsecondary education. Rather, grant aid

oten ails to increase rapidly enough to ll the growing

gap between the costs o attending college or graduate

school and the ability o students and amilies to pay

those costs.
http://trends.collegeboard.org/http://trends.collegeboard.org/http://trends.collegeboard.org/http://trends.collegeboard.org/


18/32



FIGURE 9A

Distribution o Cumulative Debt Among 2009 Bachelors Degree Completers,

by Last Institutional Sector Attended

FIGURE 9B

Distribution o Cumulative Debt Among 2009 Four-Year College Students Not

Completing a Bachelors Degree, by Last Institutional Sector Attended

Student Debt

Among students beginning their studies in 2003-04, about 19% o bachelors degree completers and

about 13% o students who last attended a our-year institution but did not complete a bachelors degree

accumulated more than $28,000 in student debt.

Bachelors degree completers are more likely

than those who did not graduate to have

accumulated large amounts o student debt, but

overall they are also somewhat more likely to

have no debt at all.

Among dependent students beginning their

postsecondary studies in 2003-04 who last

attended a or-prot our-year institution, 15%

had earned bachelors degrees by 2009. Two-

thirds o these graduates had at least $28,000

in education debt. About 15% o dependent and

16% o independent students who last attended

a or-prot our-year institution, but did not earn a

bachelors degree, borrowed more than $28,000.

Among dependent students who last attended

a public our-year institution, 64% had earned

bachelors degrees by 2009. Fourteen percent

o these graduates had at least $28,000

in education debt. Over a quarter o the

independent public our-year graduates had this

much debt.

About 10% o dependent and 15% o

independent students who last attended a public

our-year institution, but did not earn a bachelors

degree, borrowed more than $28,000.

ALSO IMPORTANT:

Among bachelors degree recipients, 15% o dependent

students and 39% o independent students began their

studies in 2003-04 at a two-year (or less) institution.

Among students who last attended a our-year

institution but did not complete a bachelors degree

by 2008-09, 35% o dependent students and 41% o

independent students began their studies in 2003-04 at

a two-year (or less) institution.

Percentages o 2003-04 Beginning Postsecondary

Students Who Last Attended a Four-Year Institution

Receiving Bachelors Degrees by 2009

Dependent Independent

BachelorsDegree

NoBachelors

DegreeBachelors

Degree

NoBachelors

Degree

Total 63% 37% 22% 78%

Public Four-Year 64% 36% 23% 77%

Private Nonproft Four-Year 71% 29% 31% 69%

For-Proft Four-Year 15% 85% 13% 87%

NOTE: Beginning Postsecondary Students Longitudinal Study(BPS) reports on a nationally

representative sample o students who began their studies in 2003-04. Figures 9A and 9B are

based on students whose last institution attended was a our-year college or university. Debtcategories are based on quartiles o total debt or the 66% o students meeting this criterion

who took out student loans. Debt amounts include both ederal and nonederal student loans.

The All category includes both dependent and independent students. For independentbachelors degree recipients, the sample size in the or-prot our-year sector is too small to

obtain accurate estimates, and thereore was omitted rom Figure 9A. In the or-prot sector,many our-year institutions enroll students in shorter-term certicate and associate degree

programs. This is less common in public and private nonprot our-year institutions.

SOURCES: Beginning Postsecondary Students Longitudinal Study(BPS), 2009; calculations by

the authors.

DependencyStatusandSector

withNumberofStud

ents(inThousands)

Percentage

0% 20% 40% 60% 80% 100%

Total Four-Year (1,140)

Total Four-Year (58)

Private Nonprot Four-Year (21)

Public Four-Year (27)

Total Four-Year (1,082)

For-Prot Four-Year (15)



All

Independent

Dependent

Fourth Quartile(>$27,978)

Third Quartile($17,289$27,978)

Second Quartile($9,883$17,288)

First Quartile($1$9,882)

$0

36%

25%

26%

32%

37%

16%

32%

40%

15%

10%

13%

12%

16%

6%

16%

16%

11%

8%5%

11%

11%

2%

8%

13%

18%

13%

13%

18%

18%

11%

20%

17%

19%

44%

44%

27%

18%

65%

25%

14%

DependencyStatusandSector

w

ithNumberofStudents(inThousands)

Percentage

0% 20% 40% 60% 80% 100%

All

Independent

Dependent










Fourth Quartile(>$27,978)

