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PEDAR: Executive Summary  How Families of Low- and Middle Income Undergraduates Pay For College: Full-Time Dependent Students in 1999-2000
Financial Need
Financial Aid
Types and Amounts of Aid
Relative Importance of Grants and Loans
Sources of Aid
Remaining (Unmet) Need
After Financial Aid
Help From Parents
Paying for College: A Summary
Research Methodology
Full Report (PDF)
Executive Summary (PDF)
 Paying for College

Paying for college has always been considered primarily a family responsibility, to be met to the extent possible through some combination of income, savings, and borrowing. However, a variety of government, institutional, and private programs exist to help students who lack the necessary financial resources or whose academic or other achievements qualify them for scholarships. This aid may take the form of grants or scholarships, which do not have to be repaid; loans, which must be repaid; or work-study, which provides aid in exchange for work, usually in the form of campus-based employment. In 1999–2000, more than half (55 percent) of all undergraduates received some type of financial aid to help pay for college (Berkner et al. 2002).

Originally, the goal of federal student aid policy was to increase college access for students from low-income families, but as tuition increased, this objective was expanded to make college more affordable for students from middle-income families as well (Spencer 1999). Federal grant aid is targeted to low-income students, while subsidized loans are available to both low- and middle-income students. In the 1992 Amendments to the Higher Education Act of 1965, Congress made it easier for students to qualify for financial aid, raised loan limits, and made unsubsidized loans available to students regardless of need. In the past decade, the federal government has increasingly relied on the tax code as a tool to assist students. The Taxpayer Relief Act of 1997 and the 2001 Economic Growth and Tax Relief Reconciliation Act include a number of provisions designed to help individuals and families to save for, repay, or meet current higher education expenses by reducing their federal income tax liability. Some of these benefits phase out as income increases, but they are broadly available (U.S. General Accounting Office 2002). In addition to federal aid, students may have access to state- or institution-sponsored aid (Berkner et al. 2002). Income restrictions for these programs vary. Finally, most states offer prepaid tuition or college savings plans to help students at all income levels pay for college (The College Board 2003).

As debates continue over who should get what kinds of aid and how much, it is important to know what students and their families are actually paying for college, where the money is coming from, and how students? methods of paying vary with their family income and the type of institution they attend. To inform these debates, this report uses data from the 1999–2000 National Postsecondary Student Aid Study (NPSAS:2000) to describe how the families of dependent students1 used financial aid and their own resources to pay for college, emphasizing variation by family income and type of institution attended. The study covers students who were dependent undergraduates attending a public 2-year college or a public or private not-for-profit 4-year institution full time, full year during the 1999–2000 academic year.2 Approximately one-quarter of all undergraduates met the criteria for inclusion in the analysis.3

The tables in this report show many aspects of student financing at five types of institutions, and within each type, at five levels of family income. The categories of institutions were chosen to group institutions that are similar in terms of mission, characteristics of students, and, especially, levels of price and availability of institutionally funded student aid. They include public 2-year; public 4-year nondoctoral; public 4-year doctoral; private not-for-profit 4-year nondoctoral (except liberal arts); and private not-for-profit 4-year doctoral and liberal arts institutions.4 The family income levels were chosen to correspond roughly to levels of financial need and eligibility for certain types of federal grants and loans.

Low-income students have a greater need for financial aid than middle-income students within each type of institution, and students at both income levels need more financial aid at higher priced institutions than at lower priced ones. By reporting data by income within type of institution, the tables show both of these patterns. Differences between public and private not-for-profit institutions reflect their different prices of attending. Although data are presented separately in the tables for the five income groups, the discussion focuses on students from low-income (less than $30,000) or middle-income ($45,000–$74,999) families.

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