Loan Replacement Grants for Low- and Moderate-Income Students: A Typology of Programs Adam J.A. Lips University of Pittsburgh Association for the Study of Higher Education Conference Jacksonville, Florida November 8, 2008

Background Postsecondary Enrollment Inequity Low- and moderate-income students disproportionately in broad-access institutions Financial Aid Trends as a Factor Government shift from grants to loans Institutional shift from need-based to merit-based

Background Loan Replacement Grants (LRGs) Eliminate or greatly reduce loan amounts Target low- and moderate-income students Over 50 new LRGs since 2003 No standard definition No system of organization

Background Function of Typologies Organize using characteristics Highlight diversity Facilitate future research Non-hierarchical

Rationale Define “Loan Replacement Grant” Present Population of Active LRGs Establish a Typology

Procedures Search for Lower-Income Student Aid Initiatives TICAS Project on Student Debt Document Program Specifics Award terms and conditions Formulate “Loan Replacement Grant” Definition Develop Typology Based on Characteristics

LRG Definition Institutions must: 1)Practice need-blind admission 2)Meet 100% of demonstrated need 3)Reduce or eliminate student loans by replacing them with grant aid ($19,000 loan max) 4)Publicize clear eligibility requirements 5)Base awards on need – no merit or narrow restrictions 6)Address direct billed cost with grant aid 49 Four-Year Institutions; 61 LRGs

LRG Programs InstitutionProgram DetailsEligibility Amherst CollegeReplaces loans with grants and work study for the cost of attendance All aid eligible students Oberlin CollegeReplaces loans with grants and work study for the cost of attendance Pell-eligible students Rice UniversityReplaces loans with grants and work study for the cost of attendance Family income below $60,000 University of Virginia (1) Replaces loans with grants for the cost of attendanceFamily income below 200% of the poverty line University of Virginia (2) Reduces loan amounts. Loans capped at $17,000 over four years. Remaining need met with grant and work study All aid eligible students

LRG Typology of Programs No-Loan LRGs Award Eligibility All Aid Eligible Income Level Eligible Award Composition Work Included No Work Loan Cap LRGs Award Eligibility All Aid Eligible Income Level Eligible Award Composition Per-Year Cap Four-Year Cap

No-Loan LRGs

Income Level Eligible, Work Included Washington University in St. Louis Families earning less than $60,000 Need met with grant aid and federal work study Income Level Eligible, No Work College of William and Mary - Gateway Virginia families earning less than $40,000 Need met entirely with grant aid

No-Loan LRGs All Aid Eligible, Work Included Davidson College – The Davidson Trust All students qualifying for financial aid Need met with grant aid and federal work study All Aid Eligible, No Work No Current Programs

Loan Cap LRGs

Income Level Eligible, Per Year Cap University of Chicago – Odyssey Scholarship Family income between $60,000 and $70,000 Loan amount limited to $3000/year Income Level Eligible, Four Year Cap Emory University – Emory Advantage Family income between $50,000 and $100,000 Loan amount limited to $15,000 over four years

Loan Cap LRGs All Aid Eligible, Per Year Cap Massachusetts Institute of Technology (MIT) All students qualifying for financial aid Loan amount limited to $4750/year All Aid Eligible, Four Year Cap University of Virginia – Access U.Va. All students qualifying for financial aid Loan amount limited to $17,000 over four years

Future Research Effectiveness Studies Program Proliferation Comparison of Types Program Sustainability

Loan Replacement Grants for Low- and Moderate-Income Students: A Typology of Programs Adam J.A. Lips University of Pittsburgh