Third Quartile($17,289$27,978)

Second Quartile($9,883$17,288)

First Quartile($1$9,882)

$0

31%

15%

37%

36%

32%

13%

28%

37%

18%

24%

13%

15%

18%

29%

17%

17%

24%

28%

20%

22%

24%

27%

22%

24%

14%

17%

16%

11%

14%

16%

16%

13%

13%

29% 18%24% 14% 15%

16%

14%

15%

12%

15%

17%

10%


19/32



Student Debt

Spread across all public our-year college

graduates who earned degrees rom the

institution at which they began their studies,

average debt per bachelors degree recipient was

$12,300 in 2009-10.

About 65% o students who earned bachelors

degrees in 2009-10 rom the private nonprot

our-year colleges at which they began their

studies graduated with debt. Average debt per

borrower was $28,100, up rom $22,600 (in 2010

dollars), a decade earlier.

Spread across all private nonprot our-year

college graduates who earned degrees rom

the institution at which they began their studies,

average debt per bachelors degree recipient was

$18,300 in 2009-10.

From 1999-2000 to 2009-10, average debt

per borrower among public college bachelors

degree recipients increased at an average annual

rate o 1.1% beyond infation. The percentage

o nontranser graduates with debt increased

rom 54% to 56%. Average debt grew by 1.4%per year over the most recent ve years o the

decade.

From 1999-2000 to 2009-10, average debt per

borrower among private nonprot bachelors

degree recipients increased at an average annual

rate o 2.2% beyond infation. The percentage

o nontranser graduates with debt increased

rom 63% to 65%. Average debt grew by 1.5%

per year over the most recent ve years o the

decade.

ALSO IMPORTANT:

As Figures 9A and 9B reveal, students who earn their

bachelors degrees at or-prot institutions are more

likely to borrow than those who attend public and

private nonprot colleges, and those who borrow

accumulate higher average levels o debt.

FIGURE 10A

Average Total Debt Levels o Bachelors Degree Recipients, Public Four-Year

Colleges and Universities, in Constant 2010 Dollars, 1999-2000 to 2009-10

FIGURE 10B

Average Total Debt Levels o Bachelors Degree Recipients, Private Nonprot Four-

Year Colleges and Universities, in Constant 2010 Dollars, 1999-2000 to 2009-10

Only students who began their studies at the institution rom which theygraduated are included in the data reported here. The blue bars represent theaverage debt levels o bachelors degree recipients who relied on student loans.The orange bars represent average debt per degree recipient, including thosewho graduated without student debt. The percentages along the base o the axisrepresent the percentage o degree recipients who borrowed.

NOTE: Debt gures include both ederal loans and loans rom nonederal sources that havebeen reported to the institutions. Transer students are excluded. Debt gures are basedon institutional reporting to the College Board and are best approximations. Estimates or2010-11 incorporate both the responses or that year and the change rom 2009-10 or schoolsreporting or both years. Exact dollar amounts should be interpreted with caution. The dataare not adequate to allow comparable calculations or or-prot institutions.

SOURCES: Annual Survey o Colleges, 2001 to 2011; calculations by the authors.

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

AverageCumulative

DebtinConstant2010Dollars

Academic Year(Percentage of Students Who Borrowed)

Per Bachelors Degree RecipientPer Borrower

09-10(56%)

08-09(55%)

07-08(55%)

06-07(55%)

05-06(55%)

04-05(55%)

03-04(54%)

02-03(53%)

01-02(52%)

00-01(52%)

99-00(54%)

$19,8

00

$10,7

00

$19,4

00

$10,1

00

$19,5

00

$10,1

00

$19,8

00

$10,5

00

$20,0

00

$10,8

00

$20,5

00

$11,2

00

$20,8

00

$11,5

00

$20,5

00

$11,3

00

$20,5

00

$11,3

00

$20,1

00

$11,1

00

$22,0

00

$12,3

00

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

AverageCumulativeDebtinConstant2010Dollars

Academic Year(Percentage of Students Who Borrowed)

Per Bachelors Degree RecipientPer Borrower

09-10(65%)

08-09(65%)

07-08(65%)

06-07(66%)

05-06(65%)

04-05(64%)

03-04(64%)

02-03(63%)

01-02(64%)

00-01(63%)

99-00(63%)

$22,6

00

$14,2

00

$22,6

00

$14,1

00

$23,0

00

$14,6

00

$24,2

00

$15,3

00

$24,6

00

$15,7

00

$26,1

00

$16,8

00

$27,2

00

$17,7

00

$27,3

00

$18,1

00

$26,5

00

$17,3

00

$26,2

00

$17,1

00

$28,1

00

$18,3

00

About 56% o students who earned bachelors degrees in 2009-10 rom the public our-year colleges at

which they began their studies graduated with debt. Average debt per borrower was $22,000, up rom

$19,800 (in 2010 dollars) a decade earlier.


