Student Aid: Facts, Statistics, and Trends

The cost of higher education continues to rise, making student aid a critical resource for many aspiring undergraduates and graduates. The overwhelming majority of college students utilize federal and non-federal financial aid to help pay for their education. This article delves into the world of student aid, exploring various types of financial assistance, eligibility, demographic trends, and the evolving landscape of student funding.

Types of Financial Aid

Students from all backgrounds and situations can access financial aid to help them pay for school. A variety of financial aid options are available to students, each with its own characteristics and eligibility requirements. These include:

Scholarships: Need-based and merit-based scholarships are financial aid options awarded by the government, public organizations, private organizations, and individual academic institutions. Scholarships do not need to be repaid and can be used to cover students’ tuition and fees, books, and other costs associated with attending school.
Federal Grants: Federal grants are a form of financial aid provided by the federal government that typically do not need to be repaid. These grants can be used to pay for four-year colleges and universities, two-year institutions otherwise known as community colleges, or accredited career programs. Examples of federal grants include Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Teacher Education Assistance for College and Higher Education (TEACH) Grants, and Iraq and Afghanistan Service Grants. A student must demonstrate financial need to qualify for a Federal Pell Grant. The largest federal grant program available to undergraduate students is the Federal Pell Grant program.
State, Local, and Institutional Grants: Grants are also awarded by state governments, local governments, and individual institutions. Just like federal grants, these grants typically do not need to be repaid.
Federal Work-Study: Federal Work-Study (FWS) is a government program that allows college students to work part time, on or off campus, while enrolled in school. Through FWS, undergraduate or graduate students earn wages that they may use at their discretion.
Federal Student Loans: Unlike other forms of financial aid, federal student loans consist of borrowed money and must be repaid within a certain period, often with interest. Some federal loan programs are available to all students, and some are based on financial need. Student loans include only loans for which the student is the designated borrower.
Private Student Loans: Like federal student loans, private student loans must also be repaid with interest. They differ from federal student loans in that they often require a co-signer or established credit record and do not offer loan forgiveness plans.

Grants and scholarships and loans are the major forms of federal financial aid for first-time, full-time degree/certificate-seeking undergraduate students. These are distinct forms of financial aid. Loans typically have to be repaid, whereas grants do not.

Financial Aid Statistics and Trends

Overall Trends

Total student aid has increased exponentially over the past 50 years. Between 1970 and 2023, total financial aid, including non-federal student loans, rose by more than 900%, according to College Board. Total aid peaked during the 2010-2011 academic year at $341.7 billion. After adjusting for inflation, student aid during the 2022-2023 academic year was $268.3 billion, the lowest it had been in 10 years. The average amount of aid awarded to students has also increased over time. Between 2003 and 2023, the total average aid for undergraduate students rose by 25%, per College Board. As of the 2022-2023 academic year, 85% of full-time, first-year undergraduate students were awarded some type of financial aid. The majority of students awarded financial aid received federal grants.

Grants and Scholarships

The average federal grant award for undergraduate students has more than doubled to $10,146 in 2022-2023 from $4,335 in 2001. Student aid estimates for 2023-2024 show that average federal grant aid has increased to $11,610. According to the National Center of Education Statistics (NCES), during the 2021-2022 academic year: 56% of first-time, full-time undergraduate students who were awarded aid were awarded federal grants. The average federal grant aid awarded was $4,983. As of 2022-2023, undergraduate students who received Pell Grants accounted for 53% of students who were awarded grant aid during the year. The average Pell Grant aid awarded during that period was $5,240. In 2021-2022, 33% of students awarded aid were offered state/local grants. During the same year, 54% of students awarded aid were offered institutional grants. The average amount of state/local grant aid awarded was $4,116. The average amount of institutional grant aid awarded was $12,500.

Federal Work-Study

During the 2024-2025 academic year, $1.2 billion in FWS funds was allocated to participating institutions. In 2024-2025, 2,951 institutions nationwide participated in the FWS program. In 2022, 455,015 students were awarded FWS funds. On average, students earned $2,083 in FWS funds that year. In 2022, just over 455,000 students were awarded Federal Work-Study funds.

Student Loans

During the 2022-2023 academic year: 47% of students awarded aid were awarded federal student loans. The average federal student loan amount awarded was $5,844. Thirty-eight percent of first-time, full-time degree/certificate-seeking undergraduate students overall were awarded loan aid in 2020-21, a 12 percentage point decrease from 2010-11 (50 percent). At 4-year degree-granting postsecondary institutions overall, the percentage of first-time, full-time degree/certificate-seeking undergraduate students awarded financial aid increased from 85 to 87 percent between 2010-11 and 2020-21. However, changes differed by control of institution (i.e., public, private nonprofit, and private for-profit). At 2-year degree-granting postsecondary institutions overall, the percentage of first-time, full-time degree/certificate-seeking undergraduate students awarded financial aid increased from 77 to 82 percent between 2010-11 and 2020-21. At 4-year institutions, the percentage of undergraduates who were awarded loans between 2010-11 and 2020-21 decreased across institutions of all control types. In each of the three years from 2018-19 to 2020-21, the average annual loan amount for students at private nonprofit 4-year institutions was higher than the corresponding loan amount for students at other types of institution (public and private for-profit 4-year institutions and public, private nonprofit, and private for-profit 2-year institutions).

In addition to examining annual student loans, it is important to understand the amount of student loans received over the entire course of a degree or certificate. Among federal student loan borrowers who completed a bachelor’s degree in 2015-16, the average amount owed as a percentage of the amount borrowed as of 4 years later (2020) was 78 percent. Among these bachelor’s completers, the average percentage owed was higher for those who had ever received a Pell Grant than for those who had not (85 vs. 66 percent). The average amount owed as a percentage of the amount borrowed also showed some variation by race/ethnicity. The average percentage owed was lower for those who were Asian (63 percent) and higher for those who were Black (105 percent) compared with those of most other racial/ethnic groups.

