1. Reinventing Financial Aid
Sara Goldrick-Rab
Eastern Association of Student Financial Aid Administrators
May 22, 2016

2. College Affordability Matters
Widespread interest in college
Price factors in access, quality, and completion
Same approach to financial aid for 50 years
Families struggling to make ends meet
Legislators concerned about high prices
Aid administrators buried under regulations
Broad frustration, sense of blocked opportunities

3. Growing % of Academically-Prepared Students
Signs of Trouble
Growing % of Academically-Prepared Students
Are Forgoing College

4. Signs of Trouble Declining % of Academically-Prepared
Community College Students Are Finishing

5. Food and Housing Insecurity
2015 survey at 10 community colleges across U.S.
20% had very low levels of food security
13% were homeless
39% were housing insecure but not homeless
See Hungry to Learn at wihopelab.com

6. Food and Housing Insecurity
2015 survey at 8 universities & 2 two-year colleges in Wisconsin-- < 200% of Pell eligibility
Low levels of food security
45% of two-year college students
28% of university students
28% of two-year students (4% of university students) had trouble paying rent or utilities
See 2015 “Data Update” wihopelab.com

7. Growing Inequality
Fraction of Birth Cohort Completing College, by Family Income

8. What’s Going On? Spending more money on aid than ever but…
Purchasing power of grants is declining
Allocation of campus-based aid is inefficient
Mix of aid is misaligned with today’s students
Mistrust is pervasive

9. Gut Check
What is the average net price of a year of community college for dependent students?
Bottom 25% of family income? ($20K)
Middle income? ($50-80K)
High income? ($140K)
How much more/less is it for independent students?

10. Data
Annual Cost of Attending Community College Minus All Grants, By Family Income (Dependents)
Family Income
Community College
Net Price/Year
% of Income
Low ($21,000)
$8,300
40%
Moderate ($52,000)
$11,300
22%
Middle ($81,000)
$13,300
16%
High ($142,000)
$14,000
10%

11. Data
Annual Cost of Attending Community College Minus All Grants, By Family Income (Independents)
Family Income
Community College
Net Price/Year
% of Income
Low ($2,039)
$11,400
559%
Moderate ($13,586)
$12,100
89%
Middle ($29,311)
$12,400
42%
High ($73,120)
$14,100
19%

12. Geography Matters

13. Rethinking Financial Aid
Let’s take a step back:
What’s the real price of college?
Who needs a discount?
How can we effectively deliver the discount?

14. Rethinking Financial Aid
What’s the real price of college?

15. Official Definition of Price
Cost of Attendance=
Tuition
Fees
Housing and Food
Books and supplies
Transportation
Medical expenses
Personal expenses (e.g. clothing)

17. Real Price What’s the matter with COA & Net Price? They are estimates
PJ is there is assist if errors, but…
They don’t account for opportunities to learn
Rising use of academic fees
They assume family contributions not student assistance to family
EFC is truncated at zero
Foregone assistance is neglected

18. Rethinking Financial Aid
Who needs a discount?

19. Percentage Change in Inflation-Adjusted Mean Family Income by Quintile: , , and
Minh- text is tiny, can you fix?

20. Rationing What’s the matter with the means-testing? FAFSA! And SAP!
Rules and regs
Lots of heterogeneity among Pell recipients
The upside downside of income gains
Donut hole over the threshold
Divisiveness and politics of resentment
Is this efficient and effective?

21. Rethinking Financial Aid
3. How can we effectively deliver the discount?

22. Grants Work
Experimental Impact of Offering the Wisconsin Scholars Grant to Students Beginning at Public Universities
Text is too small
Goldrick-Rab, et al. 2016

23. Grants Work Key attributes of good grants: Simple and straightforward
Clearly communicated
Consistent and trustworthy
Many grants violate these terms!

24. Loans Sticker price is what is advertised
Net price is what remains after grant aid
Both can affect students’ decisions
Experts think about net price relative to future earnings (investment)
Students think of net price relative to current income (ability to pay)

25. Perspective The investment perspective falls short:
The returns to college are too uneven and increasingly uncertain
Students make decisions with other people and their financial constraints
Scarcity breeds fear, stress
Some cultures emphasize present over future

26. Work Work-study Popular Underfunded and misallocated Misunderstood
Subject to abuse
Work
Hard to find and hard to keep
Risky

27. Rethinking Aid We need a system that takes price seriously
Clear and consistent communication from start
Dependable
Simple on the front-end
Aid administrators as students’ supporters rather than gatekeepers and accountants

28. Incremental Improvements
Consider the real EFC.
Assess material hardship or at least refer students to social benefits programs that can help.
Examine standardized living cost calculations for your area.

29. What About “Free College”
Reduced price
Simplified message about price (free) and about commitment to public higher education (universal, no means-testing)
Increased resources for institutions (including instructional costs & support services)
Greater accountability for institutions & states
Political commitment to public higher education

30. Promising Starts
In Tennessee, the Promise appears to have greatly boosted African American enrollment
In Texas, tuition reductions at community colleges led to greater access and completion
Donations for free college efforts are swamping those for standard grant programs

31. Isn’t Information the Real Issue?
Some students do not complete the FAFSA– simplifying the process, and using PPY will help
But the price is too high after the FAFSA
Current efforts to kill the FAFSA still retain means-testing – which is politically divisive and ineffective at identifying need

32. What About Trump’s Kids?
Most people in the top 5% attend private colleges
But universal programs, which garner more political support & stability and are often better at reducing inequality, require modest giveaways to upper-income families
The financially needy still receive the bigger benefits since college pays off more for them

33. Won’t Students Be Lazy?
There is no evidence that American undergraduates work harder when they pay more
Effects of “performance-based scholarships” cannot be attributed to work requirements rather than money
Differences in outcomes of out-of-state vs. in-state students can’t be attributed to higher tuition
Higher college completion rates of students who study more versus less can’t be attributed to effort

34. But Be Careful
Using academic criteria for who gets free college or who keeps the subsidy could hurt.
High school students in the “academic middle” are stuck without college & can’t succeed if working while in college
GPA criteria or credit thresholds in college can cause students to move slower not faster

35. Is Free Enough?
Price isn’t the only thing affecting the college experience, but it is a substantial part
The additional resources, student support, and accountability that flow from this cultural shift to college being free also helps with college enrollment and completion
No single policy fixes all problems, but free college fixes more with one single policy reform than any other

36. Final Notes Financial aid administrators are essential:
You see the problems firsthand
You know the students need more support
You can help push for change– you can lead

37. For More Information
On Amazon now! Release date: September 27, 2016