Financial aid played a major role in the financing of undergraduate postsecondary education in 1999–2000. More than one-half of all undergraduates received some type of financial aid. More undergraduates received grants than loans to help pay for their education, but the average grant amount was less than the average amount borrowed. The average amounts of financial aid, however, varied considerably by the type of institution and price of attendance, as well as the attendance status and family income of the student. At public 2-year institutions, where students had a lower average price of attendance, most of the aided students did not take out student loans. At private not-for-profit 4-year institutions, where students had a higher average price of attendance, about one-half of undergraduates took out student loans, but most of them also received a substantial amount of grant aid.

More undergraduates received grants from the federal financial aid programs than from any other single source, but states, postsecondary institutions, and private organizations were also important sources of grant aid to undergraduates. Low-income dependent undergraduates were more likely to receive federal grants; middle-income dependent undergraduates were more likely to receive grants from state and institutional sources than from federal sources. High-income dependent undergraduates were more likely to receive grants from state, institutional, and private sources than from federal sources. Nearly all of the undergraduates who borrowed, however, took out loans through the federal student loan programs. On average, undergraduates borrowed about $5,100 to pay for educational expenses in 1999–2000. The cumulative federal loan amounts that undergraduates had ever borrowed were about twice this amount. Two-fifths of all undergraduates enrolled in 1999–2000 had borrowed through the federal student loan programs at some time, and their average cumulative federal loan was almost $10,000. Three-fifths of all the graduating seniors at 4-year institutions in 1999–2000 had borrowed through the federal student loan programs at some time, and their average cumulative federal loan was almost $17,000.