More families bank on loans to pay for college, study finds

WASHINGTON (AP) _ More full-time students from higher-income families are taking on debt to pay for college, reflecting rising costs and greater loan options. <br/><br/>The share of full-time college students

Tuesday, June 1st 2004, 5:02 pm

By: News On 6

WASHINGTON (AP) _ More full-time students from higher-income families are taking on debt to pay for college, reflecting rising costs and greater loan options.

The share of full-time college students who borrowed to pay for college expenses rose from 30 percent in 1990 to 45 percent in 2000, a federal study released Tuesday shows.

College grants _ which, unlike loans, do not have to be repaid _ also increased over the decade. But the grants were not enough to cover jumps in tuition and fees, which outpaced rises in inflation and family income during the period.

So, to make up the difference, more people relied on loans.

``Students are left with a lot of undergraduate debt, which is the price that's being paid,'' said Susan Choy of MPR Associates, who wrote the financial aid analysis for the National Center for Education Statistics.

The average loan in 2000 ranged from $5,200 for low-income students to $7,400 for high-income students, covering a range of public and private colleges and universities.

At four-year public schools, the average loan was $5,300, up from $3,300 in 1990.

The study focused only on full-time students considered financially dependent on their parents. Full-time students account for about half of four-year public school enrollment.

The greater reliance on loans is tied in part to changes in federal law that raised loan limits and opened unsubsidized federal loans to all students, regardless of financial need.

The share of poor students who borrowed stayed about the same over the decade, almost 50 percent. Yet higher participation came among the upper income range of the ``average family.''

By 2000, about half of students from middle-income families had taken out loans. Among students at the highest end of the income range _ from families making $124,600 per year _ 35 percent took loans, up from 13 percent in 1990. The loans often went toward more expensive schools.

``Families have just decided that this was a good resource,'' Choy said. ``The loans are low-interest. They're easy to get _ any student can get them. They're just deciding to borrow through student loans as opposed to whatever else they would have done, ... possibly even instead of using savings.''

After grants and loans, the net price to students for all college expenses at public four-year colleges remained the same from 1990 to 2000: $8,000. But it took more loans to make that happen, and after-college debt has become a growing concern.

The report found that, on average, students from the higher-income families had enough to pay for college, while poorer ones still paid more than their expected share under federal standards.

The hope is that financial aid will keep rising so ``tuition doesn't outpace us at rates that just make it impossible for people to go to college,'' said Sally Stroup, assistant secretary for postsecondary education.

In 2000, 71 percent of students got some financial aid, up from 54 percent in 1990.

The college aid report is part of The Condition of Education 2004, an annual progress report on student achievement gains, dropout rates, school choice and many other measures.