NCES: As College Costs Rise, More Students Borrow and Max Out on Loans
By Allie Bidwell, Communications Staff
It’s been widely reported that as the cost of college consistently increased over the last few decades, more students turned to taking out loans to pay for the cost of college – and that they tend to borrow larger amounts these days. But a new report from the National Center for Education Statistics’ Institute of Education Sciences found a larger number of students are also maxing out on their federal loans.
The research brief, published on Thursday, found that while the percentage of borrowers who took out the individual maximum amount slightly decreased between 2007-08 and 2011-12 (from 61 percent to 55 percent), the declines were accompanied by an increase in both the number and percentage of students who borrowed. Overall, the number of borrowers who took out any Stafford Loan who borrowed at the individual maximum for Subsidized and Unsubsidized Stafford Loans combined increased from about 3.8 million in 2007-08 to about 4.5 million in 2011-12.
Additionally, when researchers looked at all undergraduates – not just those who took out any Stafford Loan – they found a small but statistically significant increase in the percentage of borrowers who took out the individual maximum, up from about 21 percent to 23 percent.
Undergraduates who borrowed the individual maximum for combined Stafford Loans also differed by dependency status, income level, and institution type, the brief found.
For example, a higher percentage of Stafford borrowers at private nonprofit institutions (64.8 percent) reached the individual maximum amount in 2011-12 than those in public four-year (54.7 percent), public two-year (43.3 percent), and for-profit institutions (56.3 percent).
Some have also claimed that when students reach their federal loan limits, it can drive them to take out private student loans, which tend to have higher interest rates and fewer safeguards. But the new research brief found that 11 percent of undergraduates who had not reached their individual loan limits had taken out a private loan, as well as 12 percent of undergraduates who did borrow the maximum amount. Some students’ parents also took out Parent PLUS Loans before the Stafford Loan limit was reached.
“Given the increase in student borrowing, in both the numbers of borrowers and loan amounts, and the debate surrounding the effects of loan limits on students, it is important to understand the extent to which borrowing at the federal maximum loan amount has changed over time and how that change varies among student groups,” the brief said.
Publication Date: 9/30/2016
Judy S | 9/30/2016 10:48:42 AM
Student Loan Debt is so much more than the cost of tuition and books. If we had free tuition and no refunds enrollment would be down.
Jeanette S | 9/30/2016 9:37:23 AM
students with no income (welfare) borrow loans (because they can) and don't pay them back.
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