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Half of Minnesota College Students Utilize Student Loans




Sandy Connolly
Minnesota Office of Higher Education
(651) 259-3902

Borrowing growth strongest among students from higher-income families

About half of all Minnesota college students took out student loans in 2004, reflecting a moderate increase from 2000, according to a report just released today by the Minnesota Office of Higher Education. The report, Undergraduate Borrowing in Minnesota, indicates that students attending college full time for a full year who take out student loans borrow an average of $6,600 in a year.

"Student loans have been an important part of the college financing equation since the 1950s, when the first federal subsidized loans became available," said Susan Heegaard, Director of the Office of Higher Education. "Student borrowing patterns can be a reflection of many factors including the cost of attendance and other economic conditions such as changes in interest rates and the overall borrowing capacity among students and their families."

The report identifies a dramatic increase in borrowing among dependent students from families with incomes of $90,000 and higher. In 2000, 28 percent of students in this group borrowed compared with 57 percent in 2004. For the same period, borrowing declined for students from families with annual incomes below $30,000 and increased slightly for middle-income families with incomes from $30,000 to $89,000. Longitudinal data on borrowing for independent students statewide is not available.

Among the significant findings in the report:

  • Student borrowing in Minnesota has increased overall since 2000, both in terms of the number of students borrowing and the amounts borrowed.

  • Much of the increase in student borrowing is occurring among students from families with incomes of $90,000 and higher.

  • Minnesota undergraduates attending both public and private colleges borrow more than their counterparts nationally, both in terms of the percent who borrow and the average amount borrowed.

  • There is a growing reliance on unsubsidized and private student loans, or loans for which students need not necessarily demonstrate financial need.

  • The increase in student borrowing in Minnesota is consistent with growth in personal debt across the country and may be, in part, a reflection of declining interest rates from 2000 to 2004.

This is the first time a comprehensive student borrowing report has been issued for the state. The report was generated with data from a national survey by the U.S. Department of Education. The survey, called the National Postsecondary Student Aid Study, was conducted in 2000 and 2004 and provides information on college financing, student demographics and other information related to college attendance. Students from for-profit institutions were not included.

The Office of Higher Education intends to further study the borrowing data and other data generated by the survey to identify important trends and challenges facing students.

"It's important for us to know and understand as much as we can about how students are financing their education and how those factors relate to access and participation," said Heegaard. "We intend to continue to probe this and other data for more clues about college financing and access."

The report is summarized in the agency's newsletter, Insight (February 2006). The Undergraduate Borrowing Report (.pdf) is available online.

The Minnesota Office of Higher Education is a state agency providing students with financial aid programs and information to help them gain access to postsecondary education. The agency serves as the state's clearinghouse for data, research and analysis on college enrollment, financial aid, finance and trends. The Minnesota State Grant program, which is administered by the agency, is a need-based tuition assistance program for Minnesota students. The agency also oversees tuition reciprocity programs, a student loan program, Minnesota's 529 college savings program, licensing of postsecondary schools and an early awareness outreach initiative for youth.

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