How State Financial Aid Programs Propel Low-Income and First-Generation Students

November 13, 2023

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Title: Features of Effective State Financial Aid Programs

Author: Catherine Brown

Source: National College Attainment Network

Although the federal Pell Grant and Direct Loan programs remain the cornerstone of student financial aid packages, state financial aid remains a key factor for students from low-income backgrounds choosing to pursue higher education.

Recent research by the National College Attainment Network (NCAN) shows that nearly 75 percent of all students attend college in their home states, which is usually a requirement to receive state-based financial aid. However, due to the current patchwork of 50 different state aid systems, wide variation exists in both the assistance offered and its effectiveness in increasing college persistence and completion. This new report highlights the successful, evidence-based features of well-run state financial aid programs.

Existing research is clear that the generosity of need-based financial aid is extremely important for increasing enrollment and persistence for low-income students. A recent meta-analysis of smaller surveys and studies that examined grant-based aid estimated that an “additional $1,000 of grant aid improves persistence and attainment by 1.5 to 2 percentage points.” Furthermore, research also shows that an increase in eligibility restrictions on state aid can have substantial impacts on who attends, and ultimately completes, college. As an example, the report states that barring part-time students from a financial aid program or requiring consecutive terms of full-time enrollment creates additional obstacles for a category of students who make up nearly 6 million of the country’s learners and already face their own barriers.

The report is divided into three sections, each focusing on a key feature of effective state financial aid programs, and then provides examples from different states. The report maintains that effective state financial aid programs are: (1) generous and well-targeted, (2) transparent and predictable, and (3) simple to access and retain.

Generous and well-targeted: Financial assistance should focus on need-based aid, meaning students from low-income families receive the largest awards and all funds are distributed to students with demonstrated need. Well-targeted programs will be large enough to cover all or a majority of colleges costs, including living expenses (when combined with the Pell Grant). Generous, effective financial aid can be combined with other state grant and scholarship dollars to provide the maximum support. As an example, the Cal Grant in California provides up to $13,752 (number varies based on state resident tuition) for low-income students at designated universities, plus an additional $1,648 in cost-of-living stipends. Additional funds are available for foster youth and student-parents.

Transparent and predictable: Effective state programs will be transparent and predictable in terms of when and how much money will be provided. This can occur through making financial aid criteria and award levels publicly available through sample tables and a financial aid estimator. Additionally, funding is an entitlement and guaranteed to all those who meet the income criteria and not distributed on a first-come, first-served basis. As an example, the Tuition Assistance Program (TAP) for New York provides a TAP award estimator on its public website.

Simple to access and retain: A third key design in state aid programs is the simplicity of accessing and retaining the money, usually by filling out the FAFSA form alone with no other applications or paperwork needed. Additionally, there should no other requirements beyond income to qualify for state aid (e.g., no criminal background check, age restrictions, time since graduation, occupational limitations, GPA cutoffs, etc.). As an example, both the Cal Grant in California and Washington College Grant for Washington only require a completed FAFSA to receive financial awards. Undocumented students only need to fill out one, separate form.

To read the full report by NCAN, click here. To read more about the ongoing work by the National College Attainment Network and their efforts to increase postsecondary access and success, particularly for students from low-income backgrounds, click here.

—Austin Freeman

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