Beyond Need and Merit: Strengthening State Grant Programs

Editor's Note: This report was released in conjunction with an event at Brookings on strengthening state grant programs.

Rising college tuition levels—accelerated by cuts in state funding for public universities— have combined with today's tough economic realities to make financing a postsecondary education even more difficult for students and their families. State grant programs are more important than ever to make college possible for many students who could not otherwise afford to enroll.

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For these dollars to make as much difference as possible in the lives of students and in the future of state economies, state grant programs must be designed to produce the largest possible return on taxpayers' investment. In this report, the Brookings Institution State Grant Aid Study Group, chaired by student aid expert Sandy Baum, examines the variety of state grant programs currently in place and makes policy recommendations based on the best available research.

The group proposes moving away from the dichotomy between “need-based” and “merit-based” aid and instead designing programs that integrate targeting of students with financial need with appropriate expectations and support for college success. Here are highlights from their recommendations:

Help students with financial need

• To maximize the impact of their financial aid programs, states should do a better job of targeting aid dollars at students whose potential to succeed is most constrained by limited resources.

• Students whose options are constrained by limited resources are most likely to be affected by state grant awards—in terms of both their ability to attend college and the likelihood that they will graduate.

Consolidate and simplify

• States should consolidate programs to make the system simpler and easier for prospective students and their families to understand and navigate.

• Programs can be better targeted but still relatively simple. Look-up tables like those that would base grant eligibility only on income and family size might serve as a model.

• States should welcome federal simplification efforts and should resist any temptation to collect additional data—restoring complication even as the federal government reduces it.

• States should create a single net-price calculator that students can use to calculate the cost of attendance at every public institution in the state.

Design programs that encourage timely completion

• To encourage on-time degree attainment, state grant programs should reward concrete accomplishments such as the completion of credit hours.

• Academic requirements embodied in state grant programs should provide meaningful incentives for success in college; they should not be focused exclusively on past achievement or be so high as to exclude students on the margin of college access and success.

• States should provide second chances for students who lose funding because they do not meet targets the first time around.

Improving state grant programs in difficult financial times

• Rationing funds is unavoidable and there may be no good options under these circumstances, but some choices are worse than others. Providing assistance to those who apply early and denying aid to those who apply after the money has run out is quite arbitrary, particularly if an application deadline cannot be specified in advance.

• States under pressure to reduce their budgets quickly could lower income limits; cut grants for all recipients, with the neediest students losing the least; or build more incentives for college completion into their programs.

• States should use this time of financial exigency to carefully evaluate the effectiveness of existing grant programs and put in place systems for periodic review of these programs.

• In addition to tweaking their existing programs, states should test and evaluate innovative approaches. A pilot program found to be very successful could then be scaled up and replace another program found to be less effective.

State Profiles

 Alaska  Illinois  North Carolina  South Carolina
 Alabama  Indiana  North Dakota  South Dakota
 Arkansas  Kansas  Nebraska  Tennessee
 Arizona  Kentucky  New Hampshire  Texas
 California  Louisiana  New Jersey  Utah
 Colorado  Massachusetts  New Mexico  Virginia
 Connecticut  Maryland  Nevada  Vermont
 Delaware  Maine  New York  Washington
 Florida  Michigan  Ohio  Washington, DC
 Georgia  Minnesota  Oklahoma  Wisconsin
 Hawaii  Missouri  Oregon  West Virginia
 Iowa  Mississippi  Pennsylvania  Wyoming
 Idaho  Montana  Rhode Island  

This report was authored by:

Sandy Baum
Senior Fellow, George Washington University Graduate School of Education and Human Development

David W. Breneman
University Professor and Newton and Rita Meyers Professor of Economics of Education, Curry School of Education, University of Virginia

Matthew M. Chingos
Fellow in Governance Studies and Research Director of the Brown Center on Education Policy, Brookings Institution

Ronald G. Ehrenberg
I.M. Ives Professor of Industrial and Labor Relations and Economics, Cornell University

Pamela Fowler
Executive Financial Aid Director, University of Michigan

John Hayek
Vice President, Finance, Planning, and Performance , Kentucky Council on Postsecondary Education

Donald E. Heller
Dean, College of Education, Michigan State University

Allison G. Jones
Senior Fellow for Postsecondary Engagement, Achieve

David A. Longanecker
President, Western Interstate Commission for Higher Education

Timothy J. Nesbitt
Former Deputy Chief of Staff, State of Oregon Governor’s Office

Judith Scott‐Clayton
Assistant Professor in Economics and Education, Teachers College, Columbia University

Sarah E. Turner
University Professor of Economics and Education, Curry School of Education, University of Virginia

Jane V. Wellman
Executive Director, Delta Cost Project

Grover J. Whitehurst
Senior Fellow in Governance Studies and Director of the Brown Center on Education Policy, Brookings Institution