In the current era of escalating college costs, almost all students attending college look to federal and state financial aid as a source of monetary support for their education. Despite the significant increases in college costs over the last two decades, the amount of money that students can borrow under the federal loan program has not risen since 1992. At a time when most federal financial assistance takes the form of loans rather than grants [1], students are further constrained in their ability to finance a college education, or faced with the option of increased debt levels.
Several aspects of the financial aid structure restrict its flexibility. Federal and state financial aid is determined on an annual basis and is available at intervals, usually at semester starts in the fall-spring academic year. Aid is almost always awarded on the basis of the previous calendar year’s income, rather than according to present need; the policy penalizes students, retrospectively, for their earnings (Goldrick-Rab 2008). For example, the annual calculation includes student earnings, which are most often used to meet immediate expenses. Those earnings may not last for the full academic year because of a change in employment or other factors, putting the student at a disadvantage when completing the following year’s financial aid application. For students whose resources are very constrained, this can necessitate part-time enrollment in order to work and/or take time out to save. Furthermore, lack of information about aid prospects and the complexity of the financial aid application process can discourage students from applying both to college and for financial aid. This is particularly prevalent among students from economically disadvantaged backgrounds.
Students who opt to attend part-time, taking one to three courses per semester, are not typically eligible for federal financial aid. Also, under the Higher Education Act (HEA 484), students must meet an institution’s definition of "satisfactory academic progress" (SAP), in order to be eligible for federal aid and most state aid (see SAP examples from University of Minnesota and Palm Beach State College). This can be an issue for students who have difficulty passing courses, especially on a first try.
Federal financial policy should be structured to incentivize full-time, continuous enrollment, as these course-taking patterns are linked to completing a degree. However, some students – those who are older, need to work full-time, or have family obligations like raising children – are not likely to attend full-time regardless of financial incentives. Financial aid barriers should be eased for these students to allow them to access financial aid throughout their degree path. For example, federal financial aid has time- and credit-limitation policies; most federal and state guidelines stipulate that aid can only be used for courses taken within 150 percent of the official time for the degree program. While these policies can be seen as positive in terms of incentivizing completion, they do have consequences for students who are under-prepared, and/or have a non-traditional path to a degree. Students in developmental education, those who attend part-time throughout their degree, or those whose academic performance requires them to repeat courses, may face a sharp end to aid because of these policies. For example, students in a developmental education sequence who take two full semesters to complete (remedial) requirements must press on to complete all other associate's degree requirements credits within the next four semesters to continue to be eligible for financial aid.
As noted, financial aid can be used as an important incentive towards enrollment and stronger performance. The Opening Doors program in Louisiana, a program designed to help low-income parents make progress, showed that "just in time" grants of $1000 made at the start of the semester coupled with intensive advising, increased matriculation including the percentage of students attending full-time. These findings are critically important because they point to the changes that moderate financial awards ($1000 per semester covers approximately forty-two percent of the average in-state published charges per semester for community colleges) can leverage in terms of enrollment and timely degree completion of a student population with competing life priorities. Data from the Opening Doors study showed that a smaller financial incentive (of about $500) did not have the same scale of impact on enrollment.
For a list of all Financing College resources from the TTC database, click here.
[1] Federal Pell grants for very low-income students are the only notable exception.