Report Highlights States’ Changes To Financial Aid Programs

By Brittany Hackett, Communications Staff 

Many state legislatures in the 2013 and 2014 legislative sessions made changes to their need- and merit-based aid programs and other postsecondary financial aid programs, according to a report from the Education Commission of the States (ECS). 

There is “great interest” among states “in developing programs that are both cost-effective and productive in helping states meet goals,” the report’s authors said. “By and large, states are looking to use financial aid as a policy tool to drive enrollment, and in some cases, enrollment in specific areas of study.” The report notes that states provided about $11.2 billion in financial aid to postsecondary students across the country in the 2012-13 academic year. 

During the two most recent legislative sessions, seven states changed or added new need-based programs, including: 

  • Maryland’s First Scholarship Program, which provides scholarships to first-generation students who are accepted to a postsecondary institution and complete at least 40 community service hours prior to applying for the scholarship;
  • South Dakota’s S.B. 237, which appropriated $1.5 million to the state’s first need-based aid program that will begin distributing awards as early as 2016;
  • The District of Columbia’s Promise Establishment Act of 2014, which awards grants to graduates of D.C. high schools who enroll in college at least half-time within three years of completing high school; and
  • Tennessee’s Promise Scholarship Act of 2014, which promises last-dollar scholarships to students who enroll full-time in the fall immediately following high school graduation. The program will pay up to the average public two-year tuition cost. 

Two states – New Mexico and California – also expanded the definition of “need” to increase participation of middle class students.

Overall, 10 state legislatures passed initiatives that use financial aid programs as a way to meet their workforce demands, including six states that will do so through grants and scholarships:

  • Michigan established a grant program for minority students enrolled in medical, dental, nursing, or physician’s assistant programs who accept a work assignment within the state;
  • South Dakota’s legislature appropriated $1.5 million to start a program to grant scholarships to students who agree to teach for five years in high-need fields within the state; and 
  • West Virginia created a new $10 fee for nursing licensure applications that will be used to provide scholarship support for nursing students who agree to practice or teach nursing in West Virginia for one to two years.

Four states also passed legislation linking loan repayment assistance or forgiveness for students who agree to work in high-need fields and meet certain service requirements, including:

  • Connecticut, where some English language learner teachers can receive up to $25,000 in loan reimbursement over five years if they teach in one of the state’s public schools;
  • New Mexico, which enacted a program to provide loan forgiveness for teachers;
  • Indiana’s Teacher Loan Repayment Program, which offers loan repayment assistance to STEM and other high-need teachers who meet the qualifications, including teaching for at least three consecutive years in a state public school; and
  • Mississippi, which granted authority to the Postsecondary Education Financial Assistance Board to research and create loan forgiveness programs for high-need professions within the state.

States also responded to the growing number of students who enroll in more than one institution to complete their degree, with Maryland and Virginia enacting programs designed to help students more easily transfer from a two- to four-year institution. Maryland’s 2+2 Transfer scholarship provides eligible community college students who have completed at least 60 credits funding at a four-year institution, public or private. In Virginia, H.B. 133 will now allow spring transfer students to qualify for funds through the state’s Two-Year College Transfer Grad Program, instead of only providing the funds to students who transfer in the fall.

Five states – Maine, New Jersey, Ohio, Vermont, and Washington – also passed legislation in 2014 requiring them to establish commissions to research college affordability issues and provide reports by spring 2015.

ECS notes in the report that while many states have taken action on student aid issues, more changes may be needed to address national trends in higher education. For example, states may need to address within their aid programs the growing population of non-traditional-age college students, including ways to encourage enrollment and completion among these students. States will also need to consider whether applying state dollars to lowering the cost of college, rather than directing funds to loan repayment assistance and forgiveness programs, may better serve students and reduce their need to take on debt. 

The report notes that research is limited regarding financial aid programs and their impact on college completion for workforce participation. “Further analysis is needed in this area, and states may consider if the financial aid system is the best vehicle for workforce policies,” the authors state.


Publication Date: 11/7/2014

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