The 1990s brought college tuition and fee increases that outpaced both inflation and growth in the median family income (U.S. General Accounting Office 1996, 1998). At the same time, federal, state, and institutional financial aid to students expanded (The College Board 2003a), and important changes were made in the structure of the financial aid system. At the federal level, the 1992 Reauthorization of the Higher Education Act expanded students’ eligibility for need-based aid, raised student loan limits, and introduced unsubsidized loans for students regardless of their need. The resulting increase in borrowing has been one of the most dramatic changes in financial aid in the decade. Also during the 1990s, the federal government began to use tax credits to ease the burden of paying for college. States and institutions increased their grant programs, as well as the amounts awarded based on merit or a combination of merit and financial need, rather than need alone (The College Board 2003b; Horn and Peter 2003). As a result of these trends and events, the overall picture of what and how students pay for college has changed substantially since the early 1990s.

This analysis examines changes in student financing of undergraduate education between 1989–90 and 1999–2000, focusing on students who enrolled full time for the full academic year and who were considered financially dependent on their parents for financial aid purposes. It briefly describes the increases in tuition and fees, major types and sources of financial aid available to undergraduates, data and definitions used, and where students enrolled. It then shows what prices they faced, how much they and their families were expected to pay from their own resources, and what types and amounts of financial aid they received. The analysis presents the price of going to college in three ways: the total price (tuition and fees plus books and living expenses), the net price after taking grants into account, and the net price after both grants and loans are considered.

Although this analysis describes how students have used financial aid to help pay for college, it does not address the role of financial aid in providing access to college. Only students who actually enrolled were included—that is, those who were able to assemble the necessary financial resources. The analysis does not include prospective students who may have been discouraged by the price of going to college, found the available financial aid inadequate to their needs, or were unable or unwilling to borrow the amount needed to enroll.