Innovation in College & Career Preparation

New Online Database Opens Window to State Financial Aid Programs

By Lorenzo L. Esters, Senior Program Director, National Engagement and Philanthropy, USA Funds 

Lorenzo Esters, USA FundsEarlier this month, the Education Commission of the States launched an online database that offers an easily accessed window to detailed information about the nation’s largest state-funded financial aid programs.  The data portal serves as a resource to inform ongoing efforts by state policymakers to redesign financial aid models to better meet the needs of today’s growing population of nontraditional college students, who are older, more diverse and less likely to enroll in college straight out of high school.

ecslogo-verticalUSA Funds®, which is helping to fund this important project, recently asked Brian Sponsler, director of the  Postsecondary and Workforce Development Institute at ECS, and Sarah Pringel, researcher of the Postsecondary and Workforce Development Institute at ECS, to talk about the goals of the database and provide a brief update on the project’s initial findings. Here’s what they told us.

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What is the purpose of the new database and how are you hoping it will be used?

The rising cost of college is a topic of increasing concern in statehouses and around kitchen tables across the country. As students and parents worry about being priced out of higher education, policymakers at a variety of jurisdictional levels — institutional, local, state, and federal — are faced with ensuring access to the postsecondary training required to develop the workforce of tomorrow.

Ensuring affordable pathways to and through college must be a group effort. Students, governments, and institutions must all be invested in designing policies that meaningfully address these challenges. State financial aid programs, which awarded $11 billion in assistance to more than 4.5 million students in 2013, provide a critical avenue for states to enter the affordability conversation. Attention to these programs has been clouded by a dearth of comparative data for all of the 50 states.

Taking stock of the current landscape of state financial aid policy designs is a crucial component of informing conversations about reform. The Education Commission of the States, as an organization dedicated to leveraging policy research and analysis in service of state policy leaders, believes in the power of learning as a first step in policy change. To assist states in this effort, our new50-state database of state financial aid policies explores these programs in great detail.

More important, this resource is publicly available and currently updated with the latest available data on state financial aid programs. Our intent is to provide a transparent, easily accessible way for stakeholders to learn more about these important programs.

What have you learned about the general landscape of state financial aid programs since launching this effort?

The ECS data portal explores the 100 largest financial aid programs across the 50 states, and represents over three-quarters of the dollars states expended on financial aid in 2013. From the database, we learn that:

  • State aid programs are widely diverse, ranging from small programs serving fewer than 10 students to huge programs approaching nearly $1 billion in awards.
  • In determining grant eligibility and award amounts, seven in 10 state aid programs rely on federal aid calculations — specifically the Estimated Family Contribution (EFC), which is based on the information students and families provide in the FAFSA, the Free Application for Federal Student Aid.
  • Half of the states’ aid programs rely on measures of financial need, while fewer than a fourth rely on at least one measure of academic merit.

A notable finding is the heavy reliance of state aid programs on the EFC estimates derived from the FAFSA.  As the effort to simplify the FAFSA takes hold as part of the conversation about reauthorization of the Higher Education Act, state voices must be engaged and heard.  A worse-case result of FAFSA simplification would be the creation of a multitude of new state aid application forms that will do nothing to make applying for aid more transparent or simpler for students and families.  States must be engaged in the investigation of policy options such as the use of prior-prior-year income data to determine the impact on state financial aid awards.

What are the policy implications for federal aid redesign as well as state aid policies?

In compiling the 50-state database, three things became readily apparent to us:

First, there is incredible diversity in the way states construct financial aid programs, and that program design affects how specific student groups can benefit — or not benefit — from specific financial aid programs.  For instance, when aid eligibility is limited to a set number of years — say the first seven years following high school graduation, state grants are not available for the growing population of adult learners who are so critical to meeting state workforce and educational attainment goals.

Second, it is almost impossible to overstate the importance of aligning financial aid program design with state higher education goals. Aid dollars are a tremendous driver of student and institutional behavior. By setting eligibility requirements, disbursement timelines, and funding amounts, states incentivize actions by institutions and students.  By necessity, the recent focus on establishing state education goals — for example, those based on degree attainment — requires state policy leaders to assess the level of congruence between newer goals and established aid programs.

Finally, calendars play a major role in state financial aid policy reform and development.  State budget calendars, institution-based enrollment and academic calendars, student calendars for making decisions about application and enrollment are not naturally aligned, creating problems for state aid policy.  Policymakers must develop a keen and subtle awareness of the way timing impacts the implications of various reforms and policy options under consideration.

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