New Analyses on Aid Policy

Studies are released on students who borrow and then drop out, and on the role of private scholarships.
May 4, 2005

With Congress reviewing the Higher Education Act – the mammoth law that governs most student aid programs, it’s high season for releasing reports on aid and loan policy.

On Tuesday, reports were released on students who borrow and who later drop out, and on the role of private scholarships.

The former -- "Borrowers Who Drop Out: A Neglected Aspect of the College Student Trend" – was produced by the National Center for Public Policy and Higher Education. The report found that half of all freshmen take out student loans, and that 20 percent of borrowers drop out. Higher percentages of students borrow at for-profit institutions and at four-year institutions.

Drop-out rates are highest among borrowers at for-profit, less than four-year institutions, 32 percent of whom had dropped out within six years of enrolling.

The students who borrow and then drop out face serious economic hardships, the report says. These students have debt from their education, but do not have the degrees that might have helped them get better jobs. 

Low income students have few good options, the report says. “Many students -- particularly low-income students -- are faced with a double bind: Borrowing can cause long-term negative financial consequences for those who fail to complete their programs,” the report says. “Yet avoidance of borrowing may push students to delay enrolling after high school, to enroll part-time in college, or to work full-time while in college, each of which is a known risk factor for dropping out of college.”

The other report -- “Private Scholarships Count: Access to Higher Education and the Critical Role of the Private Sector” -- was released by the Institute for Higher Education Policy. The report notes that private scholarships, while little studied, play a key role in helping many students go to college.

Among the findings of the report:

  • Total private scholarship aid was between $3.1 billion and $3.3 billion in 2003-4.
  • About 7 percent of undergraduates, 5 percent of graduate students, and 10 percent  of professional students received private scholarships. Average awards for the three groups of students, respectively, were: $1,982; $3,091; and $5,029.
  • Between 30 and 50 percent of private scholarship recipients are minority students.
  • The total value of “unclaimed” private scholarships (those that the report notes are frequently hyped in online guides to paying for college) may be as high as $100 million annually.


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