State grant and scholarship programs for college students increasingly favor students who aren’t needy, according to a new report.
The report, “Beyond Need and Merit,” comes from the Brown Center on Education Policy at the Brookings Institution. Ostensibly, it recommends that states eliminate the distinction between need-based aid and merit aid and instead award all grant aid by a simple formula that considers both.
But what the report really advocates is that all states base their grant programs primarily on need. Its top recommendation: “Focus resources on students whose chance of enrolling and succeeding in college will be most improved by the receipt of state support.”
A surprisingly large number of states don’t do that.
Twenty years ago, the report says, 90 percent of state grant dollars were awarded at least partly according to financial need. Today, that share has dipped to 70 percent.
At least 13 states have enacted large merit-based grant programs in the last two decades. Such programs are popular among middle-class families who vote.
The result: 35 percent of aid recipients in Louisiana come from families with family incomes above $80,000. A Georgia grant program favors students in the top income quartile.
Florida, Georgia, Idaho, Kentucky, Louisiana, Mississippi, Nevada, New Mexico, South Carolina, South Dakota, Tennessee, Utah and West Virginia all award less than half of their state aid according to financial need.
An inventory of aid programs in Washington, D.C. found that just 6 percent of state-based grant aid went to students according to need. The best-known program, Tuition Assistance Grants, is open to rich and poor alike.
Virginia spends about two-fifths of grant dollars without regard to need. Maryland, by contrast, allots only 5 percent of scholarship funds without considering need.
The authors, who include college-finance guru Sandy Baum, suggest states eliminate the current complex web of aid programs and streamline the state scholarship effort into a single, simple program that targets students according to income and family size, period.
For example, a state might enact a sliding scale of aid according to income: $4,000 to a student from a family at the poverty line, $1,000 for a family earning $50,000 and a cutoff of $60,000 in household income.
This matters because states are spending a growing share of a shrinking higher-education budget on grant aid. State subsidies declined from $8,700 per student to $7,100 per student between 2008 and 2011, after inflation. Yet, over the same span, state grant aid grew from $8.4 billion to $9.2 billion.