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How Low Income Undergraduates Financed Postsecondary Education:1992-93


Relationship Between Financial Aid and Cost

Ratio of Financial Aid to Total Cost

On average, financial aid covered 42 percent of the student-reported cost of attending for low income undergraduates enrolling full time, full year in 1992-93 (table 12). Sixty-five percent of their aid was in the form of grants, and 26 percent in the form of loans.


The different ratios across institution types reflect in part differences in the cost of attending. Pell grants are normally awarded to financially needy students first, with other grants, loans, and work-study aid added where unmet need still exists. For example, the average ratio of loans to total aid was 11 percent at public less-than-4-year institutions, but 32 percent at public 4-year institutions, where average costs were higher (see table 7).


Overall, the federal government was the source of most financial aid (77 percent, on average). State aid programs added another 10 percent, and institutional aid programs, 9 percent. Differences in these ratios across institution types reflect the availability of various sources of aid at different types of institutions. For example, the relative unavailability of state and institutional aid at private, for-profit institutions increased students reliance on federal aid. On average, 93 percent of the aid to full-time, full-year low income students at private, for-profit institutions came from federal sources, compared with 65 percent to 81 percent at other types of institutions (figure 10).


Institutional aid accounted for an average of 21 percent of all aid to students in private, not-for-profit 4-year institutions who received aid. However, institutional sources were relatively unimportant in other types of institutions: 9 percent in public 4-year institutions and even less elsewhere.

Net Cost and Unmet Need

The net cost to the student is the amount left after subtracting the total amount of financial aid (grants, loans, and work study) from the total student-reported cost. In 1992-93, full-time, full-year low income undergraduates had an average net cost of $7,600, ranging from $6,500 at public 4-year to $9,700 at private, for-profit institutions (figure 11 and table 13). While financial aid does not equalize educational costs across types of institutions, it does have an impact on the relative costs of attending some types of institutions. For example, while the average total cost of attending a public less-than-4-year institution was less than the average total cost of attending a public 4-year institution ($10,100 compared with $11,400, table 7), the average net cost was not less ($7,300 compared with $6,500, table 13).


Table 12 Mean aid ratios for low income undergraduates attending full time, full year, by dependency status and type of institution: 1992-93

                 Total aid/
                 student-                     Federal   State     Institutional
                 reported Grants/   Loans/      aid/      aid/      aid/
                  cost    total aid total aid total aid total aid total aid
________________________________________________________________________________
                                   Total
  Total            42.0   65.1      26.4      76.7      10.0      9.1                                                          
Institution type                                               
 Public less-than-
  4-year           31.1   77.2      11.4      78.5      10.6      4.2                                                                                          
 Public 4-year     46.0   60.0      31.8      75.9      11.0      8.6                                                          
 Private, not-for-profit less-than-
  4-year           45.9   74.4      18.0      81.2      10.9      3.2                                                          
 Private, not-for-profit 4-year
                   51.5   64.8      26.7      64.7      12.0     20.5                                                                        
 Private, for-profit 
                   33.3   61.7      34.0      93.0       3.6      1.9                                           
                                 Dependent
  Total            49.1   69.2      22.9      73.8      11.3     12.5                                                          
Institution type                                               
 Public less-than-4-year 
                   35.8   83.4       7.4      74.9      11.6     13.0                                                                                         
 Public 4-year     48.8   66.6      26.2      75.5      12.3      8.9                                                          
 Private, not-for-profit less-than-4-year 
                   52.8   77.6      16.3      87.3       8.9      1.4                                                          
 Private, not-for-profit 4-year 
                   57.6   69.7      21.8      63.8      11.8     22.0                                                                        
 Private, for-profit  
                   44.6   56.4      35.9      94.0       3.6      1.1                                           
                            Single independent
   Total           42.8   59.9      30.3      74.6       9.5      9.6                     
Institution type                                           
 Public less-than-4-year
                   29.5   74.2      11.5      75.9       8.1      2.6                                                                                          
 Public 4-year     47.0   55.3      35.3      75.5      10.3      8.7                                                          
 Private, not-for-profit                        
 less-than-4-year   -      -         -          -         -        -                                                         
 Private, not-for-profit 4-year  
                   49.1   59.5      30.4      62.2      12.3     22.4                                                                        
 Private, for-profit 
                   35.8   56.7      39.2      91.5       3.4      2.3                                           
                        Independent with dependents
   Total           34.0   66.7      25.9      82.0       9.3      4.9                     
Institution type                                               
 Public less-than-4-year
                   30.0   76.3      13.2      81.6      11.6      1.3                
 Public 4-year     39.6   57.3      34.8      77.4      10.1      8.1                                                          
 Private, not-for-profit
  less-than-4-year 41.3   74.2    17.9        80.7      13.3      2.6                                                         
 Private, not-for-profit 4-year 
                   40.9   62.4    31.8        71.6      12.2     13.6                                                                        
 Private, for-profit
                   28.4   65.9    30.8        93.3       3.6      1.9                                           

- Sample size was too small for a reliable estimate.

