A Partnership Approach Could Improve Student Aid
By William C. Nelsen, Kristen D. Conklin, and Sarah A. Flanagan
Last month, the Congressionally established Advisory Committee on Student Financial Assistance released a follow-up report to last year's "Access Denied" that documents in even greater detail the barriers that inadequate student aid poses for hard-working and talented young people who want to enter and complete college. "Unmet need," the gap between the cost of attending college and all the resources a student has available (including family money, grants, and scholarships), is the emerging policy question of the forthcoming reauthorization of the Higher Education Act.
This year alone, as the advisory committee's report demonstrates, record-high financial barriers will prevent more than 400,000 high-school graduates who are qualified to enter four-year institutions from attending those institutions -- and 170,000 students won't attend any college at all. Over the next decade, unmet need -- which averages between $3,200 and $6,200 per student -- could keep millions more qualified low-income students out of college.
Beyond the obvious waste in human capital, such an outcome would have a devastating effect on the U.S. economy. According to the Inter-American Development Bank, each additional year of average education in a nation increases its economic output by from 5 percent to as much as 20 percent. Moreover, Anthony P. Carnevale, vice president for education and careers at the Educational Testing Service, estimates that the United States will need 12 million more people with some postsecondary education over the next 20 years to perform increasingly complex and technical jobs. To meet the demand, everyone with talent and drive should have the education that he or she deserves.
Already, the federal and state governments, higher-education institutions, and the private sector give billions of dollars of grant aid to students each year. But to make college affordable for all people, regardless of their economic circumstances, all four sectors must work together more effectively. Instead, they often work at cross-purposes -- devising a federal solution, a state solution, or a private-sector solution, without first considering the consequences for the other sectors, and, more important, the consequences for students. As a result, the available financial aid is distributed inefficiently, the impact on students and families is uneven, and too many students who most need aid are left out of the picture.
At the federal level, the government's commitment to need-based aid has grown significantly since the mid-1990s. The Pell Grant maximum award, for example, has increased 74 percent since 1995, allowing the grant to recoup some of the value that it lost over two decades of decline, after adjusting for inflation. Meanwhile, however, the federal government has operated under a practice of suspicion, not partnership, with other aid providers.
The most egregious example is the Department of Education's regulations governing the GEAR UP program of scholarships for disadvantaged students. For years, students received their first dollar of support from the federal government, empowering them with the financial resources to pursue the college of their choice. Under the GEAR UP rules that the Department of Education put forward in 2000, however, scholarships are awarded only after all other aid, private and public, is given -- a "last dollar" approach. Such inflexible rules have discouraged institutions from participating in the program and made GEAR UP students ineligible for hundreds of scholarship programs. Fortunately, the Bush administration seems likely to remove the rule by the end of the year.
State financial-aid policies have also unintentionally limited access for needy students. A decade ago, when state revenues were increasing and the college-age population was decreasing, many states made commitments to merit-aid programs and tuition freezes at public colleges. Both policies ended up directing public subsidies toward upper-income students and families. Data separately analyzed by Donald E. Heller, a senior research associate at the Center for the Study of Higher Education at Pennsylvania State University, and the National Association of Student Financial Aid Administrators show that upper-middle-income and upper-income students are overrepresented across state merit-based scholarship programs. Now, as state tax revenues dry up and the college-age population booms, not enough money is available to expand important need-based programs.
States need to conduct comprehensive reviews of their limited higher-education expenditures to ensure that their scarce resources are being used as efficiently as possible to promote access. Reasonable amounts of merit aid and tuition subsidies are a good way to recognize hard work and to moderate price increases. But in tight fiscal times, excessive assistance to upper-income families may deplete funds from the need-based programs that make a difference in whether a low-income, but talented, student can attend college at all.
Private charities contribute to the patchwork approach to financial aid with their specific scholarship rules. Those rules sometimes also overemphasize merit-based scholarships -- giving too much money to the brightest students, while the neediest fall desperately short of funds. Some private scholarship providers also play the last-dollar scholarship game, and are inflexible, seeking to grant scholarships late in the process and only after every other possible player has stepped forward. Others may seek to grab headlines by providing large merit grants to just one or two students. Merit grants can be an effective way to encourage and reward achievement, but they do not need to be $15,000 or more to accomplish that goal.
Colleges have also added to the problem. By failing to negotiate with scholarship providers on how to treat outside money when packaging student aid, they have discouraged some private-aid providers from raising new money. Many higher-education institutions are justified in using their own aid dollars to make sure they have classes of students that are diverse and seats that are full. But when they are inflexible or fail to communicate how their policies work, they create mistrust.
The Collegiate Partners program of the Citizens' Scholarship Foundation of America, where one of us serves as president, is one successful example of the opposite approach. Under that program, financial-aid officers and the CSFA work as partners to form agreements, updated annually, on the treatment of private scholarships in financial-aid packages in ways that are positive for both the students and the institutions.
Our disjointed, nonproductive approach to helping more needy students go to college must stop. The different types of financial-aid providers must work together to improve college access. Several concrete steps can, and should, be taken to:
Promote cross-sector research and dialogue. We must encourage regular discussions among our different sectors about how to create the most effective student-aid packages possible. Our central goal must be to reduce unmet need for all qualified students and their families.
Focus on policy coordination, not uniformity. Financial-aid policies will continue to serve multiple purposes, and we should welcome all forms of scholarship aid. However, we can coordinate our policies to focus our resources and avoid wasteful overlaps in how we serve students. Better communication and analyses of the impact of aid from all four sources on students' unmet financial need will help us package our policies and programs more efficiently.
Make the most of financial-aid resources through partnerships. Private foundations and individual donors frequently tell students to get their federal and institutional aid first and then come back if they still don't have enough money for college. That approach allows donors to stretch their own dollars and know the precise impact of each contribution. But only one person or entity can provide the last dollar. And if no one is willing to give the first dollar, the total pool of scholarship money will shrink. Negotiating partnership approaches rather than playing the last-dollar game will be more productive for everyone.
Follow the financial-aid office's lead. All sectors need to appreciate the important role of the financial-aid offices on our campuses. Those professionals are ultimately closest to individual students; they should be given as much authority and flexibility as appropriate to assemble the final aid packages.
Provide improved information. Families are confused about how and where to get financial aid. Those of us in the four sectors must combine our talents and communications networks to improve outreach to families. We should help students plan for college as early as possible and demystify the financial-aid process.
Develop a coordinated advocacy effort. The supporters of need-based assistance spend far too much time battling each other, and too little time promoting legislation for financial and other support for needy students in Congress and statehouses. The Washington-based Student Aid Alliance, a coalition of more than 60 national higher-education groups representing colleges, students, parents, scholarship providers, and others, is an excellent example of how diverse groups can come together to create a uniform, positive, and effective message about the importance of need-based assistance. Advocates, philanthropists, researchers, and political leaders who are committed to college access should work in concert and not in competition with one another.
As the number of needy, college-ready students soars, we must meet the challenge head-on. If we can turn our lack of trust into a strong and active partnership, the future of postsecondary opportunities for all America's students will be much brighter.
William C. Nelsen is president of the Citizens' Scholarship Foundation of America. Kristin D. Conklin is a senior policy analyst for the National Governors Association. Sarah A. Flanagan is vice president for government relations and policy development for the National Association of Independent Colleges and Universities.