The 2015-2016 National Postsecondary Education Student Aid Study (NPSAS:16) showed an overall decline in student loan borrowing compared to its 2011-2012 counterpart, NPSAS:12. The National Center for Education Statistics (NCES) publishes this study every four years on financial aid, and it provides data on loans, grants, work-study, and other financial aid options from federal, state, and private sources.
Using data from 89,000 undergraduate and 24,000 graduate students, the report revealed an interesting find. 38% of undergraduates took out student loans in 2015-2016, down from 42% in 2011-2012. So, full- and part-time students were borrowing less often, relatively speaking. Although the borrowing rate was down, the overall number of student borrowers still increased to nearly 42 million, up 8.88% compared to 2012.
Naturally, total student loan debt also grew over the same period according to federal sources, as did average college tuition. Today, total outstanding student loan debt is currently over $1.4 trillion and rising. According to the study, average student loan recipients borrowed $7,600 that year in both federal and private student loans (this is up $500 from 2012). Keep in mind this specifically pertains to student loan aid from both federal and private sources.
While there was a decline in student loan borrowing, looking at the bigger picture of financial aid reveals another story. Overall borrowing is actually up by one percent, accounting for 72 percent of undergraduates in 2016. Here’s why.
63 percent of undergraduates received financial aid through grant money – a 4 percent increase from 2012. The rate of grant funding increased the most compared to all other financial aid categories in this report. Interestingly, 39 percent of undergrads received Pell Grants in 2016 which is down from 41 percent in 2012. This could indicate an increase in overall contributions in terms of grants and scholarship aid from private and state sources.
The average grant amount was $7,400 which is $200 less than the average student loan. Despite that, this could be a good sign for the average borrower; after all, grants don’t require repayment.
Looking at graduate students, similar trends were observed.
Overall, 72 percent of graduate students received financial aid of some sort – an increase of 2 percent from 2012. 44 percent of 2016 grad students took out student loans compared to 45 percent in 2012. 40 percent received grant aid in 2016. In both 2012 and 2016, the average student borrowed $22,000 in overall financial aid. Interestingly, 2016 grad students borrowed $23,400 in student loans on average which is up by $2,000 from four years prior.
Why Does This Matter?
The NPSAS:16 from the NCES offers a snapshot of the outlook of popular and stressful issue in today’s political and economic climate. Student loan debt has risen each year as more Americans enter college, and overall student loan repayment prospects are a growing concern.
Many blame the increasing cost of college for the trends in financial aid and student loan debt. Since college tuition and fees are so great, college students are forced to rely on aid which can lead to unmanageable, crippling student loan debt in the worst case scenario. One of the takeaways in this report is that financial aid is still a very real necessity for the majority of prospective college students, so it’s easy to assume that the price tag for higher education is still steep.
Knowing this, undergraduate and graduate students might be able to make smarter decisions when it comes to financial aid. For instance, grant funding is rising which could potentially indicate students are starting to look for alternatives to student loans. As mentioned earlier, grant funding doesn’t need to be paid back, so they don’t come with the same financial obligations and implications as a loan.
While this is a positive thought, it bodes well to note a warning from NPSAS:16 itself. The authors of the report cautioned readers “not to draw causal inferences based on the results presented in this report.”
Author: Andrew Rombach
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