In the 2009–10 academic year, student loans and financial aid saw a significant increase, as reported by the College Board. However, this rise was largely counterbalanced by a 6% increase in college costs. The College Board's "Trends in Student Aid" report highlights that $154.5 billion in student financial aid was distributed during this period, with grants making up about half of the total aid from both federal and private sources.
The College Board's report reveals that the average financial aid package for undergraduate students was nearly $11,500, comprising over $6,000 in grants and more than $4,800 in federal student loans. Graduate students received slightly more aid, with grants averaging nearly $6,400, but they also borrowed more, with an average loan amount exceeding $15,700.
In comparison to the 2008–09 academic year, grant aid for undergraduates increased by 22%, while federal student loans rose by 9%. The federal Pell Grant program saw a historic 16% increase in the average award, reaching $3,656. However, only about 25% of recipients qualified for the maximum grant of $5,350.
Private student loans accounted for about 8% of all student loans in 2009–10, a significant decrease from 25% in 2006–07. Federal subsidized Stafford loans made up 35% of all student loans, up from 31% in 2006–07. Unsubsidized Stafford loans represented 42% of the total, marking a 12% increase from 2006–07.
Subsidized Stafford loans are available to students demonstrating financial need, with the government covering interest while the student is in school. Unsubsidized Stafford loans, available regardless of financial need, require students to pay all accrued interest during deferment periods. In 2009–10, about 65% of undergraduates did not take out Stafford loans, but those who did often opted for both types, with an average debt of $6,550.
In 2008, Congress increased the maximum annual and lifetime limits for Stafford loans to discourage reliance on private loans, which typically have higher interest rates and fewer protections. Dependent undergraduates can borrow up to $31,000, while independent students can borrow up to $57,500. Graduate students can receive up to $20,500 annually, with a lifetime cap of $138,500, including undergraduate loans.
The Grad PLUS program, introduced in 2006–07, allows graduate students to borrow additional funds, though it requires a credit check. In 2009–10, Grad PLUS loans constituted about 5% of all student loans. Conversely, federal parent loans (PLUS loans) saw a 20% decline in issuance, partly due to stricter credit requirements amid the recession.
The 2009–10 academic year marked a pivotal moment in student financial aid, with significant increases in both loans and grants. However, rising college costs continued to challenge students and families. For more detailed insights, refer to the College Board's full report on Trends in Student Financial Aid 2010.
For further reading, explore more College Board higher education reports.
Mastering Student Loan Debt Through Prepayments
Navigating the financial landscape of higher education can be daunting, especially with the looming specter of student loan debt. With two-thirds of college graduates burdened by loans, the average debt hovers around $25,000, including both principal and accrued interest. However, strategic prepayment can significantly mitigate this financial strain, potentially reducing the repayment period from a decade to just seven years or less.
Paying for College: Evaluating Your Financial Aid Package
Prospective college students who have filled out their applications for federal student aid (the application known as the FAFSA) should now be receiving information about their financial aid packages for the upcoming school year.
Student Loan Debt Collections Come Up Short
The U.S. Department of Education is reporting that its current student loan debt collection contract produced more revenue in the first 15 months of operation than the previous debt collection contract did for the same period of time, but debt collection revenues are still below the department’s projections.
