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Increase in Unsubsidized Stafford Loans Fuels Growth in Federal Borrowing

April 1, 2008

More undergraduate students are borrowing to pay for their education than seen a decade ago, with increased proportions taking out unsubsidized Stafford loans. The percentage of students borrowing unsubsidized Stafford loans more than doubled, from 10 percent to 21 percent, between 1995-96 and 2003-04, according to a new report by the National Center for Education Statistics.  This rise in unsubsidized Stafford loans contributed to the overall increase in the proportion of undergraduates taking out federal loans, growing from 25 percent to 33 percent over the same time period.  More than 70 percent of undergraduates enrolled in private, for-profit institutions took out a federal loan in 2003-04, the highest percentage of any institutional sector.  In comparison, 53 percent of undergraduate students attending private, non-profit, four-year institutions, 42 percent at public four-year institutions, and 11 percent at public two-year institutions borrowed from the federal government.

Along with the increasing proportion of students taking out federal loans, the dollar amount borrowed is also rising. In 1995-96, 57 percent of dependent students and 13 percent of independent students borrowed the maximum amount in unsubsidized and subsidized federal loans allowed under current federal limits.  By 2003-04, the number borrowing the maximum had jumped to 73 percent for dependent students and 36 percent for independent students. 

To view the full report, visit the NCES website.  Additional resources related to financial aid can be found on the research pages on the NACUBO Web site.