July 18, 2013
States Shift Financial Aid Money toward Need-Based Aid and Grant Aid
According to an annual survey released on Monday by the National Association of State Student Grant and Aid Programs (NASSGAP), the amount of state dollars going toward financial aid remained relatively stable between 2010-11 and 2011-12. In 2011-12, states awarded about $11.1 billion in state-based financial aid, a slight increase (0.7 percent) over the $11.0 billion awarded in 2010-11. That growth has not kept pace with rising enrollments or the overall increase in students’ financial need; however, it’s encouraging to see growth of any size given that general state appropriations for higher education fell by 7 percent during that same time period.
The state-by-state data show that Washington, New Jersey, New York and California gave out the most need-based aid on a per-student basis. Oregon more than doubled the amount it spent on need-based grants, to nearly $44-million, and Washington increased its need-based grants by 26 percent. However, 23 states cut need-based aid from 2010 to 2011 and four states reported no need based aid programs at all.
What’s most intriguing, in my opinion, is that even though states collectively put only slightly more money toward their financial aid programs, they shifted a larger portion of those aid dollars toward need-based aid and grant aid (see the tables below). This finding suggests that states are attempting to maintain access in the face of rising tuition rates and to reduce the amount of debt their students accumulate.
Of the $11.1 billion in total state-awarded student aid:
- $9.4 billion (84%) was grant aid—up 1.7% from 2010-11; and
- $1.7 billion (16%) was non-grant aid (loans, work-study, tuition waivers, etc.)—down 4.2% from the previous year.
Of the $9.4 billion in state-awarded grant aid:
- $7.0 billion (74%) was need-based—up 6.3% from last year; and
- $2.4 billion (26%) was non-need-based—down 9.4%.
Of the $10.1 billion in state-awarded undergraduate aid (both grants and non-grants):
- $4.7 billion (47%) was exclusively need-based—up 6.0%;
- $2.0 billion (20%) was awarded on a mix of need and merit criteria—up 1.6% and surpassing, for the first time ever, aid awarded solely on merit;
- $1.9 billion (19%) was exclusively merit-based—down 1.3%; and
- $1.4 billion (14%) was special purpose awards and uncategorized aid— a 3.0% drop.
| Change in Total State-Awarded Student Aid | ||
| Percent change from 2010-11 to 2011-12 | ||
| Type of Student Aid | Dollar amount | Portion of total |
| Grant aid | 1.7% | 0.8% |
| Non-grant aid | -4.2% | -0.8% |
| Total aid | 0.7% | |
| Change in State-Awarded Grant Aid | ||
| Percent change from 2010-11 to 2011-12 | ||
| Type of Grant Aid | Dollar amount | Portion of total |
| Need-based | 6.3% | 3.0% |
| Non-need-based | -9.4% | -3.0% |
| Total grant aid | 1.7% | |
| Change in State-Awarded Undergraduate Aid | ||
| Percent change from 2010-11 to 2011-12 | ||
| Type of Undergrad Aid | Dollar amount | Portion of total |
| Exclusively need-based | 6.0% | 2.7% |
| Mixed need & merit-based | 8.5% | 1.6% |
| Exclusively merit-based | -6.5% | -1.3% |
| Uncategorized & other | -17.4% | -3.0% |
| Total undergraduate aid | 0.0% | |