NOTE: The ratio total aid/student-reported cost was calculated for all students; the other ratios were calculated for aided students only.

SOURCE: U.S. Department of Education, National Center for Education Statistics, 1992-93 National Postsecondary Student Aid Study (NPSAS:93), Undergraduate Data Analysis System.


Figure 10 Average percentage of total aid received by aided low income undergraduates from federal, state, and institutional sources, by type of institution: 1992-93


Financial aid reduced educational costs for full-time, full-year low income students. Nevertheless, a substantial gap remained between their average net cost of $7,600 and their average EFC of $1,600.

Unmet need, for financial aid purposes, is what remains after subtracting financial aid and the EFC from the budget established by the institution (not student-reported costs). In 1992-93, 94 percent of all full-time, full-year low income students had unmet need (table 13). The overall average unmet need (including students with zero need) was $4,900, and ranged from $3,700 at public 4-year institutions to $8,100 at private, for-profit institutions. Independents with dependents had the greatest unmet need at each type of institution, reflecting their lower EFCs and partially reflecting the maximum award limits in grant and loan programs.


In part, the unmet need also reflects an apparent reluctance of low income students to borrow. Despite their unmet need, full-time, full-year low income students did not always


Figure 11 Average total cost, net cost, and unmet need for low income undergraduates attending full time, full year, by type of institution: 1992-93


borrow as much as they could have through the Stafford loan program (table 14). A full 64 percent of those with $2,000 or more in unmet need did not take out a Stafford loan, and another 15 percent borrowed less than the maximum. Those with the lowest net costs and lowest unmet need (less than $1,000) were more likely than those with net costs or unmet need greater than $2,000 to have borrowed the maximum. This pattern is expected, because borrowing contributed to reducing their need and net cost.

Table 13 Mean net cost, EFC, need, and unmet need for low income undergraduates attending full time, full year, by dependency status and type of institution: 1992-93

                      Expected
                       family    Financial aid need2            Unmet need3
                               _________________________ ______________________                                                                                                         
                  Net  contrib          With need             With unmet need
                  cost1 (EFC)   Average4  Percent Average4 Average Percent Average
_______________________________________________________________________________
                                   Total
   Total         $7,552 $1,607 $9,421   99.4    $9,479  $4,938  94.1    $5,250 
Institution type                                    
 Public less-than-4-year                               
                  7,285  1,067  7,035  100.0     7,035   4,550  98.7     4,610                                               
 Public 4-year    6,530  1,805  8,004   99.2     8,068   3,658  90.4     4,048                                                    
 Private, not-for-profit less-than-4-year
                  7,334    999  9,062  100.0     9,062   4,984  96.8     5,151                                                     
 Private, not-for-profit 4-year   
                  8,608  2,148 13,594   98.8    13,765   5,960  93.5     6,375                                    
 Private, for-profit   
                  9,703  1,181 11,811   99.7    11,844   8,087  98.4     8,222                               
                                 Dependent
   Total          5,835  1,924  9,270   99.3     9,331   4,185  92.3     4,532                                               
Institution type                                    
 Public less-than-4-year
                  4,879  1,319  5,837  100.0     5,837   3,563  97.4     3,659                                               
 Public 4-year   
                  5,381  2,044  7,515   99.1     7,582   3,356  90.4     3,711                               
 Private, not-for-profit 
       less-than-4-year
                  4,399  1,610  7,693  100.0     7,693   3,619  90.9     3,982                                               
 Private, not-for-profit 4-year   
                  6,917  2,140 13,743   99.2    13,855   5,275  92.4     5,707                                    
 Private, for-profit   
                  7,051  1,613 11,308  100.0    11,308   6,939  95.0     7,304                               
                            Single independent
   Total          7,388  2,493  8,834   98.8     8,937   4,407  91.2     4,830                                               
Institution type                                    
 Public less-than-4-year    
                  6,892  2,194  6,304  100.0     6,304   4,175  97.5     4,282                                                     
 Public 4-year    6,392  2,370  7,637   98.9     7,724   3,273  87.0     3,763                                                    
 Private, not-for-profit
       less-than-4-year                                                                   
                    -      -      -      -         -       -      -         -
 Private, not-for-profit 4-year   
                  9,422  3,105 13,207   97.5    13,549   5,994  91.8     6,532 
 Private, for-profit   
                  9,157  2,583 10,995   99.0    11,106   7,126  97.8     7,283                               
                        Independent with dependents
   Tota          l9,473    337 10,201  100.0    10,201   6,269  98.8     6,345                                                     
Institution type                                    
 Public less-than-4-year    
                  8,586    273  8,004  100.0     8,004   5,211 100.0     5,211                                                     
 Public 4-year    8,733    367  9,504  100.0     9,504   4,872  96.5     5,050                               
 Private, not-for-profit
       less-than-4-year
                  9,322    261 10,420  100.0    10,420   6,157 100.0     6,157                                               
 Private, not-for-profit 4-year  
                 11,213    466 13,928  100.0    13,928   7,545  99.2     7,610                                    
 Private, for-profit  
                 10,826    339 12,383  100.0    12,383   8,940  99.7     8,966

- Sample size was too small for a reliable estimate.

