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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.
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
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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