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. 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 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. 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. 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. 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. 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. Regardless of 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, and subsequently for all qualified undergraduate students receiving unsubsidized or combined Stafford loans in academic year 2008-09 (see table 2). 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. 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. 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). 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). 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), and lower increases in the Great Lakes and Plains regions at 1 and 2 percent, respectively. 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, 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. 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. 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 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). 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 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. Students also borrowed less private student loan money after the loan limit increases, on average about $1,179 less in academic year 2011-12 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.