Federal Aid Just Hit $155 Billion

Federal Aid Just Hit $155 Billion

December 8, 2025

Each year, the College Board releases a Trends in College Pricing and Student Aid report, an invaluable resource for analysts and policymakers. Here are highlights from this year’s report, with an emphasis on findings that run counter to the conventional wisdom.

There were some large changes in federal aid over the past year. In particular:

Total federal aid increased by $8 billion to $155 billion.
Pell Grants accounted for most of this change, increasing by $6 billion.
Veterans’ benefits also increased by $2 billion.
Loan volume didn’t change much.

Tax benefits and Pell Grants are the most common types of aid.

The private nonprofit sector will feel the elimination of GradPLUS loans the most.

Undergraduates have been borrowing less over time, whereas graduate students have been borrowing more.

We’ve had free community college—on average—for around 17 years now. Note the Net TF line below, which shows net tuition and fees after accounting for grant aid.

Net tuition, which accounts for grant aid, continues to fall at four-year public colleges. This figure peaked at $4,400 in 2015-16 and has since fallen to $2,300.

Community colleges have comparable revenue to most other types of colleges. The only type of college that stands out as having dramatically more revenue than other types are public doctoral colleges.

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Discussion

Dr. Ed

December 9, 2025

” The only type of college that stands out as having dramatically more revenue than other types are public doctoral colleges.”

The interesting question is how do they account for tuition wavers associated with teaching & research assistant positions? There are three ways to do it:

1: Consider it “lost revenue” — write it off.
2: Recharge it — have the employing entity or department pay the tuition.
3: Ignore it — it’s completely off the books and doesn’t exist.

If you are recharging it, you have a lot of money that doesn’t physically exist because you are just charging it against something else, e.g. undergraduate teaching or research budgets. It’s cost shifting.

Reply
Dr. Ed

December 8, 2025

Over the past decade, average inflation-adjusted tuition and fees declined by 7% at public four-year institutions, and declined by 10% at public two-year colleges, compared to increases of over 20% in each sector in the previous two decades.[emphasis added]

This is significant, particularly if you look at it over the past 15 years as college costs seem to have peaked with COVID.

Also 51% of Parent Plus Loans are going to public 4 year (and 2% to public 2 year) institutions. This surprises me because the public institutions purport to be less expensive, which raises the question of the private discount rate — what is that now?

PPLs are going to become a problem because Social Security checks are already being garnished for repayment. As of next year they will no longer be eligible for income-driven repayment which means they are now, but whose income?

Reply
Dr. Ed

December 8, 2025

Over the past decade, average inflation-adjusted tuition and fees declined by 7% at public four-year institutions, and declined by 10% at public two-year colleges, compared to increases of over 20% in each sector in the previous two decades.[emphasis added]

This is significant, particularly if you look at it over the past 15 years as college costs seem to have peaked with COVID.

51% of Parent Plus Loans going to public 4 year (and 2% to public 2 year) institutions.
Those are going to become a problem because Social Security checks are already being garnished for repayment. As of next year they will no longer be eligible for income-driven repayment which means they are now, but whose income?

Reply

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