1 Attendance-adjusted total cost minus total aid.
2 Attendance-adjusted budget minus EFC.
3 Attendance-adjusted budget minus EFC and aid.
4 Includes all low income undergraduates.

SOURCE: U.S. Department of Education, National Center for Education Statistics, 1992-93 National Postsecondary Student Aid Study (NPSAS:93), Undergraduate Data Analysis System.


Table 14 Percentage distribution of low income undergraduates attending full time, full year according to Stafford Loan status, by selected financial characteristics: 1992-93


                               Stafford loan amount     
                      _____________________________________
                      None            Some          Maximum
___________________________________________________________
                              Total
  Total               55.0           21.3           23.8                                            
Net cost1                                                                       
 Less than $1,000     33.5           29.7           36.8                                  
 $1,000 $1,999        44.4           28.8           26.8                                  
 $2,000 $4,999        47.7           25.3           27.0                                  
 $5,000 $9,999        57.7           20.0           22.4                                  
 $10,000 or more      66.0           15.6           18.5                                  
Unmet need2
 Less than $1,000     26.3           40.9           32.8                                  
 $1,000 $1,999        30.9           35.8           33.3                                  
 $2,000 or more       63.7           15.4           20.9                                       
Aid status                                                                                                    
 Not aided           100.0           (3)            (3)                                                       
 Aided                48.9           24.1           27.0                                            
                                 Dependent
  Total               54.7           23.5           21.9                                            
Net cost1                                                                 
 Less than $1,000     35.8           37.1           27.2                                  
 $1,000 $1,999        46.9           24.2           28.9                                  
 $2,000 $4,999        54.4           24.7           20.9                                  
 $5,000 $9,999        59.9           21.5           18.6                                  
 $10,000 or more      63.2           15.0           21.9                                  
Unmet need2                                              
 Less than $1,000     32.8           40.9           26.3                                  
 $1,000 $1,999        40.7           32.0           27.3                                  
 $2,000 or more       64.0           16.6           19.4                                       
Aid status                                                                                                    
 Not aided           100.0           (3)            (3)                                                       
 Aided                49.1           26.4           24.5                                            
                            Single independent
  Total               52.1           22.7           25.2                                            
Net cost1                                                                       
 Less than $1,000     27.5           29.2           43.2                                  
 $1,000 $1,999        43.8           29.1           27.2                                  
 $2,000 $4,999        40.8           27.6           31.6                                  
 $5,000 $9,999        57.1           20.8           22.1                                  
 $10,000 or more      65.0           17.6           17.4                                  
Unmet need2                                              
 Less than $1,000     25.6           40.9           33.6                                  
 $1,000 $1,999        27.3           41.1           31.6                                  
 $2,000 or more       62.7           14.9           22.3                                       
Aid status                                                                                                    
 Not aided           100.0           (3)            (3)                                                       
 Aided                45.8           25.7           28.5                                            

Table 14 Percentage distribution of low income undergraduates attending full time, full year according to Stafford Loan status, by selected financial characteristics: 1992-93 Continued

                               Stafford loan amount     
                      _____________________________________
                      None            Some          Maximum
___________________________________________________________
                        Independent with dependents
  Total               58.3           17.5           24.3 
Net cost1                                                
 Less than $1,000     39.0           12.6           48.4 
 $1,000 $1,999        37.7           43.1           19.2 
 $2,000 $4,999        45.6           22.8           31.6 
 $5,000 $9,999        56.2           17.4           26.4 
 $10,000 or more      67.7           14.5           17.9 
Unmet need2                               
 Less than $1,000      5.0           40.8           54.2 
 $1,000 $1,999        17.5           33.1           49.4 
 $2,000 or more       64.3           15.0           20.7 
Aid status                                               
 Not aided           100.0           (3)            (3)  
 Aided                52.0           20.1           27.9 

1 Attendance-adjusted total cost minus total aid.
2 Attendance-adjusted budget minus EFC and aid.
3 Not applicable.

NOTE: Percentages may not sum to 100 due to rounding.

SOURCE: U.S. Department of Education, National Center for Education Statistics, 1992-93 National Postsecondary Student Aid Study (NPSAS:93), Undergraduate Data Analysis System.



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