FEDERAL STUDENT 

LOANS

Impact of Loan Limit 

Increases on College 

Prices Is Difficult to 

Discern

Report to Congressional Committees

February 2014

GAO-14-7

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-7, a report to 

congressional committees

February 2014

FEDERAL STUDENT LOANS

Impact of Loan Limit Increases on College Prices Is 

Difficult to Discern

Why GAO Did This Study

A college education can increase the 

choices and opportunities available to 

individuals, but high college tuition 

rates have prompted concerns that a 

college education may be an 

unattainable goal for some. To help 

students finance their education, 

Congress passed a law that raised the 

ceiling on the amount students can 

borrow under the federal Stafford Loan 

Program (referred to in the law as "loan 

limits"). The Ensuring Continued 

Access to Student Loans Act of 2008 

mandated a series of GAO reports 

over a 5 year period assessing the 

impact of these increases in the loan 

limits on tuition and other expenses 

and on private student loan borrowing. 

For this final report, GAO examined:

(1) the extent to which, if any, the 

Stafford loan limit increases affected 

tuition, fees and room and board prices 

at institutions of higher education; and (2) 

the trends in private student loan 

borrowing since the loan limits took 

effect. GAO developed a statistical model 

to explore whether the loan limit 

increases in academic years 2007-08 

and 2008-09 had an impact on college

prices in subsequent years. GAO 

analyzed data from the Department of 

Education (Education) and the Consumer 

Financial Protection Bureau (CFPB), and 

interviewed officials from eight higher 

education institutions that represented 

a mix of college sectors in different 

regions of the country, three of the 

largest private student lenders, federal 

officials, and subject matter specialists. 

What GAO Recommends

GAO makes no recommendations in 

this report. Education and CFPB had 

no comments.

What GAO Found

For more than a decade, college prices have been rising consistently and have 

continued to rise at a gradual pace after the Stafford loan limit increases were 

enacted in 2008 and 2009. However, it is difficult to determine if a direct 

relationship exists between increases in college prices and the Stafford loan limit 

increases because of the confluence of many other factors that occurred around 

the time the loan limit increases took effect. Specifically, when the loan limit 

increases took effect, the nation was in a recession, which created one of the 

most tumultuous and complex economic environments in recent history. GAO’s 

analysis found that the economic effects of the recession, which affected families’ 

employment, income, and net worth make it difficult to isolate the impact the

recession had on students’ decisions to borrow money to finance college 

expenses versus the impact of the loan limit increases. Further, federal, state, 

and institutional aid available to students also increased significantly around the 

same time the loan limit increases went into effect. It is difficult to determine the

extent to which the increased availability of this financial aid influenced the 

decisions of students on whether and how much money they should borrow 

versus the availability of increased loan limits. Conversely, GAO’s analysis 

shows that even though college prices continued to increase at a gradual pace 

over the last decade as well as after the loan limits increased, enrollment, which 

can be sensitive to price increases, also generally continued to grow across both 

public and private institutions and in all regions of the country. 

Around the time that the loan limit increases took effect, the number of students 

taking out private education loans decreased across all types of institutions; 

lenders were making fewer loans and students borrowed less. Specifically, 

before the loan limit increases, the number of students borrowing private loans 

for academic year 2007-08 was about 2.8 million; after the limits went into effect 

the number dropped by over 50 percent to about 1.3 million for academic year 

2011-12. Similarly, the average amount of money that students borrowed from 

private student loans decreased by about 17 percent after the loan limits went 

into effect. For example, for academic year 2007-08 students’ private student 

loans averaged about $7,048 and for academic year 2011-12 this had dropped to 

about $5,870. According to the federal and institutional officials as well as 

financial lending experts that GAO spoke with, many factors may explain the

changed private loan landscape. For example, these officials and experts noted 

that:

• lenders tightened lending criteria—such as requiring higher credit scores 

and co-signers—making it more difficult to obtain these loans; 

• Congress enacted new protections to raise students’ awareness about 

private loans, including disclosures of loan rates and terms; and

• colleges took steps to help students find alternatives to private borrowing 

and reduce reliance on private loans, such as increasing institutional aid 

and providing financial literacy counseling to help inform students about 

View GAO-14-7. For more information, contact their federal assistance options.

Jacqueline M. Nowicki at (617) 788-0580 or 

nowickij@gao.gov.
Page i GAO-14-7 Student Loan Limits

Letter 1

Background 5

Any Impact of Increases in Loan Limits on Rising College Prices Is 

Difficult to Discern 9

Private Student Loan Borrowing Declined After the Loan Limits 

Increased 15

Agency Comments and our Evaluation 25

Appendix I Objectives, Scope, and Methodology 27

Appendix II Analysis of the Relationship between Student Loan Limit Increases and 

Tuition 35

Appendix III Additional Data on College Prices and Student Enrollment 45

Appendix IV Sample Self-Certification Form for Private Loan Applicant 51

Appendix V GAO Contact and Staff Acknowledgements 52

Tables

Table 1: Major Aid Programs for Undergraduate Students 

(Aggregate Spending), Academic Years 2006-07, 2008-

09, and 2011-12 5

Table 2: Statutory Stafford Loan Limits before and after the 

Increases: Comparison of Academic Years 2006-07, 

2007-08, and 2008-09 8

Table 3: Changes in Average Private Loan Amount Borrowed by 

Students and Their Families by Sector, Academic Years 

2003-04, 2007-08, and 2011-12 18

Table 4: Selected Laws and Provisions that Increased Consumer 

Protections 22

Table 5: Characteristics of Higher Education Institutions Included 

in Our Interviews, Academic Year 2012-13 32

Contents
Page ii GAO-14-7 Student Loan Limits

Table 6: Regression Estimates of the Academic Year 2007-08 

Stafford Loan Limit Increases and College Tuition and 

Fees 41

Table 7: Estimated Average Academic Year Changes in Tuition 

and Fees: Academic Year 2007-08 Stafford Loan Limit 

Increase 42

Table 8: Regression Estimates of the Academic Year 2008-09 

Stafford Loan Limit Increases and College Tuition and 

Fees 43

Table 9: Estimated Average Academic Year Changes in Tuition 

and Fees: Academic Year 2008-09 Stafford Loan Limit 

Increases 44

Figures

Figure 1: Common Measures of College Prices, Academic Years 

2003-04, 2007-08, and 2011-12 10

Figure 2: Tuition and Required Fees, Academic Years 1999-2012, 

for Full-time Undergraduate Students 11

Figure 3: Enrollment in Degree-granting Institutions of Higher 

Education by Sector and Share of Students, Academic 

Years 1999-2000 to 2011-12 for Full- and Part-time 

Undergraduate Students 13

Figure 4: Confluence of Factors Occurring During Loan Limit 

Increases 14

Figure 5: Proportion of Eligible Students Who Borrowed at Their 

Maximum, Academic Years 2003-04, 2007-08, and 2011-

12, by Stafford Loan Type 15

Figure 6: Total Number of Students Using Private Student Loans, 

Academic Years 2003-04, 2007-08 and 2011-12 16

Figure 7: Private Student Loan Origination Volumes before and 

after Federal Student Loan Limit Increases as Reported 

by Nine Major Lenders 19

Figure 8: Percentage Change in Average Amounts of Private and 

Federal Student Loans Borrowed Between Academic 

Years 2007-08 and 2011-12 20

Figure 9: In-state Tuition and Required Fees by Region for Fulltime Undergraduate Students, Academic Years 1999-

2000 to 2011-12 45

Figure 10: Out-of-state Tuition and Required Fees by Region for 

Full-time Undergraduate Students, Academic Years 

1999-2000 to 2011-12 46
Page iii GAO-14-7 Student Loan Limits

Figure 11: Enrollment in Degree-granting Institutions of Higher 

Education by Region and Share of Students, Academic 

Years 1999-2000 to 2011-12 47

Figure 12: Enrollment in Degree-granting Institution of Higher 

Education by Attendance Status, Academic Years 1999-

2000 to 2011-12 48

Figure 13: Enrollment in Degree-granting Institution of Higher 

Education by Ethnicity, Academic Years 1999-2000 to 

2011-12 49

Figure 14: Enrollment in Degree-granting Institution of Higher 

Education by Sector and Ethnicity, Academic Years 

1999-2000 to 2011-12 50

Abbreviations

CFPB Consumer Financial Protection Bureau

Education Department of Education

EFC Expected Family Contribution

FFEL Federal Family Education Loan Program

FICO Fair Isaac Corporation credit score

FRED Federal Reserve Economic Data

HEOA Higher Education Opportunity Act

IPEDS Integrated Postsecondary Education Data System

NPSAS National Postsecondary Student Aid Study

PLUS Federal Parent Loans for Undergraduate Students

TILA Truth in Lending Act

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

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Page 1 GAO-14-7 Student Loan Limits

441 G St. N.W.

Washington, DC 20548

February 18, 2014

The Honorable Tom Harkin

Chairman

The Honorable Lamar Alexander

Ranking Member

Committee on Health, Education, Labor and Pensions

United States Senate

The Honorable John Kline

Chairman 

The Honorable George Miller

Ranking Member

Committee on Education and the Workforce

House of Representatives

A college education can increase the choices and opportunities available 

to individuals, but rising costs have prompted concerns that a college 

education may be an unattainable goal for some. To help students afford 

the rising cost of college, Congress passed a law that raised the ceiling 

on the amount individual students can borrow (referred to in the law as 

“loan limits”) under the federal Stafford Loan Program. Although 

increasing federal loan limits would give students more resources to pay 

for college, there is also concern that the availability of this additional 

resource might present an incentive for colleges to charge students more. 

At the same time, this opportunity to borrow more federal loan money 

might affect students’ private loan borrowing, which sometimes may have 

significantly higher interest rates and default rates than federal student

loans. The Ensuring Continued Access to Student Loans Act of 20081

mandated GAO to conduct a series of reports over 5 years assessing the 

impact of loan limit increases on tuition and other expenses and on 

 1 Pub. L. No. 110-227, § 9, 122 Stat. 740, 748. 
Page 2 GAO-14-7 Student Loan Limits

private loan borrowing.2 This is our final study in response to this 

mandate. For this study, we addressed (1) to what extent, if any, did the 

Stafford loan limit increases affect tuition, fees and room and board prices 

at institutions of higher education; and (2) what have been the trends in 

private student loan borrowing since the loan limits took effect?

