The Case for Need-based College Aid

By: Tim Mathis

A new fact-sheet on state financial aid programs released this week by the Brookings Institution paints a sobering picture for low-income Louisiana college students by confirming what we already knew: Louisiana does not provide nearly enough support for low-income college students.

Just 16 percent of state aid for Louisiana students is based on financial need, compared to the national average of 73 percent. In contrast, the majority of financial aid is merit-based, which makes Louisiana out of line with both its regional and national peers.

Louisiana provides financial aid through the Taylor Opportunity Program for Students, in which the state pays in-state tuition for state high school graduates with above-average grades and college aptitude scores. The TOPS program is supplemented by a second program, called GO Grants, which provide small tuition stipends for students from low-income families.

But postsecondary education is increasingly out of reach for those who need it most. Tuition at public colleges and universities has grown by 30 percent over the past four years, and only one- third of all full-time students receive TOPS. Unlike TOPS, need-based aid often provides make-or-break assistance to low-income college students. Without Go Grants, many students would probably not go to college at all and many more would drop out of college before earning their degree.

Unfortunately, the Go Grants program has been chronically underfunded since its inception. Legislators will likely appropriate level funding of $26.4 million for Go Grants for the upcoming fiscal year, or about $1,000 per student. That’s about half the $2,000 per recipient amount required for full funding.

Meanwhile, the Board of Regents recently commissioned a study that proposed redistributing Go Grants to prioritize students with greater need. The writers of the report concluded that “current fiscal realities in the state may demand that our analysis be used to ration a shrinking pool of Go Grant funding more strategically.”

The same study found that low-income students who have at least 55 percent of their financial needs met are much more likely to stay in school and eventually graduate – making the investment a worthwhile one for taxpayers.

While the GO Grant program continues to languish, the cost of the TOPS program is mushrooming. Taxpayers are projected to spend $172 million on TOPS in 2012-13 – up from $146 million just last year. However within five years, TOPS may cost up to $255 million for the same number of students. Because TOPS covers the full tuition each year, a large portion of tuition increases are paid with state dollars.

The Brookings study recommends that state financial aid is best spent on programs that target students with financial need.

With Louisiana straining under the weight of massive budget shortfalls, policymakers should take the opportunity to evaluate the effectiveness of existing grant programs, and should consider redistributing dollars from students whose families can easily afford the cost of in-state tuition to those in greatest financial need.

For more information, see the 2010 LBP report, “TOPS and Go Grants: Louisiana’s Financial Aid Programs Reward Too Much Mediocrity and Provide Too Little for Those in Need.”

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