From 1992–93 to 1999–2000, the percentage of full-time, full-year undergraduates with federal loans increased, while the percentage with federal grants did not. There were increases for both loans and grants from 1999–2000 to 2003–04.

Grants and loans are the major forms of federal financial support to postsecondary students. Federal grants are available to undergraduates who qualify by income, whereas loans are available to all students. In 1992, the federal government increased loan limits, extended eligibility for subsidized loans for middle- and high-income students, and introduced unsubsidized loans for students regardless of income. From 1992–93 to 2003–04, the annual amount of federal loans borrowed by both undergraduates and graduates grew from about $19 billion to $50 billion, while federal grants received by undergraduates grew from about $9 billion to $13 billion.¹

This indicator examines the percentage of full-time, full-year undergraduates who borrowed through federal loan programs between 1992–93 (the last year before the changes took effect) and 2003–04, the percentage receiving federal grants, and the average annual amounts received by recipients in constant 2003–04 dollars (see table 46-1).

From 1992–93 to 1999–2000, the percentage of full-time, full-year undergraduates who had federal loans increased from 31 to 44 percent, while the percentage receiving grants remained near 30 percent. By 2003–04, both the percentage with loans (48 percent) and the percentage receiving grants (34 percent) had increased. As a result of the relative changes in grants and loans received over these periods, the average percentage of federal aid received as loans increased from 54 percent in 1992–93 to 64 percent in 1999–2000, with no substantial change observed in 2003–04 (63 percent).

Among low-income dependent undergraduates, the percentage taking out federal loans remained between 47 and 48 percent from 1992–93 to 2003–04, while the percentage receiving federal grants increased from 68 percent in 1992–93 to 72 percent in 1999–2000 and 2003–04. As a result of these changes, the average proportion of federal aid these students received as loans decreased from 38 to 34 percent from 1992–93 to 2003–04. In contrast, among high-income dependent undergraduates, the percentage taking out federal loans increased from 13 percent in 1992–93 to 32 percent in 1999–2000 to 38 percent in 2003–04, while no measurable change was observed in the percentage receiving grants (about 1 percent) between 1992–93 and 2003–04. Thus, the percentage of federal aid that high-income dependent undergraduates received as loans increased from 88 to 92 percent.

¹Calculated from The College Board (2003, 2005), Trends in Student Aid. From the 2003 report, the data for 1992–93 were adjusted to constant 2003–04 dollars. Only Pell Grants, Supplemental Educational Opportunity Grants (SEOG), Perkins loans, and subsidized and unsubsidized Stafford loans are included in the federal grant and loan amounts cited. (back to text)