To determine the extent, if any, to which Stafford loan limit increases 

affected college prices, we developed a panel regression model—a 

statistical method where we collected data over time for the same 

colleges to estimate possible relationships among certain variables, 

controlling for the effects of other variables—to examine the impact of 

Stafford loan limit increases on tuition, fees, and room and board prices at 

institutions of higher education.3 In order to isolate the effect of loan limits 

from other factors that may influence tuition and other college prices, we 

controlled for factors such as college revenue from state appropriations or 

endowments, and economic variables such as the state-level 

unemployment rate. To determine if there were actual changes in the 

amounts students borrowed in federal Stafford loans before and after the 

loan limits took effect, we supplemented the findings of our panel 

regression model with the most recent data available from the National 

Postsecondary Student Aid Study (NPSAS) database (academic years 

2003-04, 2007-08 and 2011-12), and trend data (academic years 1999-

 2 Because data were not yet available to respond to the mandate, GAO first reported in 

2009 with a briefing to Congress. The second report, Federal Student Loans: Patterns in 

Tuition, Enrollment, and Federal Stafford Loan Borrowing Up to the 2007-08 Loan Limit 

Increase, GAO 11-470R (Washington, D.C.: May 25, 2011), provided descriptive 

information on the first of the two loan limit increases, including that there was a decline in 

the proportion of eligible Stafford loan borrowers who borrowed their maximum under the 

new loan limit increase. The first loan limit increase covered fewer students, and data 

were not available on the second loan limit increase at the time of that report. 

3 For our panel regression model, we compared the same cohort or group of institutions 

over multiple years. Our panel consisted of all Title IV-eligible colleges in the United 

States over an 8-year time span that covered years before and after the change in loan 

limits, which occurred in academic years 2007-08 and 2008-09. The dataset is divided by 

the type of institution and the control variables used in the regression include college fixed 

effects, economic variables and college characteristics. For more information about our 

panel regression model, see Appendix II. 
Page 3 GAO-14-7 Student Loan Limits

2000 through 2011-12) for all Title IV-eligible,4 degree-granting institutions 

of higher education from the Department of Education’s (Education) 

Integrated Postsecondary Education Data System (IPEDS). Using these 

data, we examined differences in tuition trends among four education 

institutional sectors—nonprofit,5 for-profit, public 2-year, and public 4-year 

colleges—and geographic regions.6 For public 2-year and public 4-year 

colleges, we also reviewed the annual tuition for both in-state and out-ofstate students. For both the IPEDS trend data and panel regression 

model data, we analyzed data for undergraduate students—the majority 

of college students—to measure the effect of the two separate loan limit 

increases.7 To provide examples of the role, if any, the loan limit 

increases played in how colleges set prices, we supplemented these data 

with interviews from college officials at eight institutions. We selected a 

nonprobability sample of institutions to obtain a mix of each major sector 

of higher education, regions, amount of federal aid received, enrollment 

sizes, admission selectivity levels, and prices of tuition and related fees. 

Although we cannot generalize information from these interviews to the 

broader higher education landscape, we believe that the information from 

these eight institutions provides insight into colleges’ perspectives about 

 4 Programs authorized under Title IV of the Higher Education Act of 1965, as amended, 

provide grants, loans and work-study funds from the federal government to eligible 

students. To receive Title IV assistance students must be enrolled in institutions of higher 

education that are authorized to operate in the state in which they are located, accredited 

by an agency recognized by the Department of Education and certified by the Department 

as eligible to participate in Title IV programs. An institution that enters into a program 

participation agreement with the Department is allowed to participate in any of the Title IV 

federal student financial assistance programs (other than the Leveraging Educational 

Assistance Partnership (LEAP) and the National Early Intervention Scholarship and 

Partnership (NEISP) programs). 

5 The term “nonprofit” refers to not-for-profit private colleges. Private colleges can also be 

for-profit, so we are making the distinction between the two by using the terms “nonprofit” 

and “for-profit” in this report.

6 Our scope includes institutions of higher education in all 50 states and the District of 

Columbia. We grouped 2- and 4-year for-profit institutions together because about half of 

the institutions that classify themselves as 4-year institutions award mainly 2-year 

degrees. Because we defined our population of institutions of higher education as degreegranting, our analysis excludes less-than-2-year for-profit institutions that award 

certificates. 

7 Congress first passed a law that raised Stafford loan limits for first-and second-year 

undergraduate students as well as for graduate and professional students in academic 

year 2007-08, and subsequently for all qualified undergraduate students receiving 

unsubsidized Stafford loans in academic year 2008-09.
Page 4 GAO-14-7 Student Loan Limits

the role of loan limit increases on college prices and federal and private 

student loan borrowing trends. In addition, we interviewed federal officials 

and subject matter specialists, including academic researchers.

With respect to our second objective, we analyzed the trends in private 

student borrowing because comprehensive data from private lenders 

were not available to assess the impact of loan limit increases on private 

student borrowing, and data from individual lenders are proprietary. To 

determine trends in private student loan borrowing since the loan limit 

increases took effect, we reviewed aggregate trend data from calendar 

years 2005 through 2011 for nine major private student lenders reported 

in a 2012 study by the Consumer Financial Protection Bureau (CFPB)

and Education.

8 To obtain additional information about trends after the 

loan limit increases, we supplemented the CFPB study data with analyses 

of Education’s IPEDS data (academic years 1999-2000 through 2011-12) 

and NPSAS data (academic years 2003-04, 2007-08, and 2011-12) about 

private student loan usage and undergraduate borrowing. We also 

reviewed federal laws and regulations that have affected the private 

lending market. We interviewed officials from the same eight institutions 

we selected for research objective 1 and asked about private student loan 

borrowing. We also interviewed three of the largest private student 

lenders who participated in the CFPB study about the private student loan 

industry, borrowing trends, and the extent to which the increased Stafford 

loan limits affected private student loan borrowing. Finally, we interviewed 

representatives from relevant professional associations, federal officials, 

and subject matter specialists, including academic researchers. See 

appendix I for our detailed scope and methodology and appendix II for 

details on our panel regression model.

We determined that the IPEDS and NPSAS data are sufficiently reliable 

for the purposes of this report by testing them for accuracy and 

completeness, and by reviewing documentation about the systems used 

to produce the data. Unless otherwise noted, all percentage estimates 

from NPSAS have 95 percent confidence intervals that are within 8 

percent of the estimate itself. Further, all NPSAS dollar estimates have 95 

percent confidence intervals that are within 8 percentage points of the 

 8 Consumer Financial Protection Bureau and Department of Education, Private Student 

Loans (Washington, D.C.: August 29, 2012). For the purposes of this report, when we 

refer to the ‘CFPB study’ we mean this report that was conducted by CFPB and 

Education. 
Page 5 GAO-14-7 Student Loan Limits

estimate itself. We conducted this performance audit from December 

2012 to February 2014 in accordance with generally accepted 

government auditing standards. Those standards require that we plan 

and perform the audit to obtain sufficient, appropriate evidence to provide 

a reasonable basis for our findings and conclusions based on our audit 

objectives. We believe that the evidence we obtained provides a 

reasonable basis for our findings and conclusions based on our audit 

objectives.

To help students pay for college, several forms of financial aid are 

available through federal, state, institutional, and private sources, as 

shown in table 1.

Table 1: Major Aid Programs for Undergraduate Students (Aggregate Spending), 

Academic Years 2006-07, 2008-09, and 2011-12

(millions of academic year 2012 constant dollars)

2006-07 2008-09 2011-12

Federal Stafford Loans 55,573 76,505 89,607

Federal Pell Grants 14,430 19,051 34,048

Federal Parent Loans for Undergraduate Students 

(PLUS) 11,507 12,514 18,931

Federal tax benefitsa 7,410 11,160 20,280

Federal veterans grantsb 3,710 4,358 11,007

State grants 8,535 8,749 9,532

Institutional grants 29,510 32,310 42,650

State and Institution loans 2,360 1,660 1,690

Private student loans 21,390 10,730 6,440

Source: College Board, Trends in Student Aid 2013.

a The latest available data for federal education tax benefits are for calendar year 2011. Estimates for 

2011-2012 are based on these data, and only include the Hope, Lifetime Learning, and American 

Opportunity tax credits.

b Federal veterans grants include payments for postsecondary education and training to veterans and 

their dependents, including the Post-9/11 Veterans Educational Assistance program effective for 

academic year 2009-10 (38 U.S.C. §§ 3301-3324) and all programs established earlier. Some of 

these funds also cover living expenses and other education-related costs. The Iraq and Afghanistan 

Service Grants program was effective in academic year 2010-11. This program provides non-needbased grants for students whose parent or guardian was a member of the Armed Forces who died in 

Iraq or Afghanistan as a result of performing military service after Sept. 11, 2001. 20 U.S.C. § 1070h.

In academic year 2011-12, about 70 percent of the undergraduate 

students attending college borrowed money from federal or private 

lenders. Before 2010, federal Stafford Loans and PLUS Loans were part 

Background
Page 6 GAO-14-7 Student Loan Limits

of the Federal Family Education Loan (FFEL) Program as well as the 

William D. Ford Federal Direct Loan (Direct Loan) Program. Under the 

FFEL Program, private lenders made federally-guaranteed student loans 

to parents and students. The Student Aid and Fiscal Responsibility Act of 

2009, enacted as a part of the Health Care and Education Reconciliation 

Act of 2010, terminated the authority to make or insure new FFEL loans 

after June 30, 2010.9 At the time, there was concern that paying banks to 

act as middlemen for student lending was adding to the cost of student 

borrowing. A Congressional Budget Office study estimated that the 

government would save over $85 billion over 10 years if it did the direct 

lending itself.10 Starting July 1, 2010 all Stafford and PLUS loans are 

originated and disbursed directly from the Department of Education under 

the Federal Direct Loan Program. FFEL Program loans disbursed before 

July 1, 2010 continue to be serviced according to the terms and 

conditions of the FFEL Program master promissory note the borrowers 

signed when they obtained the loan.

The Stafford Loan program is the largest source of federal financial aid 

available to postsecondary students.11 In academic year 2011-12, 35 

percent of undergraduate students participated in the program, which

provided an estimated $89.6 billion to eligible students through subsidized 

and unsubsidized loans.12 The federal government pays the interest on 

subsidized loans while students are in school, and students must have a 

financial need as determined under federal law to qualify for this type of 

loan. Each student’s financial aid need is determined by subtracting the 

student’s expected family contribution (EFC) and certain other estimated 

financial assistance from the total price of attendance.13 Regardless of 

 9 Pub. L. No. 111-152, § 2201, 124 Stat. 1029, 1074.

10 Congressional Budget Office, Cost Estimate, H.R. 3221 Student Aid and Fiscal 

Responsibility Act of 2009 (Washington, D.C.: July 24, 2009).

11 Postsecondary students include both graduate and undergraduate students.

12 Regardless of loan type, borrowers must be either U.S. citizens or eligible noncitizens, 

and be enrolled at least half time in a degree or certificate program, among other 

requirements. 20 U.S.C. § 1091. 

13 20 U.S.C. § 1087kk. The EFC represents the amount the applicant and the applicant’s 

family can reasonably be expected to contribute toward the applicant’s postsecondary 

education. 20 U.S.C. § 1087mm. When we use the phrase “total price of attendance” in 

the context of the legal requirements for the Stafford Loan program, we use it to refer to 

“cost of attendance” as that phrase is defined in 20 U.S.C. § 1087ll.
Page 7 GAO-14-7 Student Loan Limits

their financial need, students can borrow unsubsidized loans to pay for 

educational expenses and are responsible for paying back any interest 

that accrues on the loan. A student may be eligible to receive both 

subsidized and unsubsidized loans, which are generally referred to as a 

combined loan.

