A History of

Federal Student Aid

A film series documenting the policy and the political origins of federal financial aid programs


Get educated.

To understand the current state of federal student aid, it’s important to understand its origins. In six short chapters, Looking Back to Move Forward explores the 60-year history of federal student aid programs and the historical perspectives of those involved in their creation and evolution.

Each chapter features a short film, an expanded history and timeline of events, and a comprehensive viewing guide.

We hope you’ll join the discussion. Check out the trailer below, or select a chapter from the menu to get started.

American adults today
have some kind of
student loan debt.
(grants, loans, and work study)
American adults today
have some kind of
student loan debt.

(grants, loans, and work study)

Chapter 1

How Did We Get Here:

Growth of Federal Student Loans


“How Did We Get Here: Growth of Federal Student Loans” follows the expansion of the federal student loan program throughout the years, from its origins in helping middle-income students afford a college education to an eventual rise in student loan borrowing. This 15-minute film chronicles:

  • the rise in loan volume
  • the impact of budgetary and accountability factors on the loan program
  • the development of repayment options that provide tools for students to manage loan debt.
The first federal loan program, the National Defense Student Loan (now the Perkins Loan) was created in 1958.
Million Outstanding Loans
1 in 6 American adults today has some kind of student loan debt.
Of First Time
bachelor’s recipients borrowed for their educations in 2007-08, up from 49% in 1992-93.
“We’ve seen an interesting evolution in terms of the student loan programs—from creating greater access to loans to ensuring that defaults don’t happen, to what we have now contemporarily, which is this interest in debt.”
Jamie Merisotis
executive director, National Commission on Responsibilities
for Financing Postsecondary Education, 1991–93
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University students studying at library
Trends in Student Aid 2016
Current perceptions of college affordability, student aid, and student debt are, to a great extent, outgrowths of the financial crisis of 2008 and the ensuing recession. Take a look at The College Board's most recent report about trends in student aid.
Document containing interest rates
Federal Student Loan Amounts and Terms for Loans Issued in 2016-17
The above document, created by The Institute for College Access & Success, summarizes the interest rates, loan limits, and other terms for federal student loans issued from July 1, 2016 through June 30, 2017.
Older adults in a classroom setting
Snapshots of older consumers and student loan debt
The number of consumers age 60 and older with student loan debt has quadrupled over the last decade in the United States, and the average amount they owe has also dramatically increased. Learn more using the link above.
The Condition of Education 2017: Loans for Undergraduate Students
In 2014–15, the average annual undergraduate student loan amount of $7,000 was 10 percent lower than the 2009–10 average of $7,700 (in constant 2015–16 dollars). This report provides statistics about loans for undergraduate students.

Chapter 2

Where Financial Aid Began

Partnering with Campuses and States


The federal government has historically leveraged funds for both states and colleges to expand access and opportunity to higher education. “Where Financial Aid Began: Partnering with Campuses and States” documents a history of these partnerships and the policies that shaped them—from the introduction of the original campus-based programs and state partnerships through their growth or decline over the years. The federal programs covered in this 10-minute film all require a monetary match from states and colleges, thereby expanding the reach of federal financial aid.

have benefitted from collegiate work-study programs since their inception in 1964.
have need-based financial aid programs to supplement Pell, as of 2014-15.
“The campus-based aid programs were designed to get colleges to also develop their own grant, loan, and work programs that would be based on need. We also want to change the way that institutions package aid, and we want to change the way that states package aid.”
Sarah Flanagan
professional staff, U.S. Senate Health, Education,
Labor and Pensions Committee, 1987-93
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Students raising hands in classroom
Federal and State Funding of Higher Education: A Changing Landscape
States and the federal government have long provided substantial funding for higher education, but changes in recent years have resulted in their contributions being more equal than at any time in at least the previous two decades.
Graduates at commencement ceremony
Campus-Based Student Financial Aid Programs Under the Higher Education Act
Campus-based programs are unique among need-based federal student aid programs in that federal funds are awarded to institutions of higher education according to formulas that take into account past institutional awards and the aggregate financial need of students attending the institutions.
A Brief History of the Federal Work-Study Program
The above article from Campus Compact provides a brief history of The Economic Opportunity Act of 1964, The Higher Education Act of 1965, The revision in 1972 to the Higher Education Act of 1965, and The Higher Education Amendments of 1992.
Student taking notes during class
Federal Work-Study Research: Literature Review & Policy Scan
This report by the National Association of Student Financial Aid Administrators (NASFAA) examines policies and research involving the Federal Work-Study (FWS) program, which funds part-time employment for students with financial need.

