Undergraduate student aid remains challenging for students from all backgrounds

November 02, 2007

University Park, Pa. -- Penn State's efforts to lessen the financial impact of attaining an undergraduate degree are having a positive effect on thousands of high-achieving students who demonstrate the greatest financial need. However, cost trends in public higher education are necessitating greater burdens of student debt at all income levels.

"When we look at the average debt of graduating students by income, we find that our lower income students, even with the receipt of federal and state grants, still borrow more than the average across all students," said Anna Griswold, Penn State assistant vice president for Undergraduate Education and executive director of student aid, in a report to the University’s Board of Trustees Friday (Nov. 2).

"Middle income students borrow closer to the average loan debt and higher income students borrow about the same as the national average loan debt for graduating bachelor degree students."

Two-thirds of Penn State students who graduated in the 2006-07 academic year, (about 8,500 students) took out federal and/or private loans with an average debt of $26,300 at the time of graduation. Nationwide, the average undergraduate student's loan debt is about $21,100, according to Griswold. 

In 2006-07 a total of 54,657 students, or 74 percent of Penn State undergraduates, received some form of financial assistance, up from 61 percent a decade earlier. Total financial aid funding for undergraduates last year was $656 million. Almost 70 percent came from federal and state student aid, 13 percent came from University sources, and 18 percent came from external sources secured by students, most of which was private education loans.

Of that $656 million in aid, 63 percent was offered in the form of loans, said Griswold, while 36 percent was from grants and scholarships -- via federal, state and University funds -- and 1 percent was from the federal work-study program.

Because Federal Pell and the Pennsylvania Higher Education Assistance Agency (PHEAA) grant program funding for lower and middle income students has remained relatively flat for several years, tuition increases have outpaced grant funding, particularly for those who have the most difficulty paying for college. The grant programs' purchasing power, therefore, has declined, and as a result more students are using education loans. 

Within the last decade students borrowed 28 percent more in federal student loans. Because growth in this loan program is limited by an annual maximum amount that each student is allowed to borrow, this statistic demonstrates a growth in the total number of students who are signing up for these loans, not the total each student borrows.

Students who do not receive enough financial assistance based on household income or from parental support often must turn to private educational loans from banks, which are more expensive because interest accrues while the students are enrolled in college. Griswold said this type of borrowing has grown at a significant rate -- from $6.7 million in 2000-01 to $94.6 million in 2006-07. 

"We have watched trends for the income distribution of our student aid recipients since 2001. Over three broad income bands representing low, middle and higher income ranges, we have experienced a 4 percent decline in students from the lowest income, a 9 percent decline in those from the middle and a 33 percent increase in students from higher income ranges," said Griswold. "We must continue to focus on access and affordability as important areas to be addressed."

The University has made great strides in offering grant and scholarship support to help alleviate student cost burdens. Endowments and annual giving levels reached $30.6 million in 2006-07, and University grants and scholarships contributed an additional $28.4 million. A total of $59 million in University financial aid spending reached 18,690 Penn State undergraduates, about 25 percent of the University's undergraduate enrollment. Of that 25 percent, 10,465 students were assisted through endowed scholarships. This figure represents 14 percent of all undergraduates and more than twice the level assisted a decade earlier, said Griswold.

What is often overlooked when analyzing student aid is the gap of unmet need for students -- costs they pay in addition to tuition and fees, such as room, board, books and additional supplies. For the current academic year, Pennsylvania students will each need an estimated $21,754 to cover those costs, including tuition and fees. For in-state low-income students attending Penn State, 29 percent of their costs to attend Penn State are not covered by federal student loans or grants.

Penn State's Trustee Matching Scholarship Program has reached $40 million, or 40 percent of its goal. 

Last year, according to Griswold, about 4,400 students -- representing the lowest income levels and carrying grade-point averages well over 3.0 -- each received a Trustee Scholarship. At an average value of $1,500 per student, collectively the University's Trustee Scholarship Program awarded more than $6 million in 2006-07. 

The new fundraising campaign for Penn State identifies student aid as a top priority.

(Media Contacts)

Last Updated March 20, 2009