To help students and their families pay for the rising cost of college, 

Congress first passed a law that raised Stafford loan limits for first-and 

second-year undergraduate students as well as for graduate and 

professional students in academic year 2007-08,14 and subsequently for 

all qualified undergraduate students receiving unsubsidized or combined 

Stafford loans in academic year 2008-09 (see table 2).15

 14 Pub. L. No. 109-171, § 8005, 120 Stat. 4, 158 (2006). As we reported in 2011, these 

increases were the first changes to the Stafford loan limits since academic year 1993-94. 

For undergraduate students, these reflect an increase of $875 or $1,000, with the limits 

after the increase ranging from $3,500 to $8,500 depending on a student’s class level, 

dependency status, and whether the student was receiving a subsidized or an 

unsubsidized loan.

15 Pub. L. No. 110-227, § 2, 122 Stat. 740. 
Page 8 GAO-14-7 Student Loan Limits

Table 2: Statutory Stafford Loan Limits before and after the Increases: Comparison 

of Academic Years 2006-07, 2007-08, and 2008-09 

Annual loan limits for dependent students

Class level Academic 

year

Subsidized 

loan

Unsubsidized 

loan

Combined 

total

1st Year 2006-07 $2,625 $2,625 $2,625

2007-08 3,500 3,500 3,500

2008-09 3,500 5,500 5,500

2nd Year 2006-07 3,500 3,500 3,500

2007-08 4,500 4,500 4,500

2008-09 4,500 6,500 6,500

Annual loan limits for independent studentsa

Class level Academic 

year

Subsidized 

loan

Unsubsidized 

loan

Combined 

total

1st Year 2006-07 2,625 6,625 6,625

2007-08 3,500 7,500 7,500

2008-09 3,500 9,500 9,500

2nd Year 2006-07 3,500 7,500 7,500

2007-08 4,500 8,500 8,500

2008-09 4,500 10,500 10,500

Source: GAO analysis of relevant federal laws.

a Students who are 24 years of age or older are considered independent. Younger students can also 

be classified as independent under certain circumstances, such as if they are married or are on active 

military duty.

Students whose financial need is not fully met by federal assistance and 

the school’s own resources (school grants and loans, called institutional 

aid) may turn to private lenders for college funding. While the private 

student loan market is dominated by traditional financial institutions such 

as banks, a variety of other private student lenders exist. Specifically, in 

addition to the traditional banks, nonprofit lenders, many of which are 

affiliated with states and certain schools, have elected to fund or 

effectively guarantee loans.
Page 9 GAO-14-7 Student Loan Limits

For more than a decade, college prices have been rising consistently 

across most types of institutions of higher education and continued to rise 

after the Stafford loan limits increased, but it is difficult to establish if a 

direct relationship exists.16 Numerous events that affected the economy 

likely influenced rising prices, which generally followed a consistent 

upward pattern across three commonly-used measures of college prices 

(see fig. 1).17

 16 For more information about our panel regression model and analysis of the relationship 

between Stafford loan limit increases and tuition, fees, and room and board, see Appendix 

II. 

17 We used three descriptors to study postsecondary prices: tuition and required fees, 

total price of attendance, and net price after grants. Total price of attendance is what a 

typical student would pay for tuition and required fees, books and supplies, room and 

board, and other personal expenses, and net price after grants is the total price of 

attendance minus all grant aid received by a typical student.

Any Impact of 

Increases in Loan 

Limits on Rising 

College Prices Is 

Difficult to Discern
Page 10 GAO-14-7 Student Loan Limits

Figure 1: Common Measures of College Prices, Academic Years 2003-04, 2007-08, and 2011-12

Note: The tuition and fees data from the National Postsecondary Student Aid Study (NPSAS) 

displayed in this figure are lower than the tuition and fees data from the Integrated Postsecondary

Education Data System (IPEDS) because the NPSAS data includes part-time students whereas the 

data from IPEDS displays data only for full-time undergraduates.

As figure 2 shows, the tuition and required fees that a typical student 

would incur rose at an average annual rate of about 2 to 5 percent from 

academic years 2007-08 through 2011-12, following a decade-long trend 

of steady, consistent increases. The one exception to this pattern was at 

for-profit 2-and 4-year institutions, where prices decreased across all 

three measures during that time (see fig. 1). That is, for academic years 

2007-08 through 2011-12, the tuition and required fees decreased at an 

annual average rate of 3 percent (see fig. 2).

18

 18 While it is unclear why there was a decrease in for-profit institution tuition and fees, 

officials at all three of the for-profit institutions we interviewed told us that over the past 

few years they had decided not to raise their tuition and fees, and that they based these 

decisions on how their prices compared to other institutions and general affordability for 

students. 
Page 11 GAO-14-7 Student Loan Limits

Figure 2: Tuition and Required Fees, Academic Years 1999-2012, for Full-time 

Undergraduate Students

Note: The tuition and fees for public 2- year and public 4-year schools are for in-state students.

This pattern of gradual increases in tuition and fees has generally 

persisted across different regions of the United States, with higher overall 

annual rate increases from academic years 2007-08 through 2011-12 in 

the Far West region (average annual rate increase of 14 percent),19 and 

lower increases in the Great Lakes and Plains regions at 1 and 2 percent, 

 19 This high percentage change in the Far West region was largely driven by changes in 

tuition and fees at California’s institutions of higher education; California had an 18 

percent increase in tuition and fees from academic years 2007-08 through 2011-12. 

According to a report by California’s Legislative Analyst’s Office, volatility in California 

state funding support led institutions of higher education to tap into funding reserves and 

take actions to reduce per student costs, such as increasing class size, furloughing 

employees, and reducing various campus services and overhead. See California 

Legislative Analyst’s Office, The 2011-12 Budget: Higher Education Budget in Context 

(January 19, 2011).
Page 12 GAO-14-7 Student Loan Limits

respectively.20 Enrollment, which can be sensitive to college prices, was 

unaffected by increases in college prices, and continued an upward trend 

as shown in figure 3, rising to about 18 million students in academic year 

2011-12, with variations by region, student characteristics, and higher 

education sector. Further, over the last decade,21 the cohort of college 

students who are 18-24 has grown substantially, with this population 

comprising about 42 percent of all college students in 2011. See 

Appendix III for additional data on college prices and enrollment.

 20 IPEDS includes these states in the following regions: the New England region includes 

Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont; the 

Mid East region includes Delaware, the District of Columbia, Maryland, New Jersey, New 

York, and Pennsylvania; the Great Lakes region includes Illinois, Indiana, Michigan, Ohio, 

and Wisconsin; the Plains region includes Iowa, Kansas, Minnesota, Missouri, Nebraska, 

North Dakota, and South Dakota; the Southeast region includes Alabama, Arkansas, 

Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, 

Tennessee, Virginia, and West Virginia; the Southwest region includes Arizona, New 

Mexico, Oklahoma, and Texas; the Rocky Mountains region includes Colorado, Idaho, 

Montana, Utah, and Wyoming; and the Far West region includes Alaska, California, 

Hawaii, Nevada, Oregon, and Washington.

21 The most recent data available cites this figure for the period spanning years 2001 

through 2011. See U.S. Department of Education, National Center for Education 

Statistics, Digest of Education Statistics, 2012, NCES 2014-015, Chapter 3.
Page 13 GAO-14-7 Student Loan Limits

Figure 3: Enrollment in Degree-granting Institutions of Higher Education by Sector and Share of Students, Academic Years 

1999-2000 to 2011-12 for Full- and Part-time Undergraduate Students

Note: Academic year 2011-12 average tuition and fees for public 2-year and public 4-year schools are 

for in-state students.

Although college prices went up, we were unable to determine whether or 

not these increases resulted from the loan limit increases because of the 

interference of various economic factors occurring around the same time 

these loan limit increases went into effect. Specifically, when the loan limit 

increases went into effect, the nation was in a recession which created 

one of the most tumultuous and complex economic environments in 

recent history, affecting families’ employment, income, and net worth (see 

fig. 4). As shown earlier, the availability and types of federal and 

institutional financial aid available to students increased around the time 

the new loan limits went into effect (see table 1), also making it difficult to 

discern any effect those loan limits may have had. For example, the dollar 

amounts of Federal PLUS loans, federal tax benefits, Pell grants, and 

federal veterans grants all increased. Further, the amounts of state and 

institutional grants and loans also increased, while the amounts of state 

appropriations for colleges and college endowments decreased.
Page 14 GAO-14-7 Student Loan Limits

Figure 4: Confluence of Factors Occurring During Loan Limit Increases

Further, colleges appear to have responded to the economic crisis in 

ways that are difficult to capture in a model. We found some evidence of 

this in our discussion with selected college officials, who responded to the 

economic crisis in different ways. For example, officials at a private 

nonprofit 4-year institution said that despite declines in their endowments, 

they used their general operating and annual giving funds to provide more 

aid to students. In contrast, officials at one public 4-year college said that 

they set their tuition so that their students, the majority of whom qualified 

for federal Pell grants, could cover the price of tuition with their grant aid. 

In addition, officials at one public 2-year college described how their state 
Page 15 GAO-14-7 Student Loan Limits

board of education would not allow them to increase their tuition more 

than 5 percent each year, while officials at a public 4-year college said 

that any public school in their state that increased their designated tuition 

by a certain percentage had to set aside more money for financial aid to 

their students. Finally, Stafford student loan borrowing that occurred after 

the loan limit increases presented a mixed picture. The proportion of 

students taking out the maximum in Stafford student loans continued to 

decline between academic years 2007-08 and 2011-12 for unsubsidized 

(24 to 20 percent) and combined loans (61 to 58 percent) but not for 

subsidized loans, which increased from 54 to 57 percent in the number of 

students borrowing the maximum loan amount (see figure 5).

Figure 5: Proportion of Eligible Students Who Borrowed at Their Maximum, 

Academic Years 2003-04, 2007-08, and 2011-12, by Stafford Loan Type

The landscape of private education borrowing has changed since the loan 

limit increases took effect. Before the loan limit increases, the total 

number of students borrowing private student loans had been increasing, 

rising by 188 percent from 961,356 to 2,764,469 students between 

academic years 2003-04 and 2007-08 (see fig. 6). After the loan limit 

increases went into effect, the number of students taking out private 

student loans dropped overall by 52 percent, down to 1,325,997 students 

Private Student Loan 

Borrowing Declined 

After the Loan Limits 

Increased
Page 16 GAO-14-7 Student Loan Limits

between academic years 2007-08 and 2011-12. This pattern persisted 

across all types of institutions of higher education, with the steepest 

declines at public 2-year (61 percent) and for-profit 2-and 4-year 

institutions (58 percent) over this time period, according to Education 

data. While it is unclear why there were steeper declines among these 

types of institutions, increases in the availability of other types of aid may 

have been a contributing factor. For example, officials at one for-profit 4-

year institution participating in our study told us they increased the 

amount of scholarship assistance available to students. Similarly, the 

financial aid administrator at a public 2-year school told us the school was 

able to increase institutional aid to students because its foundation 

aggressively sought grants to fund scholarships.

