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Student Borrowing Increases and Graduation Taking Longer

January 16, 2003

Undergraduate students are both borrowing at high levels and taking longer than four years to graduate, according to two reports from the National Center for Education Statistics (NCES). One report highlights student borrowing characteristics, and the other presents a longitudinal study of students who began school during the 1995–96 academic year.

According to the report “Characteristics of Undergraduate Borrowers: 1999:2000,” discussions targeting federal loan limits in the upcoming Higher Education Act (HEA) reauthorization influenced the selection of data elements for the study. The authors examined two student groups: those who borrowed from all sources and Stafford loan borrowers. Each group was compared based on general profile information, persistence, and types and sources of financial aid.

Of the 29 percent of undergraduate students that borrowed money to pay for school in the 1999–00 academic year, 21 percent were high borrowers (those borrowing more than $6625). High borrowers tended to be independent, 24 years of age or older, enrolled at a four-year institution, and engaged in full-time study. They also had a moderate to high risk of not persisting in an educational program to completion. These individuals may need more loans to fully cover the costs of school, as they were more likely to attend independent, not-for-profit four-year institutions and schools with the highest tuitions. High borrowers received $9680 of loan aid, on average, and 98 percent of this group received Stafford loans.

In comparison, students who borrow the Stafford maximum tend to be young, single, engaged in full-time study, and financially dependent, though many work part-time. Across all types of institutions, maximum Stafford borrowers have a lower risk of not persisting than the less-than-maximum groups. In the 1999–00 period, 80 percent of maximum borrowers received subsidized loans, and 59 percent received unsubsidized loans; they were also more likely to receive private loans and grant aid than students who did not borrow the maximum amount.

The second NCES report, “Descriptive Summary of 1995-96 Beginning Postsecondary Students: Six Years Later,” is a longitudinal study, detailing graduation, transfer, and dropout rates. The study commenced in 1996 with a sample composed of students beginning postsecondary education for the first time during the 1995–96 academic year. Forty-six percent of that sample was enrolled at public two-year institutions, 26 percent at public four-year institutions, 15 percent at private, not-for-profit four-year institutions, 10 percent at private for-profit institutions, and 3 percent at all other types of schools.

According to the report, the differences in completion rates at the various types of schools reflect differing degree goals, academic preparation, enrollment patterns, and student demographics. Thus, only half of the students starting at public two-year colleges intended to earn an associate’s degree, and a fourth planned to transfer to a four-year institution and seek a bachelor’s degree.

At the completion of the study, 32 percent of the sample had transferred to another institution, while 11 percent had enrolled at more than one institution at some point. Of the students that began at a public two-year college, about one-fourth transferred to a four-year institution, and of the students that stayed at their original school, 31 percent graduated within six years. Students at four-year institutions fared better—55 percent of those desiring to obtain a bachelor’s degree graduated within six years. Those who were enrolled continuously on a full-time basis or who never transferred had graduation rates of 65 percent. However, the percentage of students completing their degree in four years was significantly lower—only 37 percent of students that began at a four-year institution finished in four years.

To access a full version of either report, visit the NCES Web site.


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