April 28, 2008

Report Calls for Directing Federal Aid to Neediest Students

Washington — If Congress wants more low-income students to enroll in college, it should provide larger Pell Grants to the poorest of them, says a new report out today.

The report, “Window of Opportunity: Targeting Federal Grant Aid to Students With the Lowest Incomes,” asks lawmakers to give up to $750 in additional aid to students whose families are so needy that their expected contribution to tuition is a negative number. Under current law, such students receive the same-size Pell Grant as higher-income students whose expected family contribution, or EFC, is zero.

The idea is already gaining traction in the U.S. Senate. This month, Sen. Edward M. Kennedy, a Democrat of Massachusetts, introduced legislation that would allow students with negative EFC’s to receive larger awards. The provision is part of a broader bill aimed at dealing with the credit crunch in the student-loan industry.

The report, which was published by the Institute for Higher Education Policy on behalf of the American Association of State Colleges and Universities, also calls on Congress to raise the minimum and maximum Pell awards. That change would provide additional grant aid to the neediest students while ensuring that students with incomes close to the cutoff do not lose their awards. —Kelly Field

Comments

1. This has to be good news. IHE’s have lost their way by moving away from need-based aid to a merit-based model, thus perpetuating the “rich get richer” paradigm. Surely a pendulum swing in the other direction is called for.

   — fair play    Apr 28, 04:11 PM    #

2. I also think the proposal is a good idea. However, one correction. The move away from need-based aid was not something that institutions of higher education promulgated. In terms of federal aid, it was a federal policy decision. Where students access state or other regional funds with the same or similar provisos, they are subject to the policy guidelines for use of the funds. So, the ways in which institutions are allocating or assigning financial aid funds now has not necessarily been the institutions’ doing.

   — about time    Apr 28, 04:22 PM    #

3. It angers me that the government continues to give aid to the neediest families. What about those students who’s EFC isn’t zero? I guess we have to work for our funds or either get a student loan. The neediest students already have work-study and SEOG so what more can you give them? This is just ridiculous.

   — T    Apr 28, 04:25 PM    #

4. So T, is your argument that poor people have too much money? Work Study and SEOG (often just a few $100) is enough to tide a needy student over? Brush up on your facts. A student’s EFC doesn’t have to be zero to qualify for aid.

   — DS    Apr 28, 04:36 PM    #

5. While the idea may be gaining traction, the wheels are spinning without substance in the Senate Education committee.

   — Dave    Apr 28, 04:43 PM    #

6. Is this proposal based on any solid research showing an actual decline in college participation rates for Zero EFC families? I’d rather see the funding go for additional high school counselors and college academic prep programs, since academic access seems to be an even more important problem for Zero EFC families. I’m also worried about public college tuition being beyond the reach of modest income families near the end of the Pell qualifying EFC range.

   — V    Apr 28, 05:01 PM    #

7. Giving to those who need it is fine, but the more I talk to students I see that many of these people in need have continous C and D averages. I think that if you do’t do well in school, you should lose the “aid.” Too many students take advantage of the free ride. They just want to get the piece of paper.

   — Candice Fiallo    Apr 29, 09:12 AM    #

8. Need-Based Assistance on a sliding scale is fine —- it should however be restricted to non-profit institutions —— Tax Dollars, going to For-Profit institutions in any form (direct or indirect) to enrich stockholders/businesses —- is simply wrong in my opinion.

   Furthermore, additional refinements besides looking at the metrics of Income alone, should be incorporated into the “Financial Needs Assessment” process —— Apropos, also look at cashflow, and net worth in greater detail —- since Income can be shielded or provide an inaccurate/incomplete financial picture —— which is, in general, better captured by cashflow.

   — zahid    Apr 29, 09:43 AM    #

9. Keep in mind that need-based grants going to students at private colleges (profit or non-profit) saves the state money. If private schools were not on option for lower income familes, the cost to expand the public college system to absorb these students would far exceed the cost of their grants at private colleges.

   — V    Apr 29, 10:03 AM    #

10. I’m curious how many of these students whose EFC is less than zero are from families which own multiple cell phones, large screen TVs, or SUVs. I make 70k+ per annum, but I don’t own a cell phone (honest), drive a Nissan, watch a 14” TV which came from a garage sale, and have dial up internet access.

    — Mark Smith    Apr 29, 10:56 AM    #

11. V (#9) —— I concur with you as far as the private non-profit institutions go (and I never referred to them) —- It is the private for-profit institutions who derive tax-payer dollar benefits which I find diagreeable to say the least.