Figure 6: Total Number of Students Using Private Student Loans, Academic Years 

2003-04, 2007-08 and 2011-12

Students also borrowed less private student loan money after the loan 

limit increases, on average about $1,179 less in academic year 2011-12 
Page 17 GAO-14-7 Student Loan Limits

than in academic year 2007-08– approximately a 17 percent decrease 

(see table 3). While the decline in the amount students borrowed 

occurred across all higher education institution types, amounts borrowed 

by students attending public 2-year schools (28 percent) and private 

nonprofit 4-year schools (22 percent) dropped the most. In terms of 

average amounts borrowed in dollars, student borrowing at private 

nonprofit 4-year schools showed the largest dollar decline: about $2,178. 

The decrease in the average private loan amount borrowed by students 

at public 2-year schools may have resulted in part from the effort by 

school officials to rein in student borrowing and the increased availability 

of other aid. For example, the financial aid administrator at a public 2-year 

school said they encourage students to pursue federal loans first and 

private loans as a last resort. Officials at a private nonprofit 4-year 

institution said they adopted an “interventionist” approach toward students 

who were considering private student loans. These officials said they 

reached out to students who were considering private student loans and, 

in some instances, increased the amount of institutional aid to students so 

that they would not need to take out private loans. Private lenders we 

interviewed also said that they had to rein in student borrowing to reduce 

the risk of loan defaults. One lender said that some lenders decreased 

loans to students at for-profit schools because of low graduation rates 

and high default rates.22

 22 A CFPB and Education report also showed that students at for-profit colleges have 

lower completion and graduation rates and higher rates of default on private student loans 

than students attending other types of institutions. For more information, see Consumer 

Financial Protection Bureau and Department of Education, Private Student Loans

(Washington, D.C.: August 29, 2012).
Page 18 GAO-14-7 Student Loan Limits

Table 3: Changes in Average Private Loan Amount Borrowed by Students and Their Families by Sector, Academic Years 

2003-04, 2007-08, and 2011-12

Sector

Academic 

year 2003-04

Academic 

year 2007-08

Dollar 

difference 

between 

academic 

years 

2003-04 and 

2007-08 

Percent 

change 

between 

academic 

years 

2003-04 and 

2007-08

Academic 

year 2007-08

Academic 

year 2011-12

Dollar 

difference 

between 

academic 

years 

2007-08 and 

2011-12

Percent 

change 

between 

academic 

years 

2007-08 and 

2011-12

Public 4-

year

$6,453 $6,620 +$167 +3% $6,620 $5,455 -$1,165 -18%

Public 2-

year

4,191 3,942 -248 -6 3,942 2,828 -1,115 -28

Private 

nonprofit 4-

year

9,303 9,899 +596 +6 9,899 7,721 -2,178 -22

For-profit 2-

and 4- year

7,020 6,713 -307 -4 6,713 6,006 -707 -11

Total 7,169 7,048 -121 -2 7,048 5,870 -1,179 -17

Source: GAO analysis of National Postsecondary Student Aid Study data.

Note: Dollar difference between academic years may not be exact due to rounding.

The decline in the number of students borrowing private student loans 

paralleled other declines in the private education market. According to a 

study by the CFPB—the agency that supervises large banks and 

nonbanks that make private student loans23—new loans for nine major

lenders steadily increased from 2005, peaking in 2008 at $10.1 billion. 

However, in 2009, the calendar year the second loan limit increase took 

effect, new loans decreased 31 percent (dropping from $10.1 billion in 

2008 to $7 billion in 2009). From 2009 to 2010, new loans dropped 

another 20 percent to $5.6 billion (See fig. 7).

 23 The CFPB study collected information about all loan originations between calendar 

years 2005 and 2011 from a sample of nine major lenders who were active in the industry 

in 2012. The estimated 2011 market size when including other lenders not included in the 

sample was $7 billion (origination volume) and $150 billion (outstanding volume) 

(compared to $140.2 billion outstanding for sample lenders). See Consumer Financial 

Protection Bureau and Department of Education, Private Student Loans (Washington, 

D.C.: 2012).
Page 19 GAO-14-7 Student Loan Limits

Figure 7: Private Student Loan Origination Volumes before and after Federal 

Student Loan Limit Increases as Reported by Nine Major Lenders

As the average amount of private student loans borrowed by students 

dropped, the average amount of federal education loans at all institutions 

increased (see fig. 8). For example, between academic years 2007-08 

and 2011-12, the average amount of private loans borrowed by students 

at public 2-year institutions dropped by 28 percent while the average 

amount of federal loans increased by 16 percent. At for-profit 2- and 4-

year institutions, there was about an 11 percent decrease in the average 

amount of private student loans borrowed and a 22 percent increase in 

the amount of federal student loans. The trend of less reliance on private 

student loans and more on federal student loans to fund education 

persisted across all types of institutions.
Page 20 GAO-14-7 Student Loan Limits

Figure 8: Percentage Change in Average Amounts of Private and Federal Student 

Loans Borrowed Between Academic Years 2007-08 and 2011-12

Overall, the turmoil in the nation’s financial markets and the resulting 

recession set the stage for the declines in private loan borrowing and 

lending, but there were other contributing factors, too.

• Lender exit. In response to the turmoil in the financial markets, some 

lenders exited the student loan industry altogether, according to a 

study by CFPB. These actions changed the market from one with 

many lenders to a smaller market dominated by a few large lenders.

• More stringent lending criteria. Lenders responded to the crisis by 

tightening their lending criteria, making it more difficult for some 

students to obtain these loans, according to a study by the CFPB 

which was echoed by lenders and subject matter specialists we 

interviewed. The CFPB study found that in the years leading up to the 

2007-2009 recession when private student lending was increasing, 

lenders were making a higher percentage of loans to borrowers with 

Factors Contributing to 

Private Loan Declines
Page 21 GAO-14-7 Student Loan Limits

weaker credit qualifications.24 This trend reversed during the 

recession. In the aftermath of the credit crisis and recession, private 

lenders changed their criteria for making student loans. For example, 

the CFPB study found that lenders began to rely more heavily on 

criteria that had been traditionally used to determine a borrower’s 

creditworthiness, such as the borrower’s ability to repay the loan and 

individual repayment history as reflected by a borrower’s Fair Isaac 

Corporation credit score (FICO).25 Many lenders also required or 

strongly encouraged students to have a co-signer for their private 

student loans. While students could still obtain loans without a cosigner, lenders said student borrowers with a co-signer are more likely 

to secure a lower interest rate and more favorable loan terms.26

• New consumer protections. In addition, the fallout from the turmoil 

in the national financial markets in 2008 increased scrutiny of the 

private student loan market, and subsequent statutory changes 

increased consumer protections (see table 4). Enacted in 2008, the 

Higher Education Opportunity Act (HEOA)27 amended the Truth in 

Lending Act (TILA) and the Higher Education Act of 1965 to add new 

disclosure requirements related to private student loan rates, terms, 

and the availability of federal student loans. For example, it provided 

for a 3-day period after consummation of the loan during which a 

borrower may cancel a loan without penalty28 and also provided that a 

borrower has 30 days after a loan is approved to accept the loan, 

during which time the lender generally cannot change the loan rates 

or terms.29 The new disclosures were accompanied by new borrower 

responsibilities. In an effort to prevent over-borrowing, applicants for 

private student loans must now complete a self-certification form that 

includes a calculation of how much the student needs to borrow, and 

attest that they are aware of the federal loan options available to 

 24 See CFPB and Education, Private Student Loans.

25 The Fair Isaac Corporation credit score, generally referred to as a FICO score, is a 

score that many lenders use to determine the creditworthiness of loan applicants. The 

score is calculated from a borrower’s payment history, including late and missed 

payments, length of credit history, type of credit used by the borrower, such as installment 

loans, and other factors. 

26 See CFPB and Education, Private Student Loans.

27 Pub. L. No. 110-315, 122 Stat. 3078 (2008).

28 Id., at § 1021(a), 122 Stat. 3483, codified at 15 U.S.C. § 1638(e)(7).

29 Id., at § 1021(a), 122 Stat. 3483, codified at 15 U.S.C. § 1638(e)(6).
Page 22 GAO-14-7 Student Loan Limits

them.30 See Appendix IV for a sample self-certification template. 

Several of the officials we interviewed noted that the self-certification 

forms helped to keep students from borrowing more funds than they 

actually need for educational costs. Furthermore, the HEOA amended 

the TILA to prohibit certain practices by private lenders, including 

revenue sharing between creditors and educational institutions.31 (See 

table 4 for more information).

Table 4: Selected Laws and Provisions that Increased Consumer Protections 

Name of law Selected provisions

Title X of the Higher Education 

Opportunity Act (HEOA) (Private Student 

Loan Transparency and Improvement Act 

of 2008)

• Extends coverage of Truth in Lending Act provisions to private student loans over 

$25,000.a

• Amends Truth in Lending Act (TILA) by requiring disclosures to borrower by private 

student lenders in loan applications, solicitations, approvals, and consummations, 

including information related to such topics as:

o interest rates and type of rate, such as fixed or variable

o interest rate adjustments, such as frequency and amount

o finance charges, fees, and penalties associated with default or late 

payment

o payment deferral options

o federal financial aid availability and applicable interest rates.

• Borrower guaranteed 30 days after loan approval to accept rates and terms of loan as 

offered with no changes (except for changes based on adjustments to the index used 

for a loan).

• Borrower granted 3-day right-to-cancel period.

• Includes measures to prevent unfair and deceptive practices in private student 

lending:

o private student lenders may not:

- offer or provide gifts to educational institutions in exchange for any 

advantage related to private loan activities.

- engage in revenue sharing with educational institutions.

- use the name, emblem, mascot or logo of educational institution.

- impose a fee or penalty on borrower for early repayment of private 

student loan.

 30 Id.. at § 1021(a), 122 Stat. 3483, codified at 15 U.S.C. § 1638(e)(3).

31 Id., at § 1011, 122 Stat. 3479, codified at 15 U.S.C. § 1650. 
Page 23 GAO-14-7 Student Loan Limits

Name of law Selected provisions

Title I, Part E of Higher Education Act of 

1965, as added by section 120 of Higher 

Education Opportunity Act

• Among other things, requires institutions and institution-affiliated organizations that 

provide information regarding private student loans to:

o provide borrowers the private student loan disclosures required under 

the Truth in Lending Act.

o inform borrowers that they may qualify for federal student aid under Title 

IV and that terms and conditions of federal student loans may be more 

favorable than the provisions of private student loans.

o ensure that the information regarding private student loans is presented 

in a way so as to be distinct from information regarding Title IV loans.

Dodd-Frank Wall Street Reform and 

Consumer Protection Actb Created a new federal agency—the Consumer Financial Protection Bureau (CFPB)—as 

an independent bureau within the Federal Reserve with the authority to supervise large 

banks and nonbanks that make private student loans for compliance with the federal 

consumer financial laws and other purposes. CFPB has authority to take enforcement 

action against these entities for violation of federal consumer financial laws and to take 

action to prevent unfair, deceptive, or abusive acts or practices in connection with a 

consumer financial product or service. CFPB recently issued final regulations—effective 

March 1, 2014—that establish its supervisory authority over any nonbank student loan 

servicer that handles more than one million borrower accounts.c 

Source: GAO analysis of relevant federal laws and regulations.

