University of Wisconsin System Joni Finney December 4, 2003 1 A - PDF document

University of Wisconsin System Joni Finney December 4, 2003 1

A Context: The State of Financial Aid in I. America State Financing of Higher Education II. State Financial Aid Options III. The Wisconsin Context IV. Some Suggestions V. 2

I. A Context: The State of Financial Aid in America 3

A Context: The State of Financial Aid in America � The Purchasing Power of Federal and State Aid Has Declined � Six States Account for 60% of Total Need- Based Aid Awarded � Financial Aid Shifted from Grants to Loans 4

� In Total, Higher Education Has Become Unaffordable Particularly for Many Low- Income Families � In 1990-91, Merit Aid Constituted 11% of State Grant Aid. Merit Aid Has Grown to 24% of all state grant aid, by 2000-01 In the 12 states with the largest merit aid programs, they collectively awarded $863 in merit aid – triple the $308 million awarded in need-based aid in 2000-01. Source: NASSGAP quoted in Heller and Marin Who Should We Help? The Negative Social Consequences of Merit Scholarships (Boston: Harvard Civil Rights Project.) In 2001-02 total non-need-based grant aid awarded to undergraduates: $1,208 million Source: NASSGAP (2003). Table 1. 5

Grant Aid Has Not Kept Pace with Tuition Increases 100% 98% Pell Grant 90% State Grant 80% Average Pell 75% Grant and State Grant 70% 67% Aid as Percent of Public 4- 59% 60% Year College Tuition, 1986- Source: College Board 2002 50% 1986 1988 1990 1992 1994 1996 1998 2000 2002 6

Six States Provide a Majority of Need-based Aid Distribution of Need-based Undergraduate Aid 2001-2002 Source: NASSGAP The six states award $2.3 billion dollars in need-based undergraduate aid, or 60% of total need-based aid. There was a total of $3.866 billion in need-based aid awarded in 2001-02. Source: NASSGAP (2003). 33 rd Annual Survey Report . p. iv. Chart Two. 7

Student Financial Aid Shifted from Grants to Loans 65% Loans 60% 54% 55% 50% 50% 45% Percent of 46% Grants and Grants 40% Loans out of 40% Total Aid, 35% 1982-2002 30% 1982 1986 1990 1994 1998 2002 Source: College Board, 2003 8

16% Lowest Second 14% 14% Third Fourth 12% Highest The Share of 10% Family Income 8% Needed for 6% Tuition Has 6% 6% Increased at 4% 4% Community 3% 2% 2% 2% Colleges, 1980- 1% 1% 1% 2003 0% 1980 1985 1990 1995 2000 Note: 2002 and 2003 figures are based on 2001 income. sources: College Board; Census Community College Tuition as Percent of Average Family income, by Income Quintile, 1980-2003 Average tuition and fees at public two-year colleges: $1,905 Tuition increase over last year: 13.8% Source: College Board Trends in College Pricing 9

40% Lowest 35% Second 33% Third 30% Fourth Highest The Share of 25% Family Income 20% Needed for 14% Tuition Has 15% 13% Increased at 9% 10% Public 4-Year 6% 6% 5% 4% Colleges, 1980- 3% 3% 2% 2003 0% 1980 1985 1990 1995 2000 Note: 2002 and 2003 figures are based on 2001 income. sources: College Board; Census Average public tuition at public four-year institutions for in-state students: $4,694 Tuition increased over last year: 14.1% Source: College Board Trends in College Pricing 10

160% Lowest 141% Second 140% Third Fourth Highest 120% The Share of 100% Family Income 80% Needed for 61% 56% Tuition Has 60% Increased at 38% 40% Private 4-Year 26% 26% Colleges, 17% 20% 12% 12% 1980-2003 7% 0% 1980 1985 1990 1995 2000 Note: 2002 and 2003 figures are based on 2001 income. sources: College Board; Census Average private four-year tuition: $19,710 Tuition increase over last year: 6% Source: College Board Trends in College Pricing 11

II. State Financing of Higher Education 12

State Financing of Higher Education Common State Higher I. Education Goals Elements of Financing II. Policy 13

Common State Higher Education Goals � To encourage a higher proportion of students to graduate from secondary school and achieve proficiency in academic subjects in the process � To encourage more students attend college and persist to graduation 14

� To ensure that college attendance remains affordable to students from all socioeconomic groups � To create employment opportunities for a highly skilled workforce 15

Elements of State Financing Policy State Other Programs/Agencies Higher Education Appropriations Student Financial Aid Tuition Students Institutions Institutional Aid 16

