Financial Aid

April 21, 2014

States need to focus on financial aid and tuition policy to boost postsecondary outcomes. The 2008 Measuring Up report card on state higher education performance, produced by the National Center for Public Policy and Higher Education, gives every state except California an “F” in the area of education affordability.

Some promising state approaches for improving affordability include:

  • Significantly increasing dollars for flexible, need-based aid to adults that accounts for living expenses while expanding financial aid to part-time students who work;
  • Increasing the availability of grants to low-income students rather than loans and making a pool of emergency funds available to students who encounter unexpected financial crises that might otherwise interrupt their schooling;
  • Using aid to strengthen connections between postsecondary education and work, such as through off-campus, work-study jobs in students’ fields of study;
  • Establishing tuition policies and other state mechanisms that provide significant incentives for students to attend college full-time rather than part-time whenever possible;
  • Adopting flexible funding formulas that recognize differentiated program costs, allowing for instructional innovations that cost more but produce significant improvements in student retention and success, such as learning communities or contextualized learning; and
  • Using performance funding that provides incentives to colleges to help students complete programs and rewards students for persistence and achievement.

National Resources on Financial Aid for State Policy Makers

Rewarding Persistence: Effects of a Performance Based Scholarship Program for Low-Income Students.
Lashawn Richburg-Hayes, Thomas Brock, Allen LeBlanc,Christina Paxson, Cecilia Elena Rouse, and Lisa Barrow. MDRC. (2009).

This report describes the benefits of a performance-based scholarship program with counseling in on the enrollment and academic outcomes of low income parents in two New Orleans community colleges. The study used a random assignment design and found that students who received the “Opening Doors” scholarship and counseling program in addition to their colleges standard services were more likely to register full time, to stay enrolled, to earn more credits, and to report high levels of engagement in working towards their personal goals and high levels of perceived community support.

Into College, Out of Poverty? Policies to Increase the Postsecondary Attainment of the Poor.
David Deming and Susan Dynarski. National Bureau of Economic Research (2009).

This study analyzes the impact of several college cost-reduction strategies on postsecondary attainment for low-income individuals.  Study results suggest that by making existing aid programs simpler and more transparent, states can increase postsecondary attainment and retention.

Pushing the Envelope: State Policy Innovations in Financing Postsecondary Education for Workers who Study
Radha Roy Biswas, Victoria Choitz, and Heath Prince. Jobs for the Future and the National Council for Workforce Education (2008).
Federal and state financial aid programs are designed with traditional students in mind (18- to 24-year-old dependents pursuing full-time studies), which results in less financial aid for low-income, working adults pursuing postsecondary educations.  This report highlights state financial aid policies that support adults who work while attending school part-time.  The authors profile 12 states with revamped or newly created student aid programs and policies that better serve adult learners.

Strengthening State Financial Aid Policies for Low-Income Working Adults.
Derek V. Price and Brandon Roberts. The Working Poor Families Project (2007).

This brief looks at how states can increase access to college for working adults by strengthening their state financial aid policies.  It documents the gap between the need for financial aid and what states and federal agencies provide, and it highlights states with exemplary programs. It makes a series of recommendations for state policymakers and groups wishing to retool their financial aid programs to better serve low-income adults.

Paying for Persistence: Early Results of a Louisiana Scholarship Program for Low-Income Parents Attending Community College.
Thomas Brock and Lashawn Richburg-Hayes. MDRC (2006).

This report presents the early results of the Louisiana Opening Doors performance-based scholarship program for low-income parents attending two Louisiana community colleges.  Students were randomly assigned to the program which, in addition to typically available financial aid, offered a $1,000 scholarship for each of two semesters to students who maintained at least half-time enrollment and a 2.0 (or C) grade point average.  Louisiana Opening Door participants were more likely to enroll in college full-time, pass more courses, earn more credits, and persist longer in their studies.

Financial Aid and Student Persistence.
Donald E. Heller. Western Interstate Commission on Higher Education (2003).

Financial aid has a strong impact on student persistence and degree attainment, according to this policy paper which outlines major sources of financial aid, how financial aid varies by state, and general policy implications.

Initiative to Aid Illinois Adult Learners.
Illinois Student Assistance Commission (2001).

This report is an analysis of an Illinois Student Assistance Commission demonstration project on financial aid for part-time students. It shows that many students take classes less than half-time and would benefit from financial aid. The report recommends that state financial aid be extended to less-than-half-time students.

State Financial Aid Policy Examples

Georgia’s HOPE Grant pays for up to two years of college below the associate degree level, including short-term certificate programs and developmental education, for any Georgia resident attending a public technical college or public college or university.

Minnesota’s State Grants are need-based grants available to students taking as few as three credits.  The state also offers Postsecondary Child Care Grants and work study.

Washington Opportunity Grants are aimed at increasing low-income student access to and success in earning postsecondary credentials at the associate degree level or below, including apprenticeship programs, in high-demand fields. Each year eligible students receive  grants for tuition and fees and up to $1,000 for books and supplies. Public colleges receive $1,500 per full-time equivalent (FTE) student in the Opportunity Grant program, which they must use to provide individualized student support services. Early results suggest that this package of financial aid and student success services is helping more students to persist and complete; outcomes are especially promising for part-time students.

Sources of State Data

38th Annual Survey Report on State-Sponsored Student Financial Aid 2006-2007 Academic Year.  This information is provided by the National Association of State Student Grant and Aid Programs.

State Policy Inventory Database Online (SPIDO). This online database maintained by the Western Interstate Commission on Higher Education contains information on state higher education policies and resources pertaining to accelerated learning options, articulation and alignment, data and accountability systems, retention, remediation, residency, student financial aid and other incentives, and tuition and fees, among other topics.  It is searchable by state and issue.

The NCHEMS Information Center for State Higher Education Policymaking and Analysis. This 50-state database established by the National Center for Higher Education Management Systems offers comparative data by state and county for users to explore “How your state is doing” on a host of measures, including affordability, participation, student success, competitiveness and “cross-cutting” information.

Measuring Up: The National Report Card on Higher Education.  This searchable database from the National Center for Public Policy and Higher Education grades states on their performance on a range of higher education issues, including affordability, participation, completion, and educational benefits.

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