Federal Student Loans: Patterns in Tuition, Enrollment, and Federal Stafford Loan Borrowing Up to the 2007-08 Loan Limit Increase

Although a postsecondary education is vitally important to many individuals and the nation's ability to compete globally, high college tuition rates are prompting concerns that it may remain an elusive goal for some. To help students finance their education, Congress recently raised the ceiling on the amount individual students can borrow under the federal Stafford Loan program (referred to in legislation as "loan limits"). Congress initially did so for first- and second-year undergraduate students as well as for graduate and professional students in academic year (AY) 2007-08, and subsequently for all qualified undergraduate students receiving unsubsidized Stafford loans in AY 2008-09. The Ensuring Continued Access to Student Loans Act of 2008 directed GAO to assess the impact of these increases in the loan limits on tuition and other expenses and borrowing. Since information was available only on the first loan limit increase, we focused on the AY 2007-08 loan limit increase, framing our study with three key questions: (1) What are the patterns in prices and undergraduate enrollment at institutions of higher education since the AY 2007-08 loan limit increases took effect? (2) To what extent did undergraduate students borrow Stafford loans at their maximum levels in AY 2007-08? (3) What are the characteristics of students in AY 2007-08 who borrowed more than the prior loan limits?