Policy

National Student Financial Aid Profile Report Finds Dramatic Increase in Need

• By Dian Schaffhauser
• 07/28/15

The number of students applying for federal financial aid grew by 62 percent over the course of five years, from 19 million in 2007-2008 to 31 million in 2011-2012. As Congress debates reauthorization of the Higher Education Act, a national organization of financial aid professionals has issued its latest "National Student Aid Profile" to help policymakers understand what they're making decisions about.

The annual primer published by the National Association of Student Financial Aid Administrators (NASFAA) provides overviews of six 2015 federal programs for delivering financial aid to American college students:

• Federal Pell Grant;
• Federal Supplemental Educational Opportunity Grant (FSEOG);
• Federal Work-Study;
• Federal Perkins Loan;
• Federal Direct Subsidized and Unsubsidized Loan; and
• Direct PLUS Loan.

In terms of people served, the largest of these is the first program on the list. Federal Pell grants are available to low-income undergraduates who haven't yet earned a bachelor's degree. In 2012-2013 9.4 million recipients received Pell grants. Almost three-quarters had family income of less than $30,000. In 2015-2016, the maximum award will be $5,775; the minimum award will be $577. The volume of awards issued in 2013-2014 was $35 billion.

The largest award by average size fell into the Direct PLUS Loan program. These loans go to parents of dependent undergraduates or directly to graduate and professional students. In 2013-2014, the average loan was $14,174 for parent borrowers and $21,849 for graduate and professional students. The loans are provided regardless of income, but borrowers still have to pass a credit check or find a co-signer. The total of loans issued under Direct PLUS was $17.5 billion in 2013-2014.

The form of financial aid most at risk right now, the report noted, is the Perkins loan program, which will expire if Congress doesn't enact new legislation by September 30, 2015. Under this program, students receive loans directly from their college or university, and they're repaid with an interest rate of five percent per year, which begins to accrue after the student has graduated. President Obama has proposed a new form for the Perkins loan to increase the number of schools that participate and to make the loans unsubsidized with market-based interest rates.

Overall, however, given the fiscal environment of austerity and sequestration, the report noted, the 2015-2016 federal student aid programs "fared relatively well in the budget process, with some programs even receiving modest increases." For example, the Federal Work-Study Program spending package saw a $15 million increase, a "small but welcome boost."

"Strong federal student aid programs are more important than ever in ensuring students have the funding they need to make it to and through college," said NASFAA President Justin Draeger in a prepared statement. "With debate heating up on reauthorization of the Higher Education Act, NASFAA's National Student Aid Profile is a reference policymakers and the public can rely on to familiarize themselves with the purpose and utilization of student aid programs as we work together to provide students access to college."