Financial needs and loans soar - for college students

USA Today (Society for the Advancement of Education), April, 1993

Borrowing to pay for college will continue to increase, and higher education institutions will be forced to use a larger portion of their budgets on aid as more students require financial assistance to pay for post-secondary studies, according to a report issued by the American Council on Education (ACE).

The number of students receiving financial assistance increased significantly between 1970-71 and the present, as did reliance on loans. Borrowing under the guaranteed loan program more than tripled, from $4,300,000,000 in 1970-71 to $14,000,000,000 in 1991. Grants more than doubled over the same period, from $5,-700,000,000 to $13,000,000,000.

"Twenty years ago, more student aid was given in the form of grants than in loans, but today the reverse is true," points out Charles J. Andersen, senior staff associate in ACE's Division of Policy Analysis and Research. The 1992 amendments to the Higher Education Act raised annual and cumulative loan limits for students borrowing under Federal guaranteed loan programs.

This greater reliance on borrowing, the report maintains, could serve as a barrier to minority students and those from low-income families, who often are reluctant to take out loans. In coming years, borrowing is expected to grow in terms of both the size of loans and the number of students seeking them.

Meanwhile, the amount of institutional funds needed for student aid is expected to continue to rise more rapidly than average tuition and fee charges. At public institutions, this trend is likely to result in higher tuition and fees to make up for declining state and local appropriations and to provide grants to disadvantaged students.

At independent colleges and universities, officials likely will continue to allocate unrestricted funds to scholarships for needy students to maintain diversity among their populations. In an effort to stretch aid dollars, independent institutions may choose to provide aid to students who can pay a portion of their tuition, rather than providing full support to a smaller number of more needy individuals. Such a strategy would limit access to private higher education for low-income students.