Some Schools Cut Student Grants, Scholarships

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After loosening their coffers to help families cope during the recession, some colleges now are cutting back on grants and scholarships, aid that students don't have to pay back.

The move—prompted in part by the colleges' own financial troubles—is prompting students and their families to borrow more to close the gap, raising the already-heavy debt load many graduates will face.

Grants and scholarships fell 15% during the just-completed academic year, according to a study to be released Monday by student-loan provider Sallie Mae.

On average, U.S. undergraduates received $6,077 in grants and scholarships in the 2011-2012 academic year, down from $7,124 a year earlier, according to the study, which polled 1,601 undergraduates and their parents.

Some colleges are raising the bar to qualify for both need- and merit-based scholarships, a trend that will likely continue next academic year, Mr. Draeger said. Meanwhile, college costs have continued to rise at rates faster than inflation, particularly at public schools faced with state budget cuts, according to College Board figures.

As a result, some students and their families are taking on more debt or are opting for lower-priced public schools or two-year institutions. Some students also are passing on dorm life, choosing instead to live at home to save on room and board, according to the study.

The average amount borrowed by families—a calculation that includes parents and students who didn't borrow at all—rose nearly 17% last year to $5,551. That was up from $4,753 in the 2010-2011 academic year.

Meanwhile, the percentage of families with college students taking out federal student loans grew to 34%, up from 25% in 2008-2009, according to the report, conducted by the research group Ipsos.

Swarthmore said it has raised its financial-aid budget 51% over the last three years and strives to meet the financial needs of every student.

And only one in five parents said they strongly agreed that children should attend college for the experience, no matter their future earnings potential, down from one in three in the 2009-10 academic year, when the question was first asked.

Meanwhile, some colleges are altering programs that promised students of certain family incomes they wouldn't need to take out any loans. Cornell University said earlier this month that, beginning with the class entering in fall of 2013, only students whose parents earn less than $60,000 will be eligible for loan-free aid. That policy previously covered families with incomes below $75,000.

Dartmouth College and Williams College also have limited their no-loan packages in recent years, while Wesleyan University earlier this year announced it will begin to consider a student's ability to pay in its admissions decisions, due to the school's financial constraints.