III. State Financial Aid Options 17

Trade-offs in State Financial Aid � Access � Choice � Portability � Predictability � Sticker price effects � Targeting different income groups � Signaling 18

Georgia – Merit Aid � Georgia has spent more than $2 billion on its HOPE scholarship since the beginning of the program. � More students remain in-state for college. � Students shift from 2-year to 4-year schools. � Greater disparity in participation between low-income students, and their peers. Source: Dynarski, 2002 Georgia HOPE began in 1993. Dynarski found that the HOPE scholarship both pulled students who would not otherwise enroll in college into 2-year institutions and pushed students in community colleges into 4-year institutions. The net effect was a shift towards 4- year schools. In addition, she found a increase in the gap of college participation between low- income and minority students and all other students. From Jenny: I can't find data on student course taking in high school. However, Binder and Ganderton (2002) have found that New Mexican students take fewer courses per semester in college in order to maintain their scholarships. Source: Binder and Ganderton (2002) "Incentive Effects of New Mexico's Merit- Based State Scholarship Program: Who Responds and How?" In Heller, Donald E. and Patricia Marin, eds. Who Should We Help? The Negative Social Consequences of Merit Scholarships. (Boston: Harvard Civil Rights Project.) 19

California – Low Tuition and Need-Based Aid � California is a low-tuition state with a relatively high need-based aid program. � Cal Grants have increased college enrollment. � Cal Grants support for students attending private colleges and universities Source: Kane, 2002 Kane found that the probability that a student attends college increased if the student become eligible for the Cal Grant. In 2001-02, Cal Grants were 7.07% of all student aid in California (including federal loans). In total, the state expended $512,873,000 on the program. In 2001-02, the Cal Grant covered 48.5% of average tuition and fees at independent colleges. 30.8% of all Cal Grant recipients attended Independent Colleges and Universities in California. 20

IV. The Wisconsin Context 21

How Wisconsin Stacks Up 11 state grant per $256 student $319 23 (25% Up) $6,312 11 appropriations per student $6,931 12 (10% Up) 19 $56,461 income $66,476 18 (18% Up) Change in State $2,516 25 pub 4yr tuition Rankings $3,526 27 (40% Up) over the Last $1,944 10 pub 2yr tuition Decade $2,902 5 (49% Up) State grant per FTE, from 1992 to 2002 (source: NASGAP) Appropriations (state plus local), from FY1992 to FY2001 (source: Grapevine) Income (median family income for four-person families), from 1991 to 2001 (source: Census) Tuition (2yr or 4yr), from AY1992-93 to AY2002-03 (source: Washington State Higher Education Coordinating Board) 22

College Participation Rate for Low-Income Students Over the last few years Wisconsin has slipped in low-income participation, declining by 15 percentage points – the 4 th largest loss in the nation: 43% in 1998 (9 th ) 28% in 2001 (17 th ) Source: Postsecondary Education Opportunity, July 2003 College Participation Rates = number of dependent Pell Grant recipients divided by number of 4 th -9 th graders nine years earlier who were approved for free- or reduced- price lunch programs. 23

Change in College Participation Rates for Low-Income Students, 1998 - 2001 Nebraska 12% US Average -3.5% Haw aii 7% 4% New Mexico A labama 4% Indiana 4% Virginia 3% Delaw are 3% Montana 2% Oregon 2% Tennessee 2% Texas 0% A laska 0% Illinois 0% 0% Colorado 0% North Dakota -1% South Carolina -1% Georgia -1% Mississippi -1% Louisiana -1% Michigan -1% North Carolina -1% Arkansas -3% Arizona -3% Iow a -3% Ohio Kansas -3% Nevada -3% Utah -3% Idaho -3% Wyoming -4% Kentucky -4% Washington -4% Maryland -4% Oklahoma -5% South Dakota -6% Calif ornia -6% Missouri -6% Massachusetts -7% -7% West Virginia -8% New Hampshire -9% Pennsylvania -11% Florida -12% New Y ork -12% New Jersey -13% Maine Source: -14% Vermont -15% Postsecondary Wisconsin Minnesota -17% Education Opportunity, Rhode Island -23% Connecticut -49% July 2003 Figures are change in percentage points (Not a rate of change). College Participation Rates = number of dependent Pell Grant recipients divided by number of 4 th -9 th graders nine years earlier who were approved for free- or reduced- price lunch programs. 24

Wisconsin’s Educational Pipeline 25

Wisconsin’s Pipeline Compared to Top Performing States 100 86 90 78 80 70 58 60 45 50 42 40 33 28 30 22 MA 20 & 10 NJ WI ND WI ND WI WI IA 0 Graduate High Enter College Enroll as a Graduate School Sophomore College 26