Federal Student Aid has posted an update to their website today (thanks to Mark Kantrowitz for the heads-up). The total disbursements for Stafford, Parent PLUS and GradPLUS loans for the 2009-10 academic year came to almost $96 billion [this figure excludes Perkins Loans which are typically about $1 billion]. When comparing them to the 2008-09 data now up on the FSA Data Center site, this amounts to a 12.5% increase (or almost $11 billion). Please note that these numbers are updated frequently, which might explain why $75 billion was the number announced for 2008-09 last year by the Dept. of Education and is close to the $77 billion listed in the FSA Strategic Plan vs. the $85.1 billion that SLA calculated for 2008-09 on the FSA site this evening.
A few highlights:
- Given that federal loans rose 20% for the first half of this year, the year-end numbers seem to indicate a slowing of the growth rate for these loans.
- GradPLUS loans were the fastest growing in terms of recipients (up 28.6%) and loan disbursements (up 23.9%). The average GradPLUS loan in 2009-10 was $17,590, a decrease of 3.6% from 2008-09. The GradPLUS program has grown from $0 to $5.4 billion since it was first introduced in 2006.
- Across the board, the average loan per recipient declined while the number of recipients grew by more than 15% for each loan type.
- The number of parent borrowers grew by over 15% to just over 762,000 while their total loan volume grew to $8.75 billion, a 14% increase. I have been hearing anecdotes that Parent PLUS loans will see a significant increase this year (Kim Clark of US News highlights some of the dangers of these loans).
- Wondering how the economy is having an impact on the increased number of students and families exhibiting need? Almost 9 million students received a subsidized Stafford loan, a need-based loan, representing a 20% increase. For comparison purposes, 8.2 million students received a Pell Grant in 2009-10, a 30% increase on a year-over-year basis.
Here are the figures for the past two years:
2009-10 | |||
Loan Type | Recipients | Disbursements | Loan $/Recipient |
Stafford-Sub | 8,976,939 | $36,868,530,990 | $4,107 |
Stafford-Unsub. | 8,606,067 | $44,820,019,110 | $5,208 |
Parent PLUS | 762,577 | $8,751,458,247 | $11,476 |
GradPLUS | 304,634 | $5,358,647,841 | $17,590 |
TOTALS | $95,798,656,188 | ||
2008-09 | |||
Loan Type | Recipients | Disbursements | Loan $/Recipient |
Stafford-Sub | 7,464,444 | $32,967,359,169 | $4,417 |
Stafford-Unsub. | 6,996,015 | $40,178,604,962 | $5,743 |
Parent PLUS | 661,525 | $7,674,704,713 | $11,602 |
GradPLUS | 236,875 | $4,324,361,926 | $18,256 |
$85,145,030,770 | |||
Year-over-Year Change | |||
Loan Type | Recipients | Disbursements | Loan $/Recipient |
Stafford-Sub | 20.3% | 11.8% | -7.0% |
Stafford-Unsub. | 23.0% | 11.6% | -9.3% |
Parent PLUS | 15.3% | 14.0% | -1.1% |
GradPLUS | 28.6% | 23.9% | -3.6% |
TOTALS | 12.5% |
How much of total tuition receipts is this amount?
Posted by: Walter Sobchak | October 27, 2010 at 07:48 AM
It is not just anecdotal evidence about the plus loan. The Plus loan administered by Direct Loans is approving at a substantially higher rate than the old FFELP program: Here are some Stats on that and another thanks to Mark Kantrowitz: http://j.mp/ceOwOq
Posted by: Ken | October 27, 2010 at 09:06 AM
Unless we are going to switch to a scandanavian model where parents are completely out of the picture, the USA's financial aid model is still based on the parents as primary responsible party for funding their children's postsecondary education. Because of lender subsidy caps in the federal program, lenders for decades found student loans more profitable than parent loans.) (The default rates on parent loans have always been much lower, though, than for Staffords.) Discussion about the "SAP gap" at lender events made it clear that lenders were strongly downplaying the benefits of parent PLUS loans in interactions both with college financial aid administrators and with families. By the time the "SAP gap" was finally fixed, the anti-PLUS bias in the financial aid process was already cast, and the era of new FFEL originations was nearing its end anyway. Financial aid administrators also found anecdotally that parents from "the me generation" were much less eager to borrower for their kids' postsecondary education than the HEA presumes.
Now that lenders are not making new federal loans, there should be an aggressive push by financial aid administrators as well as federal officials to get most parents into borrowing from the federal loan program. In addition, there should be a review of the suspicious shift of America's student population from dependent to independent status -- which generally allows the colleges to access a lot more federal student aid. The Kantrowitz figures, as detailed in his original paper, do not actually indicate approval rates and non-approval rates but are imputed from somewhat-unrelated statistics and likely simply reflect differences in the composition and operation of the DL and FFEL programs that existed during 2007-08.
The fake stories labeling federal PLUS loans as "sub-prime" instruments are part of the "fear, uncertainty and doubt" strategy developed by those who want to replace the USA's whole postsecondary education system with a free education for all model, because they don't feel they received a good education but still have to repay their student loans. A strong consumer program should be set up to address individual troubles, and then these individuals should move out of the policy sandbox because their issues do not represent "a generation adrift" or "a national trend." They are simply individual consumer issues which need to be addressed as such.
Posted by: Craigie | October 30, 2010 at 06:21 AM