20/32



Total Aid per Full-Time Equivalent Student

NOTE: Loans reported here include only ederal loans to students and parents. Grants rom allsources are included.

SOURCE: Trends in Student Aid website (http://trends.collegeboard.org), Tables 3A and 3B.

In 2010-11, undergraduate students

received an average o $12,455 in aid

per ull-time equivalent (FTE) student,

including $6,539 in grants rom allsources, $4,907 in ederal loans, and

$1,009 in a combination o tax credits

and deductions and Federal Work-

Study (FWS).

Total grant aid per ull-time equivalent

undergraduate student increased at an average

rate o 3.5% per year in infation-adjusted dollars

rom 1995-96 to 2000-01, 3.4% per year rom

2000-01 to 2005-06, and a much more rapid rate

o 6.8% per year rom 2005-06 to 2010-11.

Federal loans per FTE undergraduate student

have grown at an increasing rate, rising at

an average rate o 0.2% per year in infation-

adjusted dollars rom 1995-96 to 2000-01, 4.6%

per year rom 2000-01 to 2005-06, and 5.5% per

year rom 2005-06 to 2010-11.

FTE graduate students received an average

o $23,995 in aid, including $6,750 in grant

aid, $16,423 in ederal loans, and $782 in a

combination o tax credits and deductions and

Federal Work-Study.

In 2010-11, graduate students received about

$200 more in grant aid per student than

undergraduates and borrowed about $11,500

more in ederal loans.

In 2010-11, graduate students received 19%

more in grant aid per FTE student (ater adjusting

or infation) than they had a decade earlier. They

borrowed 75% more per student in ederal loans

in 2010-11 than in 2000-01.

ALSO IMPORTANT:

Overall, postsecondary students received an average o

$443 more (in 2010 dollars) per student in benets rom

ederal tax credits and deductions in 2010-11 than in

2000-01. They earned $32 less per student rom Federal

Work-Study jobs.

FIGURE 11A

Average Aid per Full-Time Equivalent (FTE) Undergraduate Student in Constant

2010 Dollars, 1995-96 to 2010-11

FIGURE 11B

Average Aid per Full-Time Equivalent (FTE) Graduate Student in Constant 2010

Dollars, 1995-96 to 2010-11

$0

$4,000

$8,000

$12,000

$16,000

$18,000

$2,000

$6,000

$10,000

$14,000

AverageAidinConstant2010Dollars

Academic Year

10-1107-0805-0603-0401-0299-0097-9895-96


$2,967 $2,999$3,759

$4,907$3,346 $3,979

$4,706

$6,539Average Grant Aid per FTE


$0

$4,000

$8,000

$12,000

$16,000

$18,000

$2,000

$6,000

$10,000

$14,000

A

verageAidinConstant2010Dollars

Academic Year

10-1107-0805-0603-0401-0299-0097-9895-96

Graduate Students

$3,984

$5,695 $5,837

$6,750

$8,425$9,362

$11,962

$16,423

Average Grant Aid per FTE

http://trends.collegeboard.org/http://trends.collegeboard.org/http://trends.collegeboard.org/http://trends.collegeboard.org/


21/32



Education Tax Credits and Tuition Deductions

The American Opportunity Tax

Credit (AOTC), introduced in 2009,

increased the total tax savings or

college students and their parentsclaiming education credits and tuition

deductions rom $6.6 billion in 2008 to

$14.7 billion in 2009.

Education tax credits and deductions are tax

expenditures. They reduce ederal income tax

liabilities and ederal tax revenues. Their

impact on the ederal budget is the same as the

impact o direct expenditures.

