Innovation in College & Career Preparation

Numbers Tell the Story: State Policymakers Face Tough Financial Aid Decisions

Sarah Pingel By Sarah Pingel, Policy Analyst, Education Commission of the States

Three numbers are of paramount importance to the financial aid policy community: $11.7 billion, 4.5 million and 245.

As the graphic below illustrates, states clearly are making significant investments to support postsecondary students through aid programs. In addition, the legislative volume, unique among areas of postsecondary policy, attests to the attention that state policymakers are giving to the role of financial aid in students’ postsecondary pathways.

5-5-InfographicProviding support
Importantly, each of these pieces of legislation represents a tremendous opportunity to support state legislators as they draft, consider, vote on or enact policies. Support received from USA Funds® over the past two years has greatly enhanced Education Commission of the States’ capacity to assist policymakers through the decision-making process.

To address the current need in financial aid policy, we are:

  • Framing conversations. In consultation with experts on state financial aid programs, we have advanced four principles of state financial aid redesign intended to frame and direct conversations around how financial support can target today’s college students. These four principles guide state policy leaders through decision processes applicable to their own state contexts:
    • Student centered.
    • Goal driven and data informed.
    • Timely and flexible.
    • Broadly inclusive.
  • Educating stakeholders. Which states award aid based on academic merit? How many programs award part-time students? You can find answers to these questions within a 50-state financial aid database, a hub of information for stakeholders seeking out programs that are similar — or dissimilar — to their own.
  • Providing targeted assistance. Following a competitive request for proposal process in the late summer of 2015, we’ve engaged in intensive research projects with multiple states. Projects have focused on student access to financial aid, eligibility criteria and program coordination.

Addressing challenges
As a result of these engagements, we have found that, while states have great interest in supporting the creation of affordable pathways for postsecondary students to reach the graduation podium, they also face great challenges. Coming full circle to the three key figures about state financial aid, these challenges directly relate to expenditures, total recipients and legislative activity.

Across states, budgets pose a unique challenge. Landing on a sum of $11.7 billion in state aid expenditures is not a function of what eligible students need to succeed in postsecondary education; instead, it’s a direct result of what states are willing and able to appropriate.

Our work at Education Commission of the States encourages states to think outside of the “budget box” and design programs with outcomes in mind. If the projected budget outlay is too large, strategic choices made during the budgeting process should direct spending to students who can benefit most from state support. This approach is in contrast to a prevailing model in which eligibility criteria are set only after the budget allocations are made.

Deciding which postsecondary students to support with financial aid is often a challenge within legislative chambers. The 4.5 million students receiving state aid in 2015 were selected based on competing state priorities, including the tension between academic merit and financial need. Existing aid programs in many states are expected to produce increasingly higher rates of completion, despite the fact that many were not designed for this purpose.

View Infographic

Using the four redesign principles, we support states in proactively rethinking how programs can support the needs of 21st century students as they seek to not only begin a postsecondary program — but also to complete it.

Finally, legislative activity around college affordability and state aid programs is strong. Half of the 245 introduced measures related to aid propose to enact a new financial aid program. To be sure, legislative attention is a welcome voice in conversations surrounding aid redesign. However, a powerful, overarching goal should be in place to inform statewide financial aid policy development and maintenance.

Through engagement with Education Commission of the States, leaders receive support in crafting an overarching goal for policy development and developing the tactics to create real change.

Looking ahead
State financial aid programs play a large role in helping students through their postsecondary journey. With support from USA Funds, Education Commission of the States continues to engage with states seeking to make meaningful redesign decisions around these programs.

In the months and years ahead, we look forward to continuing this work by releasing a new call for state technical assistance, and continuing to share promising practices as they emerge.

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