College Student Loan News and Info

Federal student financial aid programs have assumed a central role in making college education a reality for millions of Americans. In 2002, 11 million loans valued at approximately $40 billion were made to students and their families under the FFELP, FDLP and Perkins loan programs. This represents nearly 30% of the estimated $135 billion of the total expenditures made by students and their families for tuition, room, board, books, fees, and transportation.

The demand for student loans is expected to continue to grow. According to projections made by the U.S. Department of Education, federal student financial aid volume is expected to grow to nearly $64 billion in 2009, with 71% of those dollars coming from FFELP. Increased demand for federal student financial aid is attributable to three major factors: increasing enrollment, the rising cost of college education, and the declining purchasing power of grants. A very interesting and informative student financial aid read is the Fiscal Year 2008 Higher Education Budget Request in PDF format.

As more students graduate from high school and go on to pursue college education, demand for student loans will continue to increase. By 2012, the number of college-age young adults will increase 15 percent, or more than five million young adults, to 18 million young adults.

While the number of students enrolled in college education is growing, federal investments in financial student financial aid has shifted dramatically over time. In 1980-81, grant aid accounted for 55 percent of all aid awarded and loans were only 41 percent. By 2002, these numbers were reversed: loan aid represented 54 percent of total aid awarded, while grant aid accounted for 39 percent. 

At the same time, federal investments in Federal Pell Grants are designed to help students with the greatest need and the least resources to pay for their education have increased. But the purchasing power of these grants has declined as more students participate in the program. In 1986, the average Pell Grant covered 98% of average tuition at public four-year institutions, but by 1999, the average Pell Grant covered only 57% of average tuition at these institutions. The shift results in greater reliance on loans by students and parents in order to pay for college education.

As more and more college-qualified students graduate from high school and choose to pursue higher education, demand for federal student financial aid will continue to increase. A loan demand also reflects the continuing pattern of grant aid increasing more slowly than educational costs, resulting in greater reliance by students and families on loans to pay for college education. 

According to a study by the College Board, over the past ten years, average tuition and fees at four-year public and private institutions increased by 38%. Increases in tuition are related to such factors as declining state appropriations for public sector institutions, while in the private sector, growth in institutional aid for students, investments in facilities are prime factors.

Many students and parents are concerned about their ability to pay for college. However, recent surveys conducted by the American Council on Education show that students and parents frequently overestimate the cost of education and underestimate the amount of federal student financial aid available. In addition, the range of institutions that comprise the U.S. postsecondary education system provides many affordable options for students and families.

This entry was posted on Tuesday, March 11th, 2008 at 10:29 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.