Chapter 3

Pell Grant

Building Block of Student-Based Aid


“Pell Grant: Building Block of Student-Based Aid” chronicles the history of the program from its bipartisan legislative origins through its various selected subsequent iterations. This 14-minute film documents several key changes to the Pell Grant program including efforts to broaden and limit student eligibility, ebbs and flows in funding, increases in the maximum award levels, and the creation of supplemental programs for Pell recipients.

million students
received Pell Grants in 2015-16, up from 170,000 in 1973-74. Awards peaked at 9.4 million students in 2011-12.
was the maximum
Pell Grant amount for the 2015-16 school year.
of Pell Grant recipients
had an annual income below $30,000 in 2014-15.
“Prior to the Pell Grant, the aid went to institutions to give to students. With the Pell Grant, the dynamic changed.”
David Evans
professional staff, U.S. Senate Health, Education,
Labor, and Pensions Committee, 1978-1996
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College graduates hugging
The Pell Partnership: Ensuring Shared Responsibility for Low-income Student Success
The Pell Partnership gives a full view of Pell Grant graduation rates at nearly 1,150 institutions, including an analysis of the national completion gap and best practices at institutions that are serving low-income students quite well.
Student in chemistry class
The Impact of Pell Grant Eligibility on Community College Students’ Financial Aid Packages, Labor Supply, and Academic Outcomes
In this paper, CAPSEE examines the effects of receiving a modest Pell Grant on financial aid packages, labor supply while in school, and academic outcomes for community college students.
Grants binder sitting on a desk
Grant Aid Has Increased—But So Has the Average Net Price of College
Undergraduate students are borrowing slightly less and receiving more grant aid than those in school during the height of the Great Recession, according to an annual federal report detailing demographic and financial trends in education.
Paycheck waiting to be opened
Changes in Pell Participation and Median Income of Recipients
This Data Point examines how Pell Grant receipt and recipients’ income have changed over time. For dependent students, Pell Grant eligibility is based on parents’ income, while for independent students, it is based on students’ income.

Chapter 4

Form and Formula

How the Federal Government Distributes Aid to Students


“Form and Formula: How the Federal Government Distributes Aid to Students” explains the history of need analysis—the method used to determine the amount of federal aid a student receives—and the method of collecting financial data from students and families. The system of determining need began with colleges and universities each establishing how best to distribute institutional aid while using their own forms to collect data, and evolved to the creation of a robust, national form and formula regulated by the federal government.

This 13-minute film closely follows this evolution by documenting the passage of several seminal pieces of higher education legislation and following the diverse efforts of institutions, associations, and policymakers in determining the best form and formula to use when providing students and their families with money for college.

million students
received Pell Grants in 2015-2016.
million students
completed the Free Application for Federal Student Aid (FAFSA) during the 2015-16 application cycle.
was the average cost
was the average cost of in-state public college tuition and fees in 2016-17.
“It became very clear to us that Congress could not achieve its objectives for fair and equitable distribution of student aid funds unless it controlled the formulas and unless it controlled the forms.”
Brian Fitzgerald
staff director, Advisory Committee
on Student Financial Assistance, 1988-2005
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Math formula written on chalkboard
The EFC Formula, 2017-2018
The Expected Family Contribution (EFC) is a number that determines students’ eligibility for federal student aid. In the Fall of 2015, the President announced two major changes to the Free Application for Federal Student Aid (FAFSA) process, which this paper discusses.
A stack of FAFSA paperwork
What College Students Need to Know About FAFSA Changes
New rules on applying for financial aid will benefit students, but the process will be trickier this year. The following paper documents the changes and its impact on college-bound students.
Calculator, pen, paperwork, and laptop on desk
Federal Student Aid: Need Analysis Formulas and Expected Family Contribution
This report created by the Congressional Research Service describes the need analysis formulas used to calculate the Expected Family Contribution (EFC) for federal student aid applicants.
Students in lecture hall
How Aid Is Calculated
This article explains how colleges or career schools listed on the Free Application for Federal Student Aid (FAFSA) will calculate the financial aid that college-bound students are eligible for.

