Trends in Postsecondary Education - … But Students Get Loans

A majority of 1992-93 bachelor's degree recipients (56.3%) resorted to borrowing at some point in their undergraduate or graduate years to finance their education. The graphic shows their borrowing status: 42% borrowed as undergraduates only, 6.5% borrowed only as graduate students, and 7.7% borrowed at both points in their careers.

In 1980, grants accounted for about 55% of federal aid to students and loans for about 42%. By 2000, the figures were reversed, with loans accounting for 58% and grants for 40%. According to The College Board, the amount of federal student loans more than doubled between 1989-90 and 1995-96, from $13 billion to $28 billion. This represents a huge increase in student indebtedness.

Money Borrowed for Undergraduate Education by 1992-1993 Bachelor's Degree Recipients

Item	Average amount
Total	15,612
Bachelor's degree-granting institution Public, 4-year	13,623
Private, not-for-profit, 4-year	19,528
Other	13,266

The table shows the average dollar amount owed by 1992-93 bachelor's degree recipients by type of institution. The amount borrowed keeps going up. Today, students who borrow to finance their education can expect to leave a 4-year institution with an average debt of $15,000 to $20,000. A student who pursues an advanced degree can expect to be paying on that loan for up to 20 years. A new doctor or psychiatrist will begin practicing with an average debt of $90,745. Defaulting on student loans became a major scandal when the default rate peaked at 22.4% in 1990.

Federal loans are no longer going to those who need the money most. Legislation enacted in 1992 made it easier for middle-class families to qualify for federal loans by eliminating the consideration of family assets such as home equity. More federal loan money flowed to middle-income students. And Newsweek reports that lately, schools have been directing more aid to smart kids, "whether they need it or not," to make their rankings look better.

There is plenty of money out there for the borrowing. Octameron Associates, college financial aid advisors, reports: "Billions in low-interest, subsidized federal student loan money goes unused each year simply because students think they are ineligible, don't bother to go through the paper work hassle, or just don't know about the program." But a Congressional advisory committee warned in 2001 that if loan money continues to go to middle-income students, the financial needs of many among the increasing college-going population will have to go unmet.

Is college affordable today? One answer: People continue to enroll in college. Apparently they think the product is worth the price. It may take longer to finish a degree because students have to work their way through, but Americans are graduating in record numbers.

D. Bruce Johnstone, Professor of Higher and Comparative Education, University at Buffalo, has this to say about affordability: "In spite of tuition increases, it can still be said that any student who is of traditional college-age, who is at all academically able, and who is willing to borrow and/or work part time can probably get into several colleges or universities regardless of the financial status of his or her family." Whether that student can stay the course and bear the burden of debt is up to the student to decide. In the next panel, we look at a special case: Medical School.

There are barriers other than money to attaining a college degree. They include lack of academic preparation, race, and personal barriers, such as the fears that go along with being the first in one's family to attend college. These are issues that educators are well aware of and are seeking ways to address.

Source: Chart and table: Statistical Abstract of the United States: 2001. Table 277. U.S. Center for Education Statistics. Debt Burden Four Years After College. NCES 200-188 (August 2000). "Trends in Undergraduate Borrowing: Federal Student Loans in 1989-90, 1992-93, and 1995-96." Education Statistics Quarterly. (Summer 2000). Online. Available: http://nces.ed.gov. March 12, 2002. Bell, Julie Davis, and Demaree K. Michelau. "Making College Affordable." State Legislatures. (October/November 2001), p. 19. Hartigan, Rachel, and Ben Wildavsky. "A School's Free-Lunch Program." U.S. News & World Report. 12 February 2001, p. 50. "Octameron Associates. www.octameron.com. Johnstone, D. Bruce. "Higher Education and Those 'Out of Control' Costs." NCES 2002-158. Study of College Costs and Prices, 1988-89 to 1997-98, Volume 2: Commissioned Papers. Online. Available: http://nces.ed.gov/. March 13, 2002. "Degree Attainment Rates at Colleges and Universities." Online. Available: http://www.gseis.ucla.edu/heri/press_darcu.htm. March 20, 2002. "Colleges Strive to Bring Aid to Poorer Families." USA Today, 20 March 2002, p.6D. Kantrowitz, Barbara, "How to Win the College Game." Newsweek, 8 April 2002, p. 46.