Note: For purposes of these provisions, a private student loan is defined as a loan provided by a 

private student lender that is made expressly for postsecondary educational expenses, excluding 

open-end credit, real estate, secured loans, and federal loans made under Title IV of the HEA. 15 

U.S.C. § 1650(a)(7).

a The Truth in Lending Act provides consumer protections for credit and borrowing. These protections 

include requirements lenders must meet when offering credit and loans to borrowers, such as 

disclosures about loan rates and loan terms. See 15 U.S.C. § 1601 et seq. Section 1022 of the HEOA 

amended TILA section 104(3), codified at 15 U.S.C. § 1603(3), to expressly cover private student

loans even when the amount financed was over $25,000. At the time HEOA was enacted, certain 

credit transactions in which the financed amount exceeded $25,000 were exempt from TILA cost 

disclosure requirements. The exemption amount was raised to $50,000 in 2010 by the Dodd-Frank 

Wall Street Reform and Consumer Protection Act. Pub. L. No. 111-203, § 1100E(a)(1), 124 Stat. 

1376, 2111 (2010).

b Pub. L. No. 111-203, 124 Stat. 1376 (2010).

c Defining Larger Participants of the Student Loan Servicing Market, 78 Fed. Reg. 73,383 (Dec. 6, 

2013) (to be codified at 12 C.F.R. pt. 1090).

• Proactive school initiatives. Officials at all of the schools in our 

study described a wide range of activities they implemented to raise 

student awareness and understanding of the various types of financial 

aid available to them. Some school officials also described efforts 

aimed at providing students with alternatives to private student loans. 

While most of the schools provided personal counseling to help 

students understand the obligations that come with borrowing private 

student loans, financial literacy training, and a wide range of online 

tools to help students calculate their college costs and financial need, 

they also told us about efforts that were unique to their own 

institutions. For example, officials at one public 4-year university 

described how 80 to 90 percent of their students are eligible for Pell 
Page 24 GAO-14-7 Student Loan Limits

grants, which cover much of their costs, and that many students do 

not have the credit scores to qualify for private student loans. Officials 

told us that they kept tuition at a level that would enable students’ Pell 

grants to cover the full cost of tuition. Rather than raise tuition, school 

officials said the school made modest increases to room and board 

prices for students who chose to live on campus.

Officials at another public 4-year university said that they were able to 

hold tuition steady by increasing enrollment. They said that they have 

a multi-year plan to increase enrollment, especially for students 

served through their online education programs. These officials also 

described how they now offer a $10,000 degree to students who 

pursue a Bachelor’s degree in the specific field of organizational 

leadership. The program is competency-based rather than semester 

credit-hour based, and features a combination of traditional classroom 

instruction and credit for life learning. The $10,000 cost of the degree 

covers tuition and fees but not room and board, transit, or other 

miscellaneous costs. In addition, officials at both public 4-year 

institutions said that their state boards of education require them to 

keep college prices below a certain designated threshold, and if they 

go above it, they must then increase the amount of institutional aid to 

students. Their states put this policy in place, they said, to make 

college more affordable and reduce the need for students to seek 

private student loans to finance their education.

Officials at a private nonprofit 4-year institution described an 

aggressive strategy for helping students pay for their education 

without private or federal student loans. According to these financial 

aid administrators, the university has adopted a policy of fully meeting 

each student’s financial aid need and that for all students in general, 

they have a no loan policy. To carry out this policy, the administrators 

said the university does not include loans when determining a 

student’s financial aid award and has increased institutional funding 

for students through grants and scholarships. According to university 

officials, during the recession they tapped into the university’s 

operating funds to ensure sufficient levels of grant aid for students. In 

addition, they said the university has changed the way it calculates a 

student’s financial need for purposes of institutional aid by eliminating 

home equity as a factor when considering a student’s eligibility for 

institutional aid. The elimination of home equity as an asset, school 

officials said, resulted in more students from middle income families 

qualifying for financial aid.
Page 25 GAO-14-7 Student Loan Limits

Officials at all three for-profit institutions we interviewed said that 

keeping costs down is a significant part of their effort to reduce 

students’ reliance on loans, similar to the efforts that public institutions 

reported. Officials at one of the for-profit institutions participating in 

our study said they are focusing on reducing costs for academically 

gifted students by increasing merit-based financial aid. Students with 

higher admission test scores and GPAs receive more aid than other 

students. The same institution also recently announced that it is 

offering students in its honors program full tuition for their fourth year 

of school. Officials at another for-profit institution told us that the 

number of its students using private student loans had decreased to 

11 percent in 2009 and has remained at that level. School officials 

saw this as particularly notable because students’ private loan usage 

had been as high as 30 percent in some years preceding 2009. 

School officials told us that students who are considering private 

student loans must participate in an interview at the school so that 

they fully understand the terms and conditions of their private loan. 

During the interview, the student is given information about private 

loan interest rates, and information about federal loans. School 

officials told us they encourage students considering loans to exhaust 

their federal loans before they take out private loans.

We provided a draft of this report to the Department of Education and 

Consumer Financial Protection Bureau for review and comment. The 

Department of Education and the Consumer Financial Protection Bureau 

had no comments.

We are sending copies of this report to appropriate congressional 

committees, the Secretary of Education, the Director of the Consumer 

Financial Protection Bureau, and other interested parties. In addition, this 

report will be available at no charge on GAO’s website at 

http://www.gao.gov.

Agency Comments 

and our Evaluation
Page 26 GAO-14-7 Student Loan Limits

If you or your staff members have any questions about this report, please 

contact me at (617) 788-0580 or nowickij@gao.gov. Contact points for 

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this report. GAO staff who made key contributions to 

this report are listed in appendix V.

Jacqueline M. Nowicki

Acting Director

Education, Workforce, and Income Security Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 27 GAO-14-7 Student Loan Limits

This appendix discusses our methodology for the study, which was 

framed around two objectives: (1) the extent, if any, that Stafford loan limit 

increases affected tuition, fees, and room and board prices at institutions 

of higher education; and (2) the trends in private student loan borrowing 

since the loan limits took effect.

For our first objective, we developed a panel regression model—a 

statistical method where data are collected over time from the same panel 

to explore possible relationships among events—to examine the impact of 

Stafford loan limit increases on tuition, fees, and room and board prices at 

higher education institutions. This model is described in Appendix II.1 We 

conducted supplemental analyses of Department of Education 

(Education) data to determine patterns in college prices, enrollment, and 

students’ use of federal student loans before and after the loan limits took 

effect. For this objective, we also interviewed college officials to better 

understand the extent to which, if any, loan limit increases influenced how 

they set prices, such as tuition, fees, and room and board.

For our second objective, we analyzed Education data on private student 

loans, reviewed results of a private student lenders survey conducted in a 

study by the Consumer Financial Protection Bureau (CFPB), the agency 

that supervises large banks and nonbanks that make private student 

loans.2 We also interviewed college officials about private student loan 

borrowing. For both objectives, we reviewed relevant federal laws, 

reports, and other information relevant to these issues.

We assessed the reliability of the Education data we used by testing it for 

accuracy and completeness and reviewing documentation about systems 

 1 For our panel regression model, we compared the same group of institutions over 

multiple years. Our panel consisted of all Title IV-eligible colleges in the United States 

over an 8-year time span that covered years before and after the change in loan limits, 

which occurred in academic years 2007-08 and 2008-09. The dataset is divided by the 

type of institution, and the control variables used in the regression include college fixed 

effects, economic variables and college characteristics. 

2 Consumer Financial Protection Bureau and the Department of Education, Private 

Student Loans (Washington, D.C.: August 29, 2012). The survey included information 

from nine major lenders. The participating lenders for this CFPB and Education study 

included: RBS Citizens N.A., Discover Financial Services, The First Marblehead 

Corporation, JPMorgan Chase Bank, N.A., PNC Bank, N.A., Sallie Mae, Inc., SunTrust 

Banks, Inc., U.S. Bank National Association, and Wells Fargo Bank, N.A. The information 

was provided to Education and CFPB under a non-disclosure agreement and is protected 

under various federal laws as proprietary and confidential business information.

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 28 GAO-14-7 Student Loan Limits

used to produce the data. We found the data we reviewed reliable for the 

purposes of our analyses. Similarly, we assessed the reliability of the 

CFPB study’s private student lender survey data by reviewing 

documentation about systems used to produce the data and reviewing 

the survey methodology. We conducted this performance audit from 

December 2012 to February 2014 in accordance with generally accepted 

government auditing standards. Those standards require that we plan 

and perform the audit to obtain sufficient, appropriate evidence to provide 

a reasonable basis for our findings and conclusions based on our audit 

objectives. We believe that the evidence we obtained provides a 

reasonable basis for our findings and conclusions based on our audit 

objectives.

To determine trends in college prices since the loan limits took effect, we 

examined 13 years of trend data (academic years 1999-2000 through 

2011-12) for all Title IV-eligible, degree-granting institutions of higher 

education from Education’s Integrated Postsecondary Education Data 

System (IPEDS), and from the three most recent National Postsecondary 

Student Aid Study (NPSAS) results (academic years 2003-04, 2007-08, 

and 2011-12). We examined this data for undergraduate students—the 

majority of college students—across four institutional sectors (nonprofit, 

for-profit, public 2-year, and public 4-year colleges) and geographic 

regions.3 For public 2-year and public 4-year colleges, we also reviewed 

the annual tuition for both in-state and out-of-state students.4 We 

analyzed three descriptors of price:

1. Tuition and fees: the amount of tuition and required fees covering a 

full academic year charged to students. These values represent what 

a typical student would be charged and may not be the same for all 

students at an institution. Tuition and fees data are weighted by 

 3 Our scope includes all 50 states and the District of Columbia. We grouped 2- and 4-year 

for-profit institutions together because about half of the institutions that classify 

themselves as 4-year institutions award mainly 2-year degrees. Given that we defined our 

population of institutions of higher education as degree-granting, our analysis excludes 

less-than-2-year for-profit institutions that award certificates. 

4 We did not break down in-district and out-of-district tuition data for public 2-year 

institutions. Most schools that offer programs for 2 years likely do not enroll many out-ofdistrict commuters, so the population is expected to be too small to yield reliable results. 

Analysis of Education 

Data on Trends in College 

Prices, Enrollment, and 

Federal Student Loan 

Borrowing Patterns
Appendix I: Objectives, Scope, and 

Methodology

Page 29 GAO-14-7 Student Loan Limits

undergraduate enrollment. We analyzed these data by sector and by 

region. 

Source: IPEDS and NPSAS data.

2. Total price of attendance: what a typical student would pay for tuition 

and required fees, books and supplies, room and board, and other 

personal expenses. We analyzed these data by sector.5

Source: NPSAS data.

