Students and families often say the cost of college and how to pay for a higher education are among their top concerns when deciding on a school to attend, but many students are still unaware of several federal aid programs, such as Pell Grants and the Federal Work-Study Program, according to a new survey from New America.
In a report on the survey, released Tuesday, Senior Policy Analyst Rachel Fishman explains how students from different racial and ethnic and economic backgrounds gather information about financial aid, and how familiar those types of students are with different programs. The survey polled more than 1,000 U.S. residents between the ages of 16 and 40 who were prospective or recently-enrolled college students. It is the third in a series on how students make decisions about college.
Notably, fewer than half of all students surveyed (44 percent) were unfamiliar with the Federal Pell Grant Program, which Fishman describes in the paper as “the cornerstone of federal financial aid for low-income students.” Data from the Department of Education (ED) show that 92 percent of students from a household with an annual income of less than $50,000 who applied for federal student aid received a Pell Grant. Yet nearly half of the students surveyed (48 percent) from that same income bracket said they were unfamiliar with the Pell Grant, including more than one-quarter (27 percent) who said they had never heard of the grant program.
“This is unfortunate because many students in this income range can reasonably expect to receive Pell – free money that will help them offset the cost of their higher education,” Fishman writes. “It’s clear, however that many students are not aware of what the Pell Grant is and how it can help a student access higher education.”
Fishman also points out that receiving a Pell Grant is often a factor by which many schools distribute their own aid, and how the lack of knowledge among students could hurt their chances of receiving other types of financial aid.
“If low-income students are unfamiliar with the Pell program, they might think affording college is well outside their reach,” Fishman writes.
Overall, students were most familiar with scholarships and grants individual institutions provide, student loans and state scholarships and grants. Students were the least familiar with other federal aid benefits, such as the Pell Grant, tax credits and deductions (like the American Opportunity Tax Credit), the Federal Work-Study Program, veteran education benefits (such as the Post 9-11 G.I. Bill), and the Federal Supplemental Education Opportunity Grant (SEOG) Program.
But familiarity with different types of financial aid also varied by age, race and ethnicity and whether the student expected he or she would be receiving financial aid. Familiarity with the different types of aid available were roughly the same whether the student expected to receive aid or not, with the exception of Pell Grants – students who were expecting to receive aid were slightly more familiar (50 percent) with Pell Grants than those who were not expecting to receive aid (35 percent).
African-American students were the most likely to be familiar with campus-based scholarships and grants (90 percent), student loans (84 percent), Pell Grants (57 percent) and veterans benefits (36 percent) when compared with their white and Hispanic peers. Overall, older students (those over the age of 20) were more likely to be familiar with Pell Grants, tax credits, veterans benefits and SEOG than younger students, who were more familiar with state scholarships.
And while about two-thirds of the students surveyed said they were receiving or expected to receive financial aid, nearly one-quarter (22 percent) said they were unsure if they would.
“So, while students say that the cost of college and availability of financial aid are some of the most important factors in considering college, a significant share of students have no idea whether they’ll qualify for financial aid to help them pay for college,” Fishman writes.
Students also varied in how they gathered information about financial aid, with most turning to their high school guidance counselors (42 percent) and online search engines (42 percent) for help. Fewer than one-quarter of students used the college or university’s financial aid office (24 percent), admissions office (16 percent) or net price calculator (10 percent) as a source of information. However, the results were very different when students rated how helpful different sources were. Although few students turn to college and universities themselves for information, those who did found them the most helpful.
However, several factors might be contributing to those outcomes, Fishman says in an email.
“Depending on where a student is in their search process, they may be only exploring their options, in which case they are getting a cursory overview of the different colleges they're considering through performing web searches, checking out a website, and talking to guidance counselors,” Fishman says. “Those cursory searches likely bring up general information about colleges, but maybe not so much about how much a specific college will cost the student.”
But there are still ways to improve how information is presented to students, Fishman says. In the report, she recommends a one-stop, universal net price calculator that includes information from every institution through which students can compare different schools.
Fishman also recommends ratcheting up early awareness campaigns to help students understand sooner what kind of aid they can reasonably expect. One way to do that, she writes, is by using prior-prior year income data to fill out the FAFSA – a policy idea that NASFAA has also supported. Another way to improve early awareness, Fishman writes, is to create a Pell Grant early commitment pilot program – which has been proposed by researchers Robert Kelchen and Sara Goldrick-Rab – through which low-income students find out their Pell eligibility as early as middle school. NASFAA has also called for a similar program (the Pell Promise) that would alert students during the first year of high school.
New America’s next brief in the series will focus on student loan repayment and students’ ability to estimate their loan debt and monthly payments.
Publication Date: 8/4/2015