Trends in Student Aid, 2012. Trends in Higher Education Series

The recent focus on student debt makes reliable data about how much students are borrowing, how borrowing patterns differ among students across different types of institutions and at different levels of enrollment, and about changes over time particularly important. While total student borrowing has grown rapidly over the past decade, the rate of growth has decreased in recent years. The total volume of education loans disbursed doubled from $55.7 billion (in 2011 dollars) to $113.4 billion between 2001-02 and 2011-12. Over these years, the number of Stafford Loan borrowers almost doubled, while the average amount borrowed from subsidized and unsubsidized Stafford Loans combined increased by 8%, from $7,627 (in 2011 dollars) to $8,230. The growth rate in education loans from 2001-02 to 2011-12 was "slower" than over the previous decade, when the total grew 150%, from $22.3 billion (in 2011 dollars) to $55.7 billion. Moreover, the total volume of education loans disbursed increased by 64% in inflation-adjusted dollars between 2001-02 and 2006-07, and the growth rate slowed to 24% over the next five years. In 2011-12, undergraduate students received an average of $13,218 per full-time equivalent (FTE) student in financial aid, including $6,932 in grant aid from all sources, and $5,056 in federal loans. Federal grant aid almost tripled in constant dollars between 2001-02 and 2011-12, increasing from 20% to 26% of the total $185.1 billion in undergraduate aid. The number of students receiving Pell Grants, the central federal grant program providing funding for low- and moderate-income students, increased from 2.7 million in 1981-82 and 3.8 million in 1991-92 to 4.3 million in 2001-02 and to 9.4 million (37% of all undergraduates) in 2011-12. The composition of student aid is very different for undergraduates than for graduate students. In 2011-12, the estimated 25.5 million undergraduates received 51% of their aid in the form of grants, 40% as loans, and 9% in a combination of tax credits or deductions and Work-Study. For the 3.9 million graduate students, these percentages were 29%, 68%, and 3%, respectively. Total education borrowing, including federal student and parent loans, as well as nonfederal loans, declined by 4% in real terms between 2010-11 and 2011-12--the first decline in at least 20 years. However, the 2011-12 total of $113.4 billion was 24% higher than five years earlier. Only 2% of students who first enrolled in 2003-04 had borrowed more than $50,000 from federal and nonfederal sources combined by 2009. Over 40% did not borrow and another 25% borrowed $10,000 or less. (Contains 21 tables and 57 figures.) [This paper was written with the assistance from Charles Kurose.]