3. Net price after grants: the total price of attendance minus all grant aid 

received by a typical student. We analyzed these data by sector.6

Source: NPSAS data.

To determine patterns in undergraduate student enrollment, we used 

IPEDS to analyze enrollment trends from academic years 1999-2000 

through 2011-12. To determine the characteristics of enrolled students, 

we also analyzed IPEDS data on institutional characteristics (geographic 

region and sector) and student characteristics (attendance status and 

race and ethnicity).

To determine the extent to which students borrowed Stafford loans at 

their maximum levels in academic year 2011-12, we used NPSAS data. 

For each loan type, we analyzed and compared the proportion of eligible 

borrowers who received their maximum Stafford loan amount in academic 

years 2003-04, 2007-08, and 2011-12.

Because NPSAS data are based on probability samples, estimates are 

formed using the appropriate estimation weights provided with each 

survey’s data. Because each of these samples follows a probability 

procedure based on random selection, they represent only one of a large 

number of samples that could have been drawn. Since each sample 

could have provided different estimates, we express our confidence in the 

precision of our particular sample’s results as a 95 percent confidence 

interval (e.g., plus or minus 2.5 percentage points). This is the interval 

that would contain the actual population value for 95 percent of the 

samples we could have drawn. Unless otherwise noted, all percentage 

 5 We did not analyze NPSAS data by region.

6 We did not analyze NPSAS data by region.
Appendix I: Objectives, Scope, and 

Methodology

Page 30 GAO-14-7 Student Loan Limits

estimates from NPSAS have 95 percent confidence intervals that are 

within 8 percent of the estimate itself. All NPSAS dollar estimates have 95 

percent confidence intervals that are within 8 percentage points of the 

estimate itself.

To determine trends in private student loan borrowing since the loan limits 

took effect, we reviewed aggregate trend data from nine major private 

student lenders7 compiled in a CFPB study from calendar years 2005-11. 

CFPB officials told us that the portfolios of these nine major lenders 

represent about 90 percent of the private student loan market. The 

lenders’ participation in the data collection was voluntary, and the 

information was provided to CFPB and Education under a non-disclosure 

agreement and is protected under various federal laws as proprietary and 

confidential business information.

These private lender data consists of:

1. Sample loan-level data: records from all private student loans 

originated from calendar years 2005 to 2011 of nine major lenders 

were pooled and analyzed in the CFPB study. The data do not identify 

the specific lender for each loan.

2. Lender portfolio-level data: quarterly performance data on private 

student loans originated and/or purchased by the nine major student 

loan lenders who provided the loan-level data, aggregated across 

lenders.

In addition, the CFPB study queried the nine lenders about current loan 

terms and conditions. We reviewed the CFPB study, including data 

appendices that described these data sources and methodology. To 

obtain additional information about trends after the loan limit increases, 

we supplemented the CFPB study data with analyses of Education’s 

IPEDS data (academic years 1999-2000 through 2011-12) and NPSAS 

data (academic years 1999-2000, 2007-08, and 2011-12) about private 

 7 Consumer Financial Protection Bureau and the Department of Education, Private 

Student Loans (Washington, D.C.: August 29, 2012). The participating lenders for this 

study included: RBS Citizens N.A., Discover Financial Services, The First Marblehead 

Corporation, JPMorgan Chase Bank, N.A., PNC Bank, N.A., Sallie Mae, Inc., SunTrust 

Banks, Inc., U.S. Bank National Association, and Wells Fargo Bank, N.A. 

Analysis of Data on 

Private Student Loan 

Borrowing
Appendix I: Objectives, Scope, and 

Methodology

Page 31 GAO-14-7 Student Loan Limits

loan usage and undergraduate borrowing. We also examined these data 

by institutional sector and for undergraduate students only.

To provide the schools’ perspectives about the role of loan limit increases 

on college prices and federal and private borrowing trends, we 

supplemented our data analysis with interviews with college officials at 

eight institutions. We selected a nonprobability sample of institutions to 

represent each major sector of higher education and different regions, 

amounts of federal aid received, enrollment sizes, admission selectivity 

levels, and prices of tuition and related fees (see table 5). During these 

interviews, we spoke with the financial aid directors and other school 

officials with knowledge of how tuition, fees, and other prices are set, 

asking a series of questions related to the setting of tuition and other 

prices and the role of loan limit increases in setting tuition and other 

prices. We also asked them a series of questions about private student 

loans, including trends in private student borrowing among their students 

and the type of information they provide students to help inform their 

decision about whether to borrow private student loans.

We also interviewed officials for three of the largest private student 

lenders, who also participated in the CFPB study’s lender survey. We 

asked them a series of questions, including questions about the trends in 

private student lending, how they disclose the terms of their loans and the 

loan certification process, how private student lending has changed over 

time, and whether they expected to see resurgence in the private student 

loan market.

In addition, we interviewed representatives from relevant professional 

associations, federal officials, and subject matter specialists, including 

academic researchers.

Interviews with College 

Officials, Private Student 

Lenders and Other 

Experts
Appendix I: Objectives, Scope, and Methodology

Page 32 GAO-14-7 Student Loan Limits

Table 5: Characteristics of Institutions of Higher Education Included in Our Interviews, Academic Year 2012-13

Sector Region Percent of 

Stafford loans 

distributed to 

this school’s 

sector

Undergraduate 

enrollment

Total price of 

attendance 

(living on 

campus)

Percent of 

students 

admitted

Student 

demographics

Percent of 

beginning 

undergraduate 

students with 

federal loansa

Percent of 

beginning 

undergraduate 

students receiving 

institutional aida

Public 4-year South

West

39-41% 6,868 In-state:

$20,883

Out-of-state:

$31,413

39% 58% White

19% Black/African 

American

18% 

Hispanic/Latino

2% Asian

1% American 

Indian or Alaska

Native

59% 49%

Public 4-year Great Lakes 39-41% 2,116 In-state: $17,352

Out-of-state:

$24,572

37% 95% Black/African 

American

2% White

1% Hispanic/Latino

1% Unknown

89% 86%

Public 2-year Rocky 

Mountains

7-15% 9,266 In-state:

$13,658

Out-of-state:

$16,738

Open 

admissions/all 

students 

accepted

76% White

16% 

Hispanic/Latino

2% Native 

Hawaiian or other 

Pacific Islander

2% Unknown

1% Asian

1% Black/African 

American

1% American 

Indian or Alaska

Native

32% 42%
Appendix I: Objectives, Scope, and Methodology

Page 33 GAO-14-7 Student Loan Limits

Sector Region Percent of 

Stafford loans 

distributed to 

this school’s 

sector

Undergraduate 

enrollment

Total price of 

attendance 

(living on 

campus)

Percent of 

students 

admitted

Student 

demographics

Percent of 

beginning 

undergraduate 

students with 

federal loansa

Percent of 

beginning 

undergraduate 

students receiving 

institutional aida

For-profit 2-

and 4-year

New England 21% 6,546 $43,630 58% 36% White

28% Unknown

24% Black/African 

American

8% Hispanic/Latino

1% Asian

1% American 

Indian or Alaska

Native

87% 48%

For-profit 2-

and 4-year

Multiple 21% 59,484 overall Varies Varies 38% White

21% Black/African 

American

17% Unknown

16% 

Hispanic/Latino

4% Asian

.6% Native 

Hawaiian or other 

Pacific Islander

.6% American 

Indian or Alaska 

Native

Varies Varies 

For-profit 2-

and 4-year

Multiple 21% 125,560 overallb Varies Varies Varies Varies Varies 
Appendix I: Objectives, Scope, and Methodology

Page 34 GAO-14-7 Student Loan Limits

Sector Region Percent of 

Stafford loans 

distributed to 

this school’s 

sector

Undergraduate 

enrollment

Total price of 

attendance 

(living on 

campus)

Percent of 

students 

admitted

Student 

demographics

Percent of 

beginning 

undergraduate 

students with 

federal loansa

Percent of 

beginning 

undergraduate 

students receiving 

institutional aida

Private 

nonprofit 4-

year

Southeast 23-33% 10,590 $58,782 40% 43% White

23% 

Hispanic/Latino

7% Black/African 

American

6%Unknown

5% Asian

34% 69%

Private 

nonprofit 4-

year

Mid-East 23%-33% 5,327 $54,780 8% 48% White

19% Asian

7% Hispanic/Latino

7% Black/African 

American

3% Unknown

3% 60%

Source: GAO analysis of the Integrated Postsecondary Education Data System and college reports.

a Data for beginning undergraduate students receiving federal loans or institutional aid is from academic year 2011-2012.

b Enrollment data for this higher education institution is as of October 2013.
Appendix II: Analysis of the Relationship 

between Student Loan Limit Increases and 

Tuition

Page 35 GAO-14-7 Student Loan Limits

This appendix provides the methodology we used to develop a panel 

regression model to analyze the relationship between Stafford student 

loan limit increases and college prices, and the results of that analysis. 

Our panel regression model is a statistical method where data are 

collected over a series of years for the same colleges to estimate possible 

relationships among certain variables, controlling for the effects of other 

variables; in this study, the relationship was between increases in loan 

limits and increases in college prices.

Our analysis of the relationship between loan limit increases and college 

prices used a panel regression model, which allows one to compare the 

same group of institutions over multiple years. Our panel dataset consists 

of all Title IV-eligible colleges in the United States over an 8-year time 

span that covers years before and after the change in loan limits, which 

occurred in academic years 2007-08 and 2008-09. The dataset is divided 

by the type of institution and the control variables used in the regression 

include college fixed effects, economic variables, and college 

characteristics. We examined the following sectors: public 4-year 

colleges; private nonprofit 4-year colleges; private for-profit 4-year 

colleges; public 2-year colleges; private for-profit 2-year colleges; and 

private for-profit less-than-2-year colleges. The main source of data is 

IPEDS, an annual survey of colleges conducted by the Department of 

Education (Education) that collects financial characteristics of the 

institutions and is maintained by Education.

The base specification of our model is given by the equation:

1. CollegePrices(i,t) = B0(i) + B1*LoanLimit(t) + B2*CollegeVars(i,t)

+ B3*EconVars(t) + B4*Pre-LoanLimitTrend(t)

+ B5*Post-LoanLimitTrend(t) + e(i,t)

where the notation means the following:

• The subscript i represents college “i”

• The subscript t represents year “t”

• CollegePrices are the prices for a college in a certain year. We used 

undergraduate tuition and fees and price of attendance (i.e., tuition 

plus fees, room and board, books and supplies, and other expenses). 

We used in-state tuition for public institutions, out-of-state tuition for 

private 2- and 4-year colleges, and trade tuition for private, less-than2-year colleges.

Appendix II: Analysis of the Relationship 

between Student Loan Limit Increases and 

Tuition

Methodology

Model
Appendix II: Analysis of the Relationship 

between Student Loan Limit Increases and 

Tuition

Page 36 GAO-14-7 Student Loan Limits

• LoanLimit identifies the period following the increase in the Stafford 

student loan limit. The starting period for the increase in limits for both 

the subsidized and unsubsidized loans was academic year 2007-08 

(when the limit was increased from $2,625 to $3,500 for dependent 

students), and academic year 2008-09 (when the loan limit was 

increased from $3,500 to $5,500) for unsubsidized or combined loans. 