    Apropos, I agree with the need-based grants going to students at private colleges —— I however do not subscribe to the notion of need-based aid going to the for-profit private institutions for a number of reasons —- the main ones being:

    1. The notion of tax-payer money enriching private for-profit coffers in my opinion is inappropriate.

    2. In general the for-profit institutions derive an extremely high percentage of their overall revenues from the tax assistance-dollars —- I recall reading somewhere that the figure is close to 90% of the for-profit instutions total revenue in many instances —- that’s why the for-profit institution’s lobby is anxious that —— no legislation should be there to limit their intake of Federal Dollars to Less than 90% of their overall total revenues

    3. Related to No. 2 above —- given that such a high percentage of the revenue is from need-based assistance dollars, then it follows that the actual $$$s directly attributable to the students themselves, is less than the need-based assistance dollars
    contributed by the students (since for-profits intend to make a profit, in after-tax dollars to pay investors —- not to mention other associative costs/perks incorporated in the for-profit business models)

    4. Non-Profit Private institutions are an option for-need based students and grants are a major factor generally in the top-institutions (I should know my daughter was beneficiary of the same at Mount Holyoke College)—- and, it saved the State of Illinois some $$$s (IL resident going to MA), however, the issue on hand is “Federal Dollars” —- as such suffice it to say Need-Based Federal Dollars hand-out is independant of State Costs/Dollars.

    4. Clearly, Non-Profit institutions reduce State Costs/Burden —- Students attending Amherst instead of UMass are helpful in reducing the tax-payer/State costs/burdens —- I am not sure that the same can be said of Univ. of Phoenix vs. UMass (or other State Community Colleges for that matter).

    5. On the Cost/Burden issue —- suffice it to say that in my opinion if one were to assess the type of students who go to the For-Profit institutions and assess both their needs and what they were provided for their $$$s contributed, —— one who find that the State or other non-profits could provide the same at a far lower cost, without really burdening the system.

    Mark (#10) —- That is why I would like to see the determination of “Need-Based Assistance” to include financial evaluations of family cashflow and assets (See my Comment above # 8— Para 2.)

    — zahid    Apr 29, 11:23 AM    #

12. To answer zahid (#11) concerning the University of Phoenix vs. UMass (#4 in zahid’s list), our research shows the following:
    When you calculate the benefits received from local, state and federal governments less local, state and federal taxes, with the loss to the federal government from defaulted loans included as a benefit, the net per student cost to taxpayers in 2004 for a student in a public IHE was $11,500, in a private not-for-profit IHE it was $6,600, in a private for-profit IHE it was $25, and at U. of Phx it was a negative $315. In effect, U. of Phx returns to government coffers an average of $315 for each student it educates. Given a current enrollment of approximately 330,000 students, assuming the 2004 numbers just noted adjusted for inflation, if the students at University of Phoenix had instead enrolled at publicly supported IHEs, in 2008 this would cost taxpayers over $4,334,000,000. In short, University of Phoenix this year alone will save taxpayers over $4.3 Billion, which they are then free to spend on public supported education, financial aid, etc. Not a bad deal.

    — JKA    Apr 30, 08:28 PM    #

13. To JKA:

    Forgive, my ignorance, but I am somewhat perplexed —- firstly, ignored are facts such as the comprehensive and all inclusive educational needs catered to by Non-Profit institutions versus the narrow and profit focused needs of the For-Profit Institutions —— Tuition is the same for a Nuclear Engineering Major requiring expensive lab resources, a Premed Major also requiring extensive resources, and a business major requiring far less expensive resourses —- how can one take the resources requirements of diverse group wherein certain groups subsidize other groups and run their resourse requirements against a somewhat homogenous group requiring in general far less requirements.

    Simply put I am struggling with the analysis —- in that on one side of the equation is an average figure and on the other side is a single digit which happens to be taken from a low component of the derived average —- and, then extended into a benefit analysis. For instance, No Premed Majors/Doctors or Biophysics Majors, etc. are produced by the Univ. of Phoenix. The tax-payer cost per student in most Non-Profit Institutions includes the same —- whilst the tax-payer cost per student in the For-Profit institution does not include the same —- extending the argument, it is like saying I make a cheaper crankshaft as such I provide a better value than the car manufacturer.

    Apropos, The basic concepts of tax dollars going to For-Profit institutions in and of itself is contradictary based on the obvious —- the idea that a service is being performed is baseless —- all businesses perform a service and provide a benefit. Walmart provides a benefit of low cost goods, shouldn’t Walmart be entitled to Tax Dollars/Privileges, and if a analysis were to be performed Walmart’s procurement costs, or operational costs, etc. can in all probability be contrived and derived —- and, results can be shown as returning money to the goverment coffers for each consumer that it serves, —- and, the same public good/benefit argument can be advanced with the same plausible rationals by Microsoft, AT&T, etc.

    To the nub of the issue —- it is my personal viewpoint —- And, it is simple either you operate as For-Profit or as a Non-Profit —- And, if you choose to operate as a For-Profit, then you should be entitled to no tax-payer dollars what-so-ever. —- the goverment is free to hire a For-Profit Educational Entity as an Education Contractor (just like any other Private Contractor hired to provide any other service), —- the treatment of any For-Profit institutions as a Non-Profit entity, —- in my simple simple opine —- attests to the powers of the special interests/lobbyists.

    — zahid    May 1, 01:42 PM    #

Previous: Medical-School Association Urges Ban on Industry Gifts
Next: Another Nobel Prize Winner Donates Share of Award to Endow Fellowship