7 in 10 Undergraduates Get Financial Aid, New Data From a Major Federal Study Show

The percentage of undergraduates who use financial aid to help pay for college and the average annual aid amount both went up in the first few years after the economic downturn began, federal data released on Tuesday confirm.

Seventy-one percent of undergraduates received some form of aid in the 2011-12 academic year, up from 66 percent in 2007-8, according to the U.S. Department of Education’s National Center for Education Statistics. Their average aid amount also went up, to $10,800 from $9,000 four years earlier, shows a report of selected findings from the latest round of the National Postsecondary Student Aid Study, known as NPSAS, a nationally representative sample survey of students enrolled between the summers of 2011 and 2012.

The increase in students’ use of aid is part of a longer-term trend, but still, the new report is likely to spark attention. This iteration of NPSAS comes out as stakeholders gear up for the next reauthorization of the Higher Education Act, expected in 2014. And this week, President Obama plans to discuss his vision for reducing the cost of college, especially for middle-class students and families, on a two-day bus tour.

While the NPSAS is widely regarded as the best source of information on how students pay for college nationally, the survey is only conducted every four years or so. The new release, then, is the first to capture the effect of the economic downturn, which began midway through 2007-8, the last year of the survey.

That doesn’t mean, however, that differences between the new study and the previous one can all be pinned on the recession, cautioned Jack Buckley, commissioner of the National Center for Education Statistics. Too much has changed since the last NPSAS, he told reporters, to attribute shifts in aid to any one factor.

Rise in Pell Grants

Take the Pell Grant program, the main federal support for needy students. Forty-one percent of undergraduate students received a Pell Grant in 2011-12, up from 28 percent in 2007-8. Some of that increase was probably the result of lower-income adults going back to college in a weak economy and families finding themselves in worse financial positions as they faced the tuition bills for their children.

At the same time, policy changes expanding eligibility for the program also drove some of the increase. (In an effort to save money, Congress approved some restrictions to Pell eligibility that kicked in on July 1, 2012, the day after the period covered by the new NPSAS).

As for borrowing, the share of undergraduates with federal Stafford loans grew from 35 percent in 2007-8 to 40 percent in 2011-12, while the average amount they borrowed also went up, from $5,000 to $6,400.

Parent borrowing through the federal PLUS program grew as well. Average parent borrowing through the program rose from $10,700 in 2007-8, with 4 percent of parents borrowing, to $12,100 in 2011-12, with 5 percent borrowing. (The loan is available to parents of dependent undergraduates who do not have an adverse credit history.)

Concern About College Costs

Fifty-seven percent of undergraduates received federal student aid in 2011-12, compared with 47 percent in 2007-8. Over the same period, there was a drop in the share of undergraduates who received state aid (to 15 percent from 17 percent), while the share who received institutional aid remained pretty flat, at about 20 percent.

The new report highlights the important role the federal government plays in helping students pay for college, Arne Duncan, the secretary of education, said in a written statement.

“The NPSAS report is a reminder that we need state policy makers and individual colleges and universities to do their part in taking action against rising college tuition,” he said. “Together we can take collective action to help make college more accessible, affordable, and attainable for middle class Americans across the country.”

The picture for graduate students was somewhat different. The share of graduate students receiving any aid dropped from 73 percent in 2007-8 to 70 percent in 2011-12. And the makeup of the aid those students received also changed. The share of graduate students receiving grants dropped from 41 percent in 2007-8 to 36 precent in 2011-12, while the share receiving loans grew from 42 percent in 2007-8 to 45 percent in 2011-12. The average amount that graduate students borrowed from all sources also increased, from $18,400 in 2007-8 to $21,400 in 2011-12.

The sample for NPSAS 2011-12 consists of about 95,000 undergraduate students and 16,000 graduate students attending about 1,500 institutions eligible to participate in the federal financial-aid programs. It represents the 26 million undergraduate and four million graduate students who were enrolled at any time between July 1, 2011, and June 30, 2012.

The National Center for Education Statistics expects to release all of its findings from the new NPSAS later this fall. That full report, or even this preliminary one, is likely to trigger much further analysis. Researchers and advocacy groups will be eager to analyze how students are paying for college, looking for patterns in borrowing, for instance, and how they’re supported in different sectors.

Student Aid On the Rise