We used dummy variables that are zero in the years before the 

change in loan limit and one in the years thereafter. The dummy 

variables for the loan limits in academic years 2007-08 and 2008-09 

are used, respectively, in separate equations because the dummy 

variables overlap. The loan limit increases are one-time events. In 

addition to the loan limit increases, these variables also capture the 

effects on college prices of other events that occurred at the same 

time, such as the onset of the 2007-2009 financial crises and 

recession.

• B0 is a college fixed effect. The fixed effect allows us to control for 

characteristics of the college, which do not vary over time and may 

affect the college prices, but are not observed in our data. For 

example, the college may be located in an expensive region of the 

country.

• CollegeVars are variables that describe characteristics of a college in 

a certain year. The key variables we used involve revenue, and 

include state appropriations and endowment income. We also 

included the number of undergraduates (in full-time equivalents).

• EconVars are control variables that vary by year, but not by college. 

These variables reflect general economic conditions and include 

state-level unemployment, housing prices, and a stock market index.

• Pre-LoanLimitTrend and Post-LoanLimitTrend: To capture trends in 

college prices during the periods before and after the loan limit 

increases, two different time trends were used. For regressions 

analyzing the effect of the academic year 2007-08 loan limit increase 

on college prices:

2. Pre-LoanLimitTrend = (t – 2008)*(1 – LoanLimit), and

3. Post-LoanLimitTrend = (t – 2008 + 1)*LoanLimit.

In Equations (2) and (3), 2008 will be replaced with 2009 for regressions 

analyzing the effect of the academic year 2008-09 loan limit increase on 

college prices. The post-loan limit trend is implicitly an interaction term 

between the loan limit variable and a time trend.
Appendix II: Analysis of the Relationship 

between Student Loan Limit Increases and 

Tuition

Page 37 GAO-14-7 Student Loan Limits

These variables control for trends in college prices that are common to all 

colleges in our sample. Including both variables in our regressions allows 

trends in college prices after the loan limit increase to differ from trends in 

college prices before the loan limit increase. However, these variables 

also reflect changes in other unobservable factors, such as economic or 

political conditions, that may cause trends in college prices to differ before 

and after the loan limit increases.

• e is the error term, which captures potential model misspecification, 

measurement errors, and unobserved variables.

We divided the sample into sectors based on the control (e.g. public, 

private, and nonprofit, for profit) and level (e.g. 2-year, 4-year) of the 

institution. Specifically, we examined the six sectors where there were 

sufficient observations for meaningful analysis and excluded the 

remaining three sectors because there were too few observations. Thus 

we included public 4-year colleges; private nonprofit 4-year colleges; 

private for-profit 4-year colleges; public 2-year colleges; private for-profit 

2-year colleges; and private for-profit less-than-2-year colleges and 

excluded private nonprofit less than two-year colleges.

The analysis was done separately by institutional sector for two reasons. 

First, different institution types may not necessarily compete for the same 

types of students. For example, students with lower household incomes 

are less likely to attend private colleges than public colleges. Thus, 

different sectors may use different strategies for the college prices they

charge. Second, different institution types are likely to be affected by 

different variables. For example, state appropriations are likely to be more 

important to public colleges than for-profit private colleges. This implies 

that the model specification could be different for different sectors.

The main source of data is the IPEDS dataset, maintained by Education. 

IPEDS is an annual survey of colleges conducted by Education which 

focuses on financial characteristics of the institutions. We merged the 

academic year data across years and colleges to form a panel that runs 

from the 2003-04 to the 2010-11 academic year. For certain income 

variables, we used definitions based on work by the Delta Cost Project. 

Now part of the American Institutes for Research, the Delta Cost Project 

published a data map with the goal of standardizing and simplifying some 

of the variables within IPEDS. Both IPEDS and the Delta Cost Project 

definitions have been used in prior GAO work and deemed reliable for our 

purposes.

Data
Appendix II: Analysis of the Relationship 

between Student Loan Limit Increases and 

Tuition

Page 38 GAO-14-7 Student Loan Limits

We further refined our IPEDS data by excluding certain colleges for 

various reasons. The major exclusion was institutions that did not have 

complete data for all 8 years that we examined. Further, responding to 

the IPEDS survey is required only for colleges that participate in the Title 

IV aid programs. We also excluded colleges that were outside the 50 

states and the District of Columbia, did not participate in Title IV, were not 

open to the public, or were not predominantly postsecondary. We also 

excluded colleges that were not active, were primarily administrative 

units, or did not have undergraduate programs. This resulted in 

approximately 600 public 4-year colleges; 1200 private nonprofit 4-year 

colleges; 400 private for-profit 4-year colleges; 1000 public 2-year 

colleges; 400 private for-profit 2-year colleges; and 900 private for-profit 

less-than-2-year colleges.1

We also added data from outside IPEDS to control for the potential 

impact of household wealth on college prices. Specifically, we added a 

state-level unemployment rate from the Bureau of Labor Statistics. In 

some versions, we added the Case-Schiller composite housing price 

index, which came from Standard and Poor’s (S&P), and the S&P 500 

stock index, which we got from Federal Reserve Economic Data (FRED)

of the Federal Reserve Bank of St. Louis.

We ran several versions of our model, the results of which are presented 

in tables 6 and 7. Table 6 shows results for the first loan limit increase in 

academic year 2007-08, and table 7 shows results for the second loan 

limit increase in academic year 2008-09—both best represent the various 

models we estimated. Overall, the estimated models are statistically 

significant as indicated by the models’ statistics (p-values).

Table 6 shows the results for the academic year 2007-08 Stafford loan 

limit increase for both subsidized and unsubsidized loans on tuition and 

fees (college prices). In each estimated model, the average academic 

year change in college prices for years prior to the loan limit increase is 

given by B4 (the coefficient on Pre-LoanLimitTrend); the average 

academic year change in college prices in the year in which the loan 

limits increased relative to the prior year is given by the sum of B1 (the 

 1 The exact number of observations used per sector varies by year depending on exactly 

which variables are used in the model. If a college has a missing value for a particular 

variable in a particular year, then the number of observations used in that year decreases. 

Results
Appendix II: Analysis of the Relationship 

between Student Loan Limit Increases and 

Tuition

Page 39 GAO-14-7 Student Loan Limits

coefficient on LoanLimit), B4, and B5 (the coefficient on PostLoanLimitTrend); and the average academic year change in college 

prices in years after the loan limit increase is given by B5, all else being 

equal. Thus, in the year the loan limit increases, the change in college 

prices resulting from the loan limit and the trend effects is the sum of B1 

and B5; we could not obtain the effects of the loan limit by itself because 

B5 captures that effect as well as the trend effects. As shown in table 7, 

for example, for private, nonprofit 4-year colleges (B1 = – $698, B4 = 

$661, and B5 = $683), the average academic year change in college 

prices for years prior to the academic year 2007-08 loan limit increase is 

$661, the average change in college prices in the 2007-08 academic year 

compared to the prior year is $646, the average academic year change in 

college prices in years following the academic year 2007-08 loan limit 

increase is $683, and the average academic year change in college 

prices related to the loan limit increase is -$15 in the 2007-08 academic 

year. Estimates from the regressions analyzing the academic year 2008-

09 Stafford loan limit increases for only unsubsidized loans are shown in 

table 8.2

Table 7 presents the average academic year changes in college prices by 

different institutions in the periods before the academic year 2007-08 

Stafford loan limit increase, the changes in college prices between the 

loan limit year and the prior year, the change college prices in the years 

after the loan limit increase, and the change in college prices in the loan 

limit year attributable to only the events that occurred in that academic 

year. The results show that average academic year college prices 

generally increased across all types of colleges before the increase in the 

Stafford loan limits. In the academic year of the 2007-08 Stafford loan 

limit increase, college prices increased for some colleges and decreased 

for others. The decrease in college prices by some colleges is consistent 

with the opinion that the rapid change in economic conditions may have 

led state legislatures to put political pressure on colleges in their states to 

keep tuition low, a sentiment that was echoed in some of our interviews 

with college officials. Furthermore, some of the college officials we spoke 

with said that they held down tuition increases because of the economic 

downturn and financial crises. In the years following the academic year 

2007-08 loan limit increase, college prices generally increased. Although 

 2 Our analysis of college prices based on cost of attendance, for the limited number of 

colleges that had enough data, are similar to the reported results for tuition and fees.
Appendix II: Analysis of the Relationship 

between Student Loan Limit Increases and 

Tuition

Page 40 GAO-14-7 Student Loan Limits

the results appear to suggest that the loan limit increase tended to 

weaken the rising trend in college prices, we cannot determine which 

portion of the change in college prices in the academic year of the 2007-

08 loan limit increase is attributable to the loan limit alone because it is 

confounded by other events in that year as well as the ongoing rising 

prices.

The results in table 9 show the average academic year changes in 

college prices before, during, and after the academic year 2008-09 

Stafford loan limit increases. There were generally increases in college 

prices in the academic year of the 2008-09 loan limit increase, before and 

afterwards (although there were few cases of decreases). Similar to the 

academic year 2007-08 loan limit increase, while the results seem to 

suggest that the loan limit increase in academic year 2008-09 tended to 

boost the rising trend in college prices we could not determine the portion 

of the increase due solely to the loan limit increase because of other 

confounding effects. Also, we could not separate out the effects of the 

academic year 2007-08 and 2008-09 Stafford loan limit increases from 

each other after they occurred since the two events overlapped.

Our results suggest that average academic year college prices generally 

increased across all types of colleges prior to the increases in the Stafford 

loan limits in academic years 2007-08 and 2008-09, and after the loan 

limit increases. In the academic year of the 2007-08 Stafford loan limit 

increase college prices increased for some colleges while they decreased 

for others. And in the academic year of the 2008-09 Stafford loan limit 

increase, college prices generally increased. But, in the effective years of 

the loan limit increases we could not identify the changes in college prices 

that were due solely to the increases in the Stafford loan limit increases 

because of other events that happened during that time, including the 

financial crisis and the economic recession, as well as the upward trend 

in college prices.

We took multiple steps to verify our methodology. First, we consulted with 

GAO experts on statistics, econometric modeling, and higher education 

issues. Based on their comments, we made modifications to our model 

where appropriate. Second, we consulted academic literature on student 

financial aid and tuition. Third, we consulted academic experts who 

reviewed our methodology and offered feedback. Fourth, we recognize 

that our analysis has some limitations, including the difficulty in isolating 

the effects of the Stafford loan limits themselves, the relatively small 

number of years used, and our inability to include other types of colleges. 

