Private Loans and Choice in Financing Higher Education - College ...

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Private Loans and Choice in Financing Higher EducationFigure 4.1: Percentage distribution of undergraduate private loan borrowers, by selectedcharacteristics, in 1999-2000100%90%80%70%Institutional typePrivate for-profitPublic 2-year100%90%80%70%Age30 years or older24-29 years100%90%80%70%Dependency statusIndep with dependentsIndep w/o dependents60%50%Public 4-year60%50%60%50%40%30%20%10%Private not-forprofit4-year40%30%20%10%23 years or less40%30%20%10%Dependent0%0%0%100%90%80%70%60%50%40%30%20%10%0%Household size4 or more2 to 3One100%90%80%70%60%50%40%30%20%10%0%Parent's income(dependent students)Highest quartileMiddle quartilesLowest quartile100%90%80%70%60%50%40%30%20%10%0%Independent students' incomeHighest quartileMiddle quartilesLowest quartile100%Work intensity100%Degree program(No undergraduate degree 0.4%)100%Stafford loan limits(subsidized and unsubsidized)90%80%70%60%Worked full-time90%80%70%60%Bachelor's degree90%80%70%60%Maximum50%40%30%Worked part-time50%40%30%50%40%30%Less than maximum20%10%0%Did not work20%10%0%Associate's degreeCertificate20%10%0%Not a borrower36
Private Loans and Choice in Financing Higher EducationFigure 4.1 (continued)100%90%80%70%60%50%40%30%20%10%0%100%90%80%70%60%50%40%30%20%10%0%100%90%80%70%60%50%40%30%20%10%0%Tuition and fees20,000 or more10,000 to 19,9995,000 to 9,9991,000 to 4,999Less than $1,000Financial need20,000 or higher10,000 to 19,9995,000 to 9,9991,000 to 4,999ZeroAttendance statusMixedExclusively full-time1 to 999Less than half timeHalf timetions had borrowed the maximumfederal Stafford loans forwhich they were eligible.Undergraduates with all of thesecharacteristics—traditionalstudents at relatively expensive(tuition of $10,000 or more),private not-for-profit four-yearinstitutions who had borrowedthe maximum Stafford amountfor which they were eligible 33 —might be expected to be particularlylikely to obtain privateloans. Yet, even within this group,less than a quarter of studentsobtained such loans. Interestingly,within this specific groupof undergraduates who areparticularly likely to receiveprivate loans, there appeared tobe no differences in the likelihoodof borrowing a private loanby income quartile. 34 However,there appear to be some smalltrade-offs with other sources offunding. For example, within thisgroup of students, those whoseparents had not borrowed PLUSloans were slightly more inclinedto have obtained private loans.Some other interesting aspectsof the data stand out:◗Although “high need”undergraduates were morelikely to obtain private loans,it appears that the “need”may be more defined bycost of attendance than byability to pay. In the aggregate,few differences existedacross the various levels of33Note that less than 5 percent of all undergraduates had all of these characteristics in 1999-2000 (27 percent of all undergraduateswere traditional; of these, 26 percent attended private not-for-profit four-year institutions; of these, 46 percent borrowed themaximum Stafford loan for which they were eligible).34A multivariate analysis would be necessary to examine the relationships in detail.37
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