Admissions & Student Aid

Data Points: A Snapshot of Recent Growth in Federal Student Loans

September 23, 2009

Congress is considering a proposal to end bank-based student lending and make federal student loans available only through the government's direct-lending program. But the lending market has already changed significantly. Some lenders left the bank-based program, known as FFEL, after Congress cut their subsidies in 2007 and as credit markets tightened. Some colleges then decided to switch from bank-based to direct lending, out of concern about whether enough banks would be able to provide their students with loans.

Growth in direct lending
  Loan volume (in billions)One-year increase
  2006-7 2007-8 2008-9 2006-7 to 2007-8 2007-8 to 2008-9
Direct student-loan program $11.46 $12.62 $20.34 10% 61%
Federal Family Education Loan Program $44.82 $50.78 $58.96 13% 16%

Here is the loan volume in each of the four types of noncampus-based federal loans (which are issued by both programs above). The growth in unsubsidized Stafford Loans stemmed partly from changes in the program's rules: The amount undergraduates could borrow in that program increased for 2008-9. Part of the increase in unsubsidized Stafford and Grad PLUS borrowing is also probably the result of students' having a harder time getting private loans.
Growth fueled by loan limit changes
  Loan volume (in billions)One-year increase
  2006-7 2007-8 2008-9 2006-7 to 2007-8 2007-8 to 2008-9
Subsidized Stafford Loan $23.73 $27.40 $30.81 15% 12%
Unsubsidized Stafford Loan $22.77 $25.68 $37.09 13% 44%
Parent PLUS Loan $7.86 $7.47 $7.43 -5% -1%
Grad PLUS Loan $1.91 $2.86 $3.97 50% 39%
Total volume $56.28 $63.41 $79.30 13% 25%
Note: Final data on each award year's loan volume typically lag for about two years because of the way loan payouts work. In order to compare annual increases in loan volume consistently, each award year's volume is shown as of September 1 of that year, for example, as of September 1, 2007, for the 2006-7 award year. This means, however, that the loan-volume amounts shown are not final. The Direct Loan data were generated on September 14, 2009. FFEL data were generated on September 13,2009. Amounts and percentages are rounded.
Source: U.S. Department of Education