The results should therefore be interpreted with caution.
Appendix II: Analysis of the Relationship 

between Student Loan Limit Increases and 

Tuition

Page 41 GAO-14-7 Student Loan Limits

Table 6: Regression Estimates of the Academic Year 2007-08 Stafford Loan Limit Increases and College Tuition and Fees

Sector Public, 4-year

Private, 

nonprofit, 4-

year

Private, forprofit, 4-year Public, 2-yearPrivate, forprofit, 2-yearPrivate, forprofit, <2 yr

Dependent variable In-state tuition Out-state tuition Out-of-state 

tuition

In-state tuition Out-of-state 

tuition

Trade tuition

Loan limit dummy -95.80 [0.19] -698.44 [0.00] -415.42 [0.32] -288.63 [0.00] -1,174.65 [0.03] -318.78 [0.07]

Pre-loan limit trenda 119.53 [0.00] 660.53 [0.00] 446.75 [0.00] 81.37 [0.00] 566.53 [0.00] 325.79 [0.00]

Post-loan limit trendb 278.99 [0.00] 682.73 [0.00] -49.77 [0.72] 178.74 [0.00] 30.84 [0.86] 548.98 [0.00]

State appropriations -0.008 [0.021] NA NA 0.000 [0.234] NA NA

Endowment income NA -0.0005 [0.11] NA NA NA NA

State unemployment 

rate

82.13 [0.00] 21.53 [0.20] -48.13 [0.42] -50.12 [0.00] 14.48 [0.87] 97.15 [0.00]

Stock market price 

index

0.28 [0.05] -0.152 [0.46] -1.46 [0.08] -0.363 [0.00] -2.14 [0.04] 0.29 [0.39]

House price index 5.59 [0.00] -5.65 [0.01] -1.95 [0.82] 0.342 [0.70] -6.34 [0.53] 3.70 [0.27]

Full-time

undergraduates

-0.004 [0.73] -0.046 [0.12] -0.027 [0.00] 0.0003 [0.95] -0.300 [0.12] -0.000 [0.99]

Constant 3,908 [0.00] 21,880 [0.00] 18,188 [0.00] 3,689 [0.00] 18,029 [0.00] 9,738 [0.00]

College fixed-effects Yes Yes Yes Yes Yes Yes

No. of observations 4,564 9,261 2,679 7,264 2,155 6,333

No. of colleges 601 1,191 398 946 385 906

Prob > F 0.00 0.00 0.00 0.00 0.00 0.00

Adjusted R-square 0.94 0.98 0.72 0.93 0.71 0.86

Source: GAO analysis of Integrated Postsecondary Education Data System data.

Notes:

The values in square brackets are the p-values of the estimates.

NA means not applicable.

a The pre-loan limit time trend is equal to 0 in 2007-08 and later, equal to -1 in 2006-07, equal to -2 in 

2005-06, and so forth.

b The post-loan limit time trend is equal to 0 in 2006-07 and earlier, equal to 1 in 2007-08, equal to 2 

in 2008-09, and so forth.
Appendix II: Analysis of the Relationship 

between Student Loan Limit Increases and 

Tuition

Page 42 GAO-14-7 Student Loan Limits

Table 7: Estimated Average Academic Year Changes in Tuition and Fees: Academic Year 2007-08 Stafford Loan Limit 

Increase

Sector

Academic Year 2007-2008 Stafford Loan Limit Increasea

Average academic year 

change in tuition & 

fees, pre-loan limit 

years (2003-04 to 

2006-07)b

Average academic 

year change in tuition 

& fees, loan limit year 

(2007-08)c

Average academicyear change in tuition 

& fees , loan limit year 

(2008-09 to 2010-11)d

Average academicyear change in tuition 

& fees from loan limit 

loan limit year 

(2007-08)e

Public, 4-year $120 $303 $279 $183

Private, nonprofit, 4-year 661 646 683 -15

Private, for-profit, 4-year 447 -18 -50 -465

Public, 2-year 81 -29 179 -110

Private, for-profit, 2-year 567 -577 31 -1,144

Private, for-profit, <2 -year 326 556 549 230

Source: GAO analysis of Integrated Postsecondary Education Data System data.

a The estimates are based on the coefficient estimates in Table 1.

b The value equals the pre-loan-trend in Table 1.

c The value equals the sum of loan limit dummy, pre-loan trend, and post-loan limit trend in Table 1.

d The value equals the post-loan limit trend in Table 1.

e The value equals the sum of loan limit dummy and post-loan limit trend in Table 1.
Appendix II: Analysis of the Relationship 

between Student Loan Limit Increases and 

Tuition

Page 43 GAO-14-7 Student Loan Limits

Table 8: Regression Estimates of the Academic Year 2008-09 Stafford Loan Limit Increases and College Tuition and Fees

Sector Public, 4-year

Private, 

nonprofit, 4-

year

Private, forprofit, 4-year Public, 2-yearPrivate, forprofit, 2-yearPrivate, forprofit, <2-yr

Dependent variable In-state tuition Out-of-state 

tuition

Out-of-state 

tuition

In-state tuition Out-of-state 

tuition

Trade tuition

Loan limit dummy -403.37 [0.00] -575.75 [0.00] 9.84 [0.98] 92.29 [0.07] 761.33 [0.19] -590.72 [0.00]

Pre-loan limit trenda 183.62 [0.00] 653.03 [0.00] 293.63 [0.00] 42.91 [0.00] 183.90 [0.01] 402.69 [0.00]

Post-loan limit trendb 342.14 [0.00] 658.57 [0.00] -125.43 [0.53] 139.80 [0.00] -224.95 [0.36] 599.64 [0.00]

State appropriations -0.008 [0.02] NA NA 0.000 [0.24] NA NA

Endowment income NA -0.0005 [0.11] NA NA NA NA

State unemployment 

rate

84.90 [0.00] 17.72 [0.30] -42.84 [0.48] -51.94 [0.00] 20.92 [0.82] 96.15 [0.00]

Stock market price index -0.116 [0.50] -0.043 [0.86] -0.813 [0.43] -0.123 [0.25] -0.258 [0.83] -0.085 [0.83]

House price index 4.51 [0.00] -5.84 [0.00] 2.02 [0.78] 0.97 [0.20] 2.34 [0.78] 1.96 [0.50]

Full-time 

undergraduates

-0.004 [0.69] -0.046 [0.12] -0.027 [0.00] 0.000 [0.96] -0.306 [0.11] -0.000 [0.99]

Constant 4,943 [0.00] 22,429 [0.00] 16,512 [0.00] 3,222 [0.00] 13,205 [0.00] 11,144 [0.00]

College fixedeffects Yes Yes Yes Yes Yes Yes

No. of observations 4,564 9,261 2,679 7,264 2,155 6,333

No. of colleges 601 1,191 398 946 385 906

Prob > F 0.00 0.00 0.00 0.00 0.00 0.00

Adjusted R-square 0.94 0.98 0.72 0.93 0.71 0.86

Source: GAO analysis of Integrated Postsecondary Education Data System data.

Notes:

The values in square brackets are the p-values of the estimates.

NA means not applicable.

a The pre-loan limit time trend is equal to 0 in 2008-09 and later, equal to -1 in 2007-08, equal to -2 in 

2006-07, and so forth.

b The post-loan limit time trend is equal to 0 in 2007-08 and earlier, equal to 1 in 2008-09, equal to 2 

in 2009-10, and so forth.
Appendix II: Analysis of the Relationship 

between Student Loan Limit Increases and 

Tuition

Page 44 GAO-14-7 Student Loan Limits

Table 9: Estimated Average Academic Year Changes in Tuition and Fees: Academic Year 2008-09 Stafford Loan Limit 

Increases

Sector

Academic year 2008-09 Stafford Loan limit increasea

Average academic year 

change in tuition & 

fees, pre-loan limit 

years (2003-04 to 2007-

08)b

Average academic year 

change in tuition & 

fees, loan limit year 

(2008-09)c

Average academic year 

change in tuition & 

fees, loan-limit year 

(2009-10 to 2010-11)d

Average academic year 

change in tuition & fees 

from loan limit, loan 

limit year (2008-09)e

Public 4-year $184 $123 $342 -61

Private nonprofit 4 year 653 736 659 83

Private for-profit 4-year 294 179 -125 -115

Public 2 year 43 275 140 232

Private for-profit 2-year 184 720 -225 536

Private for-profit <2-year 403 412 600 9

Source: GAO analysis of Integrated Postsecondary Education Data System data.

a The estimates are based on the coefficient estimates in Table 8.

b The value equals the pre-loan-trend in Table 8.

c

The value equals the sum of loan limit dummy, pre-loan trend, and post-loan limit trend in Table 8.

d The value equals the post-loan limit trend in Table 8.

e The value equals the sum of loan limit dummy and post-loan limit trend in Table 8.
Appendix III: Additional Data on College Prices 

and Student Enrollment

Page 45 GAO-14-7 Student Loan Limits

Figure 9: In-state Tuition and Required Fees by Region for Full-time Undergraduate 

Students, Academic Years 1999-2000 to 2011-12

Appendix III: Additional Data on College 

Prices and Student Enrollment
Appendix III: Additional Data on College Prices 

and Student Enrollment

Page 46 GAO-14-7 Student Loan Limits

Figure 10: Out-of-state Tuition and Required Fees by Region for Full-time 

Undergraduate Students, Academic Years 1999-2000 to 2011-12
Appendix III: Additional Data on College Prices 

and Student Enrollment

Page 47 GAO-14-7 Student Loan Limits

Figure 11: Enrollment in Degree-granting Institutions of Higher Education by Region and Share of Students, Academic Years 

1999-2000 to 2011-12
Appendix III: Additional Data on College Prices 

and Student Enrollment

Page 48 GAO-14-7 Student Loan Limits

Figure 12: Enrollment in Degree-granting Institutions of Higher Education by 

Attendance Status, Academic Years 1999-2000 to 2011-12
Appendix III: Additional Data on College Prices 

and Student Enrollment

Page 49 GAO-14-7 Student Loan Limits

Figure 13: Enrollment in Degree-granting Institutions of Higher Education by Ethnicity, Academic Years 1999-2000 to 2011-12
Appendix III: Additional Data on College Prices 

and Student Enrollment

Page 50 GAO-14-7 Student Loan Limits

Figure 14: Enrollment in Degree-granting Institutions of Higher Education by Sector and Ethnicity, Academic Years 1999-2000 

to 2011-12
Appendix IV: Sample Self-Certification Form 

for Private Loan Applicant

Page 51 GAO-14-7 Student Loan Limits

Source: Department of Education

Appendix IV: Sample Self-Certification Form 

for Private Loan Applicant
Appendix V: GAO Contact and Staff 

Acknowledgements

Page 52 GAO-14-7 Student Loan Limits

Jacqueline M. Nowicki, (617) 788-0580 or nowickij@gao.gov.

In addition to the contact named above, Sherri Doughty, Assistant 

Director, Kristy Kennedy, Sandra Baxter, Patrick Dudley, John Karikari, 

and John W. Mingus made significant contributions to this report. Also 

contributing to this report were Jessica Botsford, Melissa H. Emrey Arras, 

Lorraine Ettaro, Mimi Nguyen, and Kathleen L. Van Gelder.

Appendix V: GAO Contact and Staff 

Acknowledgements

GAO Contact

Staff 

Acknowledgements

(131217)
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