Student Loans, Financial Aid Both Rise in 2009–10
According to a new report by the College Board, both student
loans and other types of college financial aid rose in the 2009–10 academic
year, although this increase in student aid was largely offset by rising
college costs, which increased by about 6 percent.
The College
Board, in its annual “Trends in Student Aid” report, estimates that a
total of $154.5 billion in student financial aid was distributed in
2009–10. Grants now comprise about 50 percent of student financial aid
from all sources, both federal and private sector.
In 2009–10, the average undergraduate student financial aid
package was worth nearly $11,500. This figure includes more than $6,000 in
grants and more than $4,800 in government-backed federal student loans.
Graduate students received slightly more financial assistance, on average, in the
form of grants — nearly $6,400 — but also borrowed more
heavily. The average graduate student took out more than $15,700 in graduate
student loans.
Grants
Compared to student financial aid figures for 2008–09, grant
aid to undergraduate students increased by 22 percent, while federal
student loans increased by 9 percent. The 2009–10 academic year also
saw a 16-percent increase in the average federal Pell Grant award to $3,656,
the largest one-year rise in the program’s history. Only about one-fourth of
all Pell Grant recipients, however, qualified for the maximum grant amount of
$5,350.
Student Loans
Private student loans —
college loans issued by private lenders rather than by the federal government —
represented about 8 percent of all student loans in 2009–10, a
decrease from 25 percent in 2006–07.
Federal subsidized Stafford student loans made up about 35 percent
of all student loans in 2009–10, an increase from 31 percent in 2006–07.
Unsubsidized federal Stafford student loans accounted for 42 percent
of the combined federal and private student loans taken out in 2009–10, an
increase of about 12 percent from 2006–07.
Subsidized Stafford loans,
which are available only to students who demonstrate financial need, are
government-backed college loans on which the government will pay the interest
while the student is in school or in a period of approved deferred payments. Unsubsidized
Stafford loans are available to students regardless of financial
need. Although students, as on a subsidized loan, may defer payments on a
federal unsubsidized college loan while they’re in school or in certain other
authorized circumstances, the student, not the government, will be responsible
for paying all the interest that accrues on an unsubsidized loan during those
periods of deferment.
According to the College Board, about 65 percent of
all undergraduate students in 2009–10 did not accept Stafford loans of any type.
The majority of students who did accept Stafford college loans ended up taking
out both subsidized and unsubsidized student loans. The average Stafford student
loan debt load in 2009–10 was $6,550.
In 2008, Congress authorized increases in the maximum annual
and lifetime federal lending limits for Stafford student loans. The expanded
loan amounts were approved in part to discourage students from taking on the
burden of private student loans, which tend to carry higher interest rates and
fewer borrower protections than federal student loans.
Currently, dependent undergraduate students can borrow up to
a maximum of $31,000 in Stafford college loans throughout their undergraduate
college career. Independent undergraduates, as well as dependent undergraduates
whose parents do not qualify for a federal parent loan, can borrow up to a
maximum of $57,500 in Stafford college loans.
Graduate students may also be awarded both subsidized and
unsubsidized Stafford student loans, up to $20,500 a year and up to a total lifetime
maximum of $138,500, including both their undergraduate and graduate Stafford
loans.
Graduate students may obtain additional student loan funds
through the federal Grad PLUS graduate student loan program. However, whereas
Stafford student loans don’t require either a credit check or a co-signer, Grad
PLUS loans have modest credit requirements. Even so, the number of graduate
loans issued through the Grad PLUS program has steadily increased since
Congress introduced the program in 2006–07. About 5 percent of all
student loans issued in 2009–10 were Grad PLUS graduate student loans.
Parent Loans
In contrast to federal student loans, federal parent loans,
known as PLUS loans, are being used less frequently, with 20 percent fewer
parent loans issued through the PLUS program in both 2008–09 and 2009–10 than
in previous years. The volume of federal parent loans peaked at 11 percent
in 2004–05 and 2005–06.
Since PLUS loans, unlike Stafford loans, are credit-based
loans, one reason for the decline in PLUS loan volume may be that the number of
parents who qualify for a PLUS loan has dropped due to the recession. Under current
PLUS loan guidelines, parents who are more than 90 days past due on at least
one bill or who have declared personal bankruptcy or been subject to a
foreclosure proceeding within the last five years do not qualify for parent
loans through the PLUS program.
Read the full report from the College Board: “Trends
in Student Financial Aid 2010”
student loans, report:
Trends in Student Financial Aid 2010<img src="http://www.articlesfactory.com/pic/x.gif" alt="" border="0", more
College Board higher education reports
Article Tags:
Stafford Student Loans, Student Loans,, Student Financial, Federal Student, Graduate Student, Undergraduate Students, Loans Issued, Student Loans, Stafford Student, College Loans, Stafford College, Federal Parent, Grad Plus
Jeff Mictabor is an enthusiast on the topic of student loan
issues in the news. He has been writing for the past 10 years for a variety of
education publications. He now offers his writing services on a freelance
basis.
