Blog: The Educated Reporter

Record Number of College Students Rely on Federal Aid

A combination of increased financial difficulties and rises in the costs of attending college likely pushed more middle-class families into relying on federal assistance to pay for higher education, according to the results of a new government survey.

Between the 2007-08 and 2011-12 school years, the percentage of full-time, full-year Pell grant recipients from households with incomes of $40,000 to $60,000 nearly doubled from 32 percent to 63 percent, according to the “2011-12 National Postsecondary Student Aid Study.” Wealthier families also came into the fold: Students from households earning $60,000 to $80,000 who received a Pell grant rose in that time period from two to 18 percent. The Pell grant is the federal government’s chief form of need-based financial aid for higher education.

Overall, more than half of the nation’s students rely on federal aid and grants to cover at least some of the costs of attending college, the study found. Since the 2007-08 school year, the federal government increased  its student programs that provide loans and grants while state and postsecondary institutional support remained virtually flat, despite a national trend of colleges raising the price of earning a degree.

The NPSAS is a representative survey that gathered financial aid information from more than 100,000 students, creating a snapshot of the roughly 26 million undergraduates and 4 million graduates attending schools in all 50 states plus the District of Columbia in the 2011-2012 academic year.

Among all undergraduate students, reliance on any federal aid jumped from 47 to 57 percent since the last such survey was taken by the U.S. Department of Education to reflect the 2007-2008 school year. The percentage of students receiving federal grants, a form of aid that students don’t have to repay, climbed 14 percentage points, from 28 to 42 percent. And while the costs of attending school have increased in those four years, institutions have upped their aid by one percent, from 19 to 20 percent. States, meanwhile, decreased their share of aid, with 15 percent of students receiving help from their states compared with 16 percent in 2007-2008. Neither of the 1 percent changes is statistically significant, however. 

“The NPSAS report is a reminder that we need state policymakers and individual colleges and universities to do their part in taking action against rising college tuition,” said U.S. Secretary of Education Arne Duncan in a statement.

[Read our Story Starter on college affordability]

Even with grants, tax breaks and other benefits from states and institutions, The College Board calculates that the amount a first-time, full-time student owes each year has gone up by about $1,540 at four-year public institutions since 2007-2008.

For students at private, nonprofit institutions, the net price has decreased slightly since 2007-08 according to College Board data, in large part due to government expansions of grant programs for low-income students and veterans.

While the amount of money Congress allocated to the Pell program rose in the years between the two surveys, the recession’s stranglehold on family finances shouldn’t be overlooked. In 2011 the Pew Research Center found that the economic collapse of 2008 decreased the wealth of white Americans by 16 percent, blacks by 50 percent and Hispanics by two-thirds after comparing household income and asset data between 2005 and 2009.

That downward pressure on minorities coincided with upward ticks in black and Hispanic students’ college attendance rates. Between 2007 and 2010, the share of blacks attending degree-granting institutions rose from 32 to 36 percent according to Department of Education data; for Hispanics, that figure grew from 13 to 14.5 percent. This trend occurred just as white representation at such institutions declined, a sign of the nation’s shifting demographic landscape.

Still, Jack Buckley, the commissioner of the Department of Education agency that released the survey, cautioned against pointing a finger at any one cause behind more families relying on Pell grants. “NCES cannot attribute these changes to any particular factors without a great deal more evidence,” Buckley said. “But I would note that any strong causal claims should be treated with caution.”

[Read our Story Starter on higher education finance]

Graduate students are also relying on the federal government more as institutional stipends and other income from scholarly activity slid. The survey noted that the proportion graduate students taking out Graduate PLUS loans—federal loans that are uncapped and can cover the full cost of attending an institution, including living expenses—doubled from five to 10 percent. Ben Miller, a postsecondary policy expert at New America Foundation who previously worked at the Department of Education, says there are several possible explanations for the increase. Since the economic downturn, private lenders have bolstered their eligibility requirements for borrowers, meaning only students with high credit scores or those who can find a co-signer are likely to receive a private loan.

Loans to graduate school students have come under increased scrutiny as some reports surfaced that several graduate schools were taking advantage of a loophole in a government loan repayment program that left taxpayers on the hook to pay off student debt.

This week the president is expected to deliver a speech outlining his administration’s plan to drive down the cost of college. Regardless of the announcement, Buckley believes change will be slow to come. “The postsecondary market place is going to take a while to react, and I don’t anticipate costs going down in the short-run,” he said. “And families and students are going to have to find ways to pay for college; they’re going to be continuing to take out loans and seeking grants at these rates or higher.”

The report drew information from several sources, including data banks that the Department of Education keeps and school reports. The report’s authors also used research methods such as cognitive laboratory work and extensive field testing of survey items to “ensure that the survey items are designed to yield as accurate information as possible,” Buckley said.

Other noteworthy results from the survey include:

  • The average federal grant was $6,200 and the average federal loan was $7,100;
  • Six percent of undergraduates were hired through work-study jobs, bringing in an average of $2,300 in wages; 4 percent received roughly $7,500 in veterans’ benefits; and 5 percent had parents who borrowed about $12,100 in federal Direct PLUS Loans, which carry larger interest rates;
  • Seventy percent of graduate students received a form of financial aid averaging $22,300, including student loans.
  • Independent students, who tend to be older and rely on their own incomes to pay for college, relied on more federal aid in this survey than in 2007-2008. Eighty-one percent of such students received some kind of aid compared with 76 percent four years earlier; the number receiving federal grants rose by 13 percentage points to 70 percent in the same time period.