Chapter 5

The Other Side of the Ledger

Student Aid Through Tax Benefits


“The Other Side of the Ledger: Student Aid Through Tax Benefits” explains the history of tax benefits such as tax credits, tax deductions, and qualified tuition programs used to pay for higher education related expenses.

In an effort to make college more affordable, federal lawmakers have proposed several approaches to make tax benefits—primarily aimed at the middle class—a viable way to supplement the direct student aid programs traditionally targeted at low-income students. Although these efforts began over half a century ago, it was not until the late 1990s that tax benefits for college expenses were written into the tax code. This 14-minute film details important legislative milestones and describes the growth of these benefits.

saved on federal income taxes by students and parents through education tax credits and deductions in 2014.
is the four-year tax savings offered to qualified taxpayers under the American Opportunity Tax Credit, made permanent in 2015.
529 qualified tuition plans were active in December of 2015, up from 12.1 million the year before.
“If you’re taking a bigger-picture view of how you fund a student’s education, traditionally it had been a focus on the federal student aid system, which was great. But early on there were opportunities to say, ‘Are there ways that we can help alleviate some college cost stress for families, in particular middle-class families, who were starting to feel the squeeze of college cost?’”
Gaby Gomez
professional staff, U.S. House Education and Labor Committee, 2006-09; assistant secretary
for legislation and congressional affairs, U.S. Department of Education, 2009-14
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Closeup of the Capital Building in Washington, D.C.
How Governments Support Higher Education Through the Tax Code
To maximize the impact of higher education investments and achieve desired policy goals, policymakers should have knowledge of the full range of assistance provided to institutions and students, including through spending programs and the tax code.
Internal Revenue Service Building in Washington, D.C.
The returns to the federal tax credits for higher education
Using selected, de-identified data from the population of potential return filers, the National Bureau of Economic Research shows how tax credits are distributed across households with different incomes, along with its causal effects and implications.
Dictionary showing definition of Tax
Higher Education Tax Benefits: Brief Overview and Budgetary Effects
This report contrasts higher education tax benefits with traditional student aid, presents a brief history of higher education tax policy over the past 60 years, summarizes key features of the available tax benefits, and provides JCT estimates of revenue losses resulting from individual tax provisions.
Person taking notes at a desk
What tax incentives exist to help families pay for college?
Rapidly rising college expenses in the 1990s spurred the 1997 enactment of tax incentives for higher education, which currently include the American opportunity tax credit, the lifetime learning credit, and deductions for tuition and fees and for student loan interest.

Chapter 6

When the Bill Comes Due

Evolution of Student Loan Repayment


The first federal student loan program was designed to increase the number of students pursuing careers in areas considered important to national security. As student loan programs expanded to serve a broader cross-section of students and became the federal government’s primary form of student aid, repayment options—including plans based on income—evolved to help students manage loan debt. “When the Bill Comes Due: Evolution of Student Loan Repayment,” a 12-minute documentary, explores these early repayment options and follows the evolution of income-driven repayment plans.

of borrowers
in repayment on federal Direct Loans were enrolled in income-driven repayment plans in 2016.
million borrowers
defaulted on their student loans in 2016.
currently available to repay federal student loans.
“There’s certainly been a lively debate about what the terms of income-driven repayment should be….How much protection do we want to offer borrowers? But on the other hand, we want to make sure that borrowers still have incentives to borrow prudently and that we don’t take pressure off institutions in terms of keeping tuition in check.”
Kevin James
legislative assistant, Office of Congressman
Thomas E. Petri (R-WI), 2009-14
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Sitting area in a college library
Federal Student Loan Forgiveness and Loan Repayment Programs
This paper examines the history of student loan forgiveness and loan repayment programs, which provide borrowers a means of having all or part of their student loan debt forgiven or repaid if certain conditions are met.
Student loan amortization schedule
Income-Driven Repayment Plans: Questions and Answers
This document created by Federal Student Aid provides information about the income-driven repayment plans that are available to most federal student loan borrowers.
College students in a computer lab
How to Repay Your Federal Student Loans
This article can help find the right repayment plan for you, learn how to make payments, get help if you can’t afford your payments, and see what circumstances might result in a loan being forgiven, canceled, or discharged.
Stack of college textbooks and an open notebook
Fact Sheet: Income-Driven Repayment Plans
Income-driven repayment plans are designed to keep federal student loan borrowers’ monthly payments low and affordable. Monthly payments are adjusted each year based on changes to annual income and family size.
What did you think about the film's reflection of student aid history?