Students of Color May Be Harmed by State-level Need-Based Aid Requirements

March 20, 2023

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Title: Students of Color May Be Disproportionately Harmed by States’ Need-Based Aid Eligibility Requirements 

Source: The Urban Institute

Author: Sandy Baum

College students who are applying for financial aid are presented with multiple options in state and federal grants. Federal Pell Grants are available to students from low-income backgrounds as determined by the FAFSA. State grants may come in the form of scholarships from the state or through individual institutions. However, whether these funds are distributed by merit or need differs state-by-state as determined by state legislators and university administrators.

Eligibility for merit-based aid typically considers GPA, credits, and other forms of academic achievement. Eligibility for needs-based aid may also include academic achievement but typically is determined by an institution’s Office of Financial Aid and an equation of factors consisting of FAFSA data, enrollment status, and other aid offers. Research indicates that access to need-based aid improves access, enrollment, and academic success for marginalized student groups, especially for low-income students.

A new report from The Urban Institute highlights racial disparities in the distribution of state need-based aid. Using state enrollment data to assess patterns, researchers found consistent disparities existed in 11 states. Among the findings:

  • Among low-income students attending college in their state of residence in 2018-19, 39 percent of Black students received need-based aid, compared to 49 percent of Asian students and 46 percent of white students.
  • Some state grant programs exclude part-time students, which impacted 33 percent of Latino students and 31 percent of Black students who attend college on a part-time basis.
  • Other state grant programs exclude 2-year institutions and for-profit institutions, when 36 percent of Pell Grant recipients attended two-year institutions and 25 percent attended for-profit institutions.

The varying requirements for need-based aid distributed by states hinder other marginalized student populations such as working students, student parents, and students who do not enroll directly after high school (which are also disproportionate by race).

The Urban Institute suggests that states examine their distribution of need-based aid and assess requirements that may lead to unintended inequities, such academic performance or GPA stipulations.

For more information, click here.

—Tabatha Cruz

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