Panel Discusses Bridging State, Federal Aid Policies

By Stephen Payne & Charlotte Etier, Policy & Federal Relations Staff 

With the high level of discourse surrounding college affordability, a panel on Thursday sponsored by Rep. Joaquin Castro (D-TX), and hosted by TG, a Texas-based non-profit, and the Institute for Higher Education Policy (IHEP) contributed to the dialogue by further discussing the interdependence of state and federal aid programs and policies. Members of the panel greatly emphasized the importance of the role of states in investing in higher education, particularly in light of decreasing state support – especially at public institutions. 

Castro opened the program, which drew a large crowd on Capitol Hill, by noting the imperative of student aid programs to low-income students who play “tug of war between school and work.” The panel included both state and federal perspectives on student aid and featured:

  • Moderator: Mamie Voight, director of policy research at IHEP;
  • Justin Draeger, president and CEO of NASFAA;
  • Sarah Pingel, policy analyst at Education Commission of the States; and 
  • Jeff Webster, assistant vice president for research and analytical services at TG

The key to access and success is affordability, Voight said. The inability of Pell Grant funding to keep pace with student need, continued state disinvestment, poor targeting of aid, and the continuously changing needs of today’s students have had extremely damaging effects on affordability, she said. Voight noted the Pell Grant has not kept pace with state disinvestment and the rising cost of college, and today only covers, on average, one-third of the total costs for higher education. 

Pingle focused more on state aid programs pulling from the principles outlined in Education Commission of the States’ recent report, “Redesigning State Financial Aid: Principles To Guide State Aid Policymaking.”  This report recommended state financial aid programs be student centered, goal driven and data informed, timely and flexible, and “broadly inclusive of all students’ educational pathways.” 

But the stakes are high, and there are losers, Webster reminded the packed room. A student’s quality of choices make a big impact, and some of these decisions can have severe consequences for the future if they lead to default or extensive debt, he said. Webster also shared data specific to Texas, detailing that 45 percent of students go to community college, annual unmet need ranged from $6,500 at a four-year public institution to $10,000 at a historically black institution, and that Texas is highly reliant on the federal government for funding its higher education, with 85 percent of dollars coming from federal student aid, up 12 percent from the national amount. Webster also discussed the disparities between affluent and low-income students stating “even though students can be equally prepared, they will have different outcomes.”

Increasingly, however, students and families must shoulder more of the burden, Draeger noted as he described growing budget gaps at public institutions due to states spending less on aid programs and overall higher education appropriations. These budget gaps provide “perverse incentives” for public institutions to make up funding shortfalls by emphasizing the recruitment of students who can pay more – especially out-of-state students. Budget gaps do little to improve access for low-income students, he said. Draeger pointed out that 2012 was the first time in history public institutions on average received more dollars from tuition than from states and indicated that this tuition dependency can lead public institutions to stray from their missions.   

During the audience question and answer session many were interested in programs which removed barriers to financial aid and how these could align with state aid programs. Draeger offered feedback on efforts of simplification including the use of prior-prior year (PPY) income data, which NASFAA has previously supported. He shared recommendations from NASFAA’s most recent report, “Great Expectations: Implications of Implementing Prior-prior Year Income Data for the FAFSA,” which included results from a National Association of State Student Grant and Aid Programs (NASSGAP) membership survey. These results indicated most states felt NASSGAP should support this legislation and few states would need a statutory change to implement the change.



Publication Date: 6/26/2015

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