The maximum income level or which joint lers

were eligible or the AOTC was $180,000 in

2009 higher than the $160,000 limit or lers

claiming the tuition deduction and the $120,000

limit or those claiming the preexisting tax credits.

Because o the increase in the income limits or

education tax credits, the percentage o total tax

savings rom education credits and deductions

going to lers with incomes o $100,000 or higher

increased rom 18% in 2008 to 26% in 2009.

Unlike the Hope and Lietime Learning tax credits

in existence since 1998, the AOTC is partially

reundable. Taxpayers receive a credit o up to

$2,500 or tuition, ees, and course materials.

Filers who do not owe taxes can receive a reund

o 40% o their credit (up to a maximum o

$1,000).

Because o the reundability o the AOTC, the

percentage o total tax savings rom education

credits and deductions going to lers with an AGI

below $25,000 increased rom 5% in 2008 to

17% in 2009.

ALSO IMPORTANT:

The ederal government allows a tax deduction or

interest paid on student loans. In 2009, 7.2 milliontaxpayers with taxable returns deducted $6.4 billion in

student loan interest, generating over $1 billion in savings.

Other signicant subsidies to students through the

tax code include the personal exemption allowed

or students ages 19 and over, which saved parents

about $3 billion in 2009, and the excludability o tuition

assistance rom employers, which saved students about

$680 million. Taxpayers saved about $1.5 billion in taxes

on the earnings rom earmarked savings or education.

(Analytical Perspectives, Budget o the U.S. Government,

FY 2012, Table 17-1, http://www.whitehouse.gov/sites/

deault/les/omb/budget/y2012/assets/spec.pd)

FIGURE 12A

Distribution o Total Tax Savings rom Education Tax Credits and Tuition

Deductions by Adjusted Gross Income (AGI), 2008 and 2009 (and Average Tax

Savings per Recipient)

FIGURE 12B

Total Education Tax Credits and Tuition Deductions in Constant 2009 Dollars,

1998 to 2009 (and Average Tax Savings per Recipient)

0% 20% 40% 60% 80% 100%

Percentage of Savings 2009($1,221)

Percentage of Savings 2008($833)

28%($888)

23%($885)

26%($1,127)

18%($646)

5%

20%($866)

18%($1,164)

18%($1,572)

AGI Level

26%($1,773)

17%($1,028)

($416)

$100,000 to$180,000

$75,000 to$99,999

$50,000 to$74,999

$25,000 to$49,999

Less than$25,000

$0 $2 $4 $8

Total Education Tax Savings (in Billions) in Constant 2009 Dollars

Tax

Year

$12$6 $10 $14 $16

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009 ($1,329) $14.7

($401)

($1,006)

($994)

($477)

($488)

$6.6

$6.8

($1,010) ($513) $7.0

($985) ($535) $6.8

($981) ($530) $6.9

($966) ($459) $6.5

($944) ($474) $6.0

($869) $5.2

($890) $5.2

($972) $5.3

($973) $3.9

Total DeductionsTotal Credits

NOTE: Reundable tax credits claimed on all returns are included. For nonreundable creditsand or deductions, only amounts claimed on taxable income tax returns are included. Thevalue o tax deductions is estimated based on applicable marginal tax rates. Available data donot allow separation o independent students rom parents o dependent students claimingtax credits and deductions. The tax deduction was rst implemented or the 2002 tax year.Percentages may not sum to 100 because o rounding.

SOURCES: Internal Revenue Service, Statistics o Income, http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.html,Tables 1.3, 1.4, 3.3 (19982009); calculations by the authors.
http://trends.collegeboard.org/http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/spec.pdfhttp://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/spec.pdfhttp://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.htmlhttp://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.htmlhttp://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/spec.pdfhttp://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.htmlhttp://www.irs.gov/taxstats/indtaxstats/article/0,,id=96981,00.htmlhttp://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/spec.pdfhttp://trends.collegeboard.org/


22/32



Pell Grants

Total Pell Grant expenditures increased

by 16% between 2009-10 and 2010-11,

leading expenditures in this program to

almost double over two years, rom$18.1 billion (in 2010 dollars) in 2008-09

to $34.8 in 2010-11.

The number o Pell Grant recipients increased

rom 3.9 million in 2000-01 to 5.2 million in

2005-06 and 6.2 million in 2008-09. In 2009-10,

8.1 million students received Pell Grants and the

number

trends in student aid 2011, college board

Documents