Financial Aid Demographics

Financial aid awards differ across school types and demographics.

Financial Aid by Income Level

The average amount of financial aid students receive largely depends on their financial need compared to the cost of education. At two-year institutions, the average amount of grant and scholarship aid awarded to first-year undergraduate students in 2021-2022 was $6,560. The average aid awarded was highest during the same period at private, nonprofit four-year institutions for students whose families earned $30,001-$48,000. Average aid was lowest for students at two-year private, for-profit institutions whose families earned $110,001 or more.

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The following table illustrates the average grant and scholarship aid awarded by school type and income level in 2021-2022:

	Public Four-Year Institutions	Public Two-Year Institutions	Private Nonprofit Four-Year	Private Nonprofit Two-Year	Private For-Profit Four-Year	Private For-Profit Two-Year
$0 to $30,000	$13,590	$8,050	$31,600	$7,860	$7,770	$5,690
$30,001 to $48,000	$13,290	$7,470	$35,610	$10,520	$8,630	$5,250
$48,001 to $75,000	$10,310	$5,280	$33,920	$10,860	$7,450	$3,990
$75,001 to $110,000	$6,090	$2,830	$29,830	$11,250	$6,050	$1,580
$110,001 or more	$3,500	$1,560	$24,860	$11,110	$7,070	$940

Note: Average aid amounts have been adjusted for inflation and represent 2022-2023 constant dollars.

Financial Aid by Race/Ethnicity

The most recently available financial aid data from NCES reveals that during the 2019-2020 academic year: Black undergraduate students were most likely to receive any type of financial aid. Asian undergraduate students were least likely to receive any type of financial aid.

Financial Aid by Sex

During the 2019-2020 academic year, 74% of female undergraduate students received some type of financial aid, according to NCES. By comparison, 67% of male students and 66% of nonbinary students received financial aid during the same academic year.

Financial Aid by Age

In 2019-2020, undergraduate students between the ages of 15 and 23 were most likely to receive some type of financial aid. Out of 10.5 million undergraduate students between 15 and 23 years old, 74% were awarded and received financial aid. 68% of undergraduate students between 24 and 29 received financial aid. 67% of undergraduate students aged 30 or older received financial aid.

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Financial Aid by Dependency Status

During the 2019-2020 academic year, 9.6 million undergraduate students were dependent, while 7.3 million were independent, per NCES. 74.2% of dependent students received at least one type of financial aid during the year. During the same year, 67.8% of independent students received at least one type of financial aid.

Eligibility for Student Aid

Any U.S. citizen or eligible noncitizen who is enrolled in a college or career degree or certificate program and has demonstrated financial need will qualify for student aid from the federal government. Students can obtain additional, non-federal financial aid through nonprofit organizations, private organizations, or their schools. Schools and organizations have their own set of eligibility requirements for financial aid. It’s important to fill out the Free Application for Federal Student Aid (FAFSA) form even if you believe you will not qualify for financial aid due to family income because federal student aid does not have an income cut-off. Other factors may still make you eligible to receive aid.

How to Use Financial Aid

While financial aid can sometimes cover a student’s entire cost of attendance, it usually only covers a portion of it, and there is a leftover, out-of-pocket cost. In 2022-2023, the average amount of gift aid awarded to first-time, full-time students at four-year schools was $15,750. You can typically use financial aid to cover tuition and fees, housing, books and other supplies, and transportation. Most financial aid awards, like grants and scholarships, are considered gift aid and do not need to be paid back.

Issues and Challenges in Student Aid

While student aid is crucial for accessing higher education, there are challenges and issues that need to be addressed:

Student Loan Debt: The process of student loan forgiveness appears to be muddled by ambiguous processes and errors. Borrowers are often unaware of actually being eligible for student loan forgiveness. In late-2020, media outlets began reporting increased complaints about student loan debt scams. The Department of Education warns that they will never ask you for your FSA ID password. Your FSA ID is like an electronic signature, which you use to sign legally binding documents electronically. Seventy percent of complaints about the companies servicing student loans are related to mismanagement and deliberate deception. Many students are unaware that they are eligible for income-driven repayment plans on federal loans as required by law and servicers frequently fail to assist them. Instead, borrowers are frequently placed in suspended payment options that rack up interest instead of income-driven repayment plans. Additionally, borrowers frequently enroll in plans their servicers tell them are eligible for Public Service Loan Forgiveness. They make payments for many years only to be denied when they apply because they were not enrolled in a qualifying repayment plan.
Cohort Default Rates: The cohort default rate (CDR) according to the ED is “the percentage of a school’s borrowers who enter repayment on certain FFEL or Direct Loan Program loans during a particular federal fiscal year… and default or meet other specified conditions prior to the end of the second following fiscal year.” Schools with high cohort default rates can be sanctioned, lose eligibility to participate in federal loan programs, or have other consequences. Therefore, it is in an institution’s best interest to have low cohort default rates. Unfortunately, many colleges with high default rates try to lower the rates by abusing the forbearance option for loans. The forbearance option is meant for the benefit of the student, not the institution. Navient vs. In 2017, the Consumer Financial Protection Bureau (CFPB) sued Navient (formerly known as Sallie Mae), the largest student loan servicing company in the United States. Under a contract with the US Department of Education, this company services over $300 billion of federal and private student loans. Beginning in October 2017, the Federal Trade Commission (FTC), CFPB, US Dept.

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