7
As shown in Figure 2, student loans were the predominant form of aid for middle-income
students as well as students in the upper-income quintiles at
public universities. In some cases families may be borrowing
to help meet their expected family contribution. While average
loan sizes for students at private institutions equaled or
exceeded the amounts borrowed by public university students,
students across all quintiles at private institutions still received
more gift aid than loans. Independent students followed the
same pattern as dependents at public universities; gift aid was predominant until the third quintile and
then was surpassed by loans. At private institutions, however, loan amounts exceeded gift aid by the third
income quintile. Student loans played a very small role at community colleges and only for higher-income
students. This could be due, in part, to the reluctance of these institutions to make loans available
for their students. Some institutions may also be concerned that if their overall student default rate
exceeds the limit set by the U.S. Department of Education, they would lose institutional eligibility to
participate in the Federal Pell Grant Program as well as the Federal student loan programs.
Of all the types of aid, work-study appeared to have the least important role in funding college
costs. Further, work-study may be awarded to students but not used if students elect to find better-paying
jobs off campus.
Sources of Aid
This sections looks at the sources of student aid and the relative importance of each source.
Given the amount of need low-income students have, it
takes a variety of types and sources of aid to complete a
financial aid package sufficient to allow students to
enroll. As noted previously, sources of aid include the
Federal Government, the State Government, the
institution, and private sources which may include local
or community scholarships or employer benefits. Across
all school types federal aid was the largest source of aid.
It should be noted, however, that a significant portion of
those funds come from private lending institutions which
participate in the federal Stafford loan programs.
Appendix 4 shows the sources of aid for dependent and independent students by both school type
and income quintile and includes the percentage of students with need who received aid from a particular
source, the average amount from that
source, and the average amount across
all students with need. The first
average shows the typical amount
students received and the second is a
measure which shows the relative
importance of the source to all students
with need. As expected, the most critical sources of aid for the majority of first and second quintile
students were state and federal government programs. Federal aid continued to be important across all
income quintiles at four-year institutions due to Federal loans. Private four-year institutions were also
heavily engaged in funding their students; they provided institutional aid to approximately 90 percent of
lower- and middle-income dependent students and more than 70 percent of first quintile independent
students in amounts which equaled or exceeded – for the most part - that provided by the state. At public
universities, nearly 50 percent of low-income dependent students received institutional aid; average
institutional aid amounts across all students with need were larger than that provided by the state for
fourth and fifth quintile students. At community colleges, state and federal funds were basically the only
Student loans were the
predominant form of aid for
middle-income students at public
universities.
The largest source of aid at all school
types was federal aid; at community
colleges it was in the form of Federal
Pell grants and at four-year schools
federal loans become key. At private
schools the second largest source was
institutional aid.
Public 2-Year Public 4-Year Private All
Federal 67.9 64.9 44.0 58.7
State 28.2 24.7 18.4 23.0
Institutional 2.5 7.3 34.5 15.2
Private 1.4 3.1 3.1 3.1
Percentage of Student Aid by Source
