More Students Borrow More Money to Pay for College

More students are borrowing to pay for college, and that is especially true at for-profit colleges, according to an analysis of U.S. Department of Education data released today.

Nearly 53 percent of full-time undergraduate students borrowed money to attend college in 2007-8, compared with 49.5 percent in 2003-4, according to the Education Sector’s analysis of data from the National Postsecondary Student Aid Study. The proportion of students who borrowed at public two-year institutions and private, nonprofit four-year institutions stayed about the same over that time period, while the proportion at public four-year colleges grew slightly. At for-profit institutions, 91.6 percent of students borrowed in 2007-8, up from 79.5 percent in 2003-4.

“You’re really seeing the biggest amount of growth at for-profit institutions,” said Erin M. Dillon, a senior policy analyst with Education Sector and one of the authors of the report. “It’s particularly disturbing because they tend to have the highest default rates over all.”

Borrowing is growing at for-profit institutions in part because they are successful in getting students to apply for federal aid, which often includes government-backed loans, and in part because they don’t have an incentive to offer institutional grants, Ms. Dillon said.

At for-profit colleges, the average amount of the loans students received per year grew by 8.3 percent, to $9,611, between 2003-4 and 2007-8. But the size of student loans grew at all institutions, and by a much greater percentage (19.6 percent) at private, nonprofit colleges, where average loans reached $9,766 in 2007-8. The report also tracks the growth in private student loans, as does another analysis of the same data by the Project on Student Debt.

The full report, “Drowning in Debt: The Emerging Student Loan Crisis,” is available at http://www.educationsector.org.