This Postsecondary Education Descriptive Analysis Report uses data from the National Postsecondary Student Aid Studies (NPSAS:96, NPSAS:2000 and NPSAS:04) to examine trends in Stafford loan borrowing among undergraduates. Since 1995-96, borrowing of subsidized Stafford loans increased among low-income dependent undergraduates and among independent students at all income levels. The rate of borrowing any Stafford loan (subsidized or unsubsidized) increased among all but those in the lowest income category, for both dependent and independent undergraduates alike. While the average amount of subsidized loans has leveled off over time, unsubsidized loans have continued to grow both in the amount of the average loan as well as in the percentage of borrowers. Unlike subsidized loans, interest on an unsubsidized loan accrues and is usually added to the principal of the loan while the student is enrolled in school and not yet in repayment. This study found that between 1995-96 and 2003-04, an increasing proportion of both dependent and independent student borrowers at all income levels took out unsubsidized loans either alone or in addition to their subsidized loans. This was true particularly among independent students whose higher loan limits allow more of them to take out both types of loans. The Stafford loan program permits dependent students to take out both subsidized and unsubsidized loans, but the combined amount cannot exceed the maximum amount of a single loan. In 2003-04, about three-fourths (73 percent) of all dependent student borrowers took out the annual maximum amount allowed in subsidized and unsubsidized Stafford loans combined. This was an increase from 57 percent in 1995-96.
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