People of Northwest Public Radio
Thu August 9, 2012
Paying For College: Financial Aid In America, In 2 Graphics
Originally published on Thu November 8, 2012 4:40 pm
Tuition has gone through the roof in the past decade. But so has financial aid.
Grants — scholarships and other money that doesn't have to be paid back — have risen by more than 50 percent, to nearly $7,000 per student per year. (That's after adjusting for inflation.) Student loans have risen by a similar amount.
The breakdown of aid has also changed, as the following graph makes clear.
A few notes:
The federal government is clearly the largest provider of financial aid, by far. That fact hasn't changed over the past decade.
But federal grants have increased significantly in the past five years. During the same time, private loans have fallen sharply. Those two trends are related: A bill passed in 2010 changed the financial aid landscape significantly, reducing the role for private lenders and expanding federal grants. (Here's more detail on that.)
That big rise in private loans between 2000 and 2005 was partly driven by the law that made it impossible to discharge student loan debt in bankruptcy. That made it more appealing for private lenders to target students. (Congress is currently rethinking the rules regarding student loans and bankruptcy).
Federal tax benefits are essentially a government subsidy for paying tuition, so the College Board includes them in its financial aid numbers. Those benefits are set to expire at the end of this year.
The figures in this post come from the College Board's report Trends in Student Aid, which has lots more data. The two graphics were created from two separate data sets, which categorize grants and loans in slightly different ways.