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PEDAR: Executive Summary  A Decade of Undergraduate Student Aid: 1989-90 to 1999-2000
Key Definitions and Data Issues
Changes in Financial Aid by Type of Institution
Public 2-Year Institutions
Public 4-Year Institutions
Private Not-for-Profit 4-Year Institution
Private for-Profit Less-Than-4-Year Instiutions
Research Methodology
Full Report (PDF)
Executive Summary (PDF)

During the 1990s, tuition increased faster than inflation and median household income (U.S. General Accounting Office 1996, 1998). Financial aid also increased, particularly in the form of federal loans. The 1992 Reauthorization of the Higher Education Act (HEA-92) was a defining moment in the history of federal financial aid because it established the direction in which the federal government would support postsecondary education in subsequent years.3 As a result of its passage, many middle-income students who were previously ineligible for need-based student aid were able to receive it, primarily in the form of subsidized student loans. HEA-92 also increased the amounts students were permitted to borrow and for the first time allowed dependent students to take out federally guaranteed unsubsidized loans.

NPSAS data from 1989–90 and 1992–93 reflect the federal financial aid policies in effect prior to HEA-92, while the 1995–96 and 1999–2000 data reflect the changes introduced by that legislation. Between 1989–90 and 1999–2000, the average net tuition (tuition minus grant aid)4 increased at public 2-year, public 4-year, and private not-for-profit 4-year institutions, indicating that among those types of institutions, increases in grant aid did not keep pace with increases in tuition over time. As the decade progressed, the proportion of full-time5 undergraduates who received any type of financial aid (grants, loans, work-study, or other) increased among all of the institutional sectors included in this study, from an overall average of 60 percent to 74 percent between 1989–90 and 1999–2000 (figure A). Among those who received aid, the percentage of the price of attendance that was covered by any type of aid also increased over time, from 47 percent to 54 percent. Increases between 1989–90 and 1999–2000 were seen in the percentage of students who received at least one of the two major types of aid: grants (51 percent to 60 percent) and loans (36 percent to 47 percent) (figure B).

Single parents, however, were one group of students for whom financial aid declined. While as many as 94 percent of single parents who were enrolled full time received some form of financial aid in 1989–90, the proportion had dropped to 79 percent by 1999–20006 (table 3). This may have reflected several changes in the characteristics of single parents enrolled full time in postsecondary education. Between 1989–90 and 1999–2000, the average expected family contribution (EFC) among single parents had increased from $800 to $1,300 even though it had decreased among all independent students with incomes at or below the median (table 2). In 1989–90, about one-half (48 percent) of all single parents worked while they were enrolled full time; in 1999–2000 this proportion had increased to about three-fourths (77 percent).7 While 87 percent of single parents were females in 1989–90, this proportion had dropped to 76 percent in 1999–2000. The socioeconomic backgrounds of single parents also appear to have changed. In 1989–90 and 1995–96, about 35 to 38 percent had a parent with at least some postsecondary education; in 1999–2000 about one-half (51 percent) of all single parents came from families with one or more parents who had some postsecondary education.8 In addition, the proportion of single parents receiving public assistance while enrolled full time decreased from 34 percent in 1995–96 to 9 percent in 1999–2000. Compared to the earlier years, single parents enrolled full time at the end of the decade were less likely to be receiving public assistance, more likely to have parents with some postsecondary education, and more likely to be working while they were enrolled. These changes may have been related to a reduced eligibility for need-based financial aid among single parents.

Among the different types of financial aid that are available to postsecondary students, the growth in federal unsubsidized loans has been most prominent.9 After the restriction on dependent students was lifted by HEA-92, the overall rate at which full-time undergraduates borrowed unsubsidized loans increased from 3 percent to 23 percent between 1989–90 and 1999–2000.10 However, the inclusion of dependent students was not the sole driving force behind this increase. Independent undergraduates also were more likely to borrow federal unsubsidized loans in 1999–2000 than in 1989–90 (35 percent vs.11 percent). In addition to the increase in unsubsidized loans, the average annual total loan amount from all sources combined (both subsidized and unsubsidized loans from federal, state, institutional, and private agencies) also increased during this time for both independent and dependent loan recipients ($4,100 to $6,200) (figure B).


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