Published on 2019/06/13

Underfunded Independence: How State Aid Programs Are Failing America’s Largest Student Population

The EvoLLLution | Underfunded Independence: How State Aid Programs Are Failing America’s Largest Student Population
As more adults consider enrolling (or re-enrolling) in higher education, it’s important for state legislators to ensure their financial aid programs are designed to meet their needs.

As the price of postsecondary education continues to rise, institutional, state and federal policy leaders are searching for solutions to ensure people can access the education they need to be competitive in the modern workforce. For many students, the simple truth is that postsecondary education is not affordable without financial assistance. In fact, even after financial aid is accounted for, many students still face a gap in unmet costs. Students making under $30,000, on average, face $6,000 in unmet need to meet the full cost of attending a public two-year institution—even after state, federal and institutional aid sources are accounted for.

While the states collectively provide over $12 billion to support the postsecondary experiences of over 4.5 million students each year, these dollars are largely inaccessible to students beginning or returning to college later in life. In 26 of the 100 largest state financial aid programs, for example, a student becomes ineligible for support if too much time has passed since their high school graduation—usually up to seven years. In these programs, the clock generally runs out by their 25th birthday.

While not directly related to a student’s age, other common requirements within state financial aid policies effectively bar older students from receiving funds. Forty-eight of the 100 largest programs are merit-based—meaning that they look back to test scores or a high school GPA to determine eligibility. These markers are far less effective at measuring success as a student gains work and other life experience between high school and postsecondary education. Thirty state financial aid programs will only fund students enrolled full-time, posing issues for older learners who are likely to juggle work obligations and children.

Expanding states’ views on student eligibility, however, has real ramifications on the cost of financial aid programs. Even as they are currently constructed, most state programs are not funded at adequate levels to guarantee funding for every eligible student. The prospect of adding additional students to the rolls is one that requires a complicated set of policy choices to be made:

  • Can additional funds be added to the program?
  • Where would those dollars come from?
  • What are the state’s priorities and goals for financial aid programs?

Despite funding challenges, several states have taken steps to open financial aid eligibility to students coming or returning to postsecondary education later in life. Some have taken the approach of setting up discrete aid programs—separate from any existing programs on the books—specifically for students regardless of their age. These are often linked to study in specific high-need fields for the state, and sometimes include post-graduation employment and residency requirements. Each of these programs will be challenged to maintain currency and relevance to the contemporary labor market, and many are also faced with challenges of scale.

A smaller set of states have taken the approach of cracking open their statutes and regulations and re-evaluating the strategies behind their investments in state aid. Drafting a more comprehensive strategy for state aid—one that responds to the needs of today’s students—has resulted in wholesale changes that have the potential to move states closer to their goals. Take, for example, a bill signed by Washington’s Governor Inslee on May 21. The new law targets aid to low- and middle-income students and makes state financial aid support an entitlement, rather than relying on a student-facing application deadline to allocate dollars.

The demands on state budgets are many, and the need to ensure efficient use of dollars to reach state goals is real. Given that no state can reasonably reach attainment needs without increasing degree production among older learners, rethinking programs that leave them out is a strategic priority to pursue.

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