ADVI SORY COMMI TTEE ON STUDENT FI NANCI AL ASSI STANCE

Presentation Prepared for: The Illinois Board of Higher Education Higher Education Summit:

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“Dollars & Sense”
November 9, 2005 Chicago, Illinois

Overview of Presentation

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About the Advisory Committee Access and Persistence for Students from Low- and Moderate-Income Families: G
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Defining terms Identifying the problem Pinpointing causes Specifying solutions

ACSFA Reauthorization Recommendations
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Overview of the Advisory Committee

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Independent: created by Congress in 1986 Purpose: To advise Congress and the Secretary of G Education on higher education and financial aid policy Primary Goal: To make recommendations that increase access and persistence for low- and moderate-income students

An independent committee created by Congress to advise on higher education and student aid policy
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G Defining Terms

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Defining Terms

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Cost of Attendance vs. Net Price
Cost of Attendance or Published Price: tuition and fees + room and board + books and supplies + transportation + G basic living costs Net price: cost of attendance – grant aid (what students and families actually pay) or family work-loan burden
Net price or work-loan burden at four-year public colleges is the best measure of access for students from low- and moderate-income families
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Defining Terms
College Costs vs. Student Costs

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“How much it costs colleges to operate and how much institutions charge for their product are linked only indirectly and inconsistently. When a college's costs go G down, tuition does not typically drop with it. Ideas for reducing institutions' costs would not necessarily translate into savings for students unless colleges took steps to guarantee that result.”
Dr. David W. Breneman, Dean Curry School of Education University of Virginia
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Defining Terms
Lowering Costs for Whom?

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“Slowing the spiraling published tuition levels is critical, but costs of attendance will always be too high to make college accessible to students from low-income families without innovative and generous programs of grant aid…any solution to the college affordability problem must involve reductions in the cost of quality education as well as increased and better-targeted subsidies for students with high-levels of economic need.”
Dr. Sandy Baum Senior Policy Analyst, College Board Professor of Economics, Skidmore

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Identifying the G Problem

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Identifying the Problem
Factors Affecting Access and Persistence

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“… access and persistence behavior is very complex: a sequential process beginning before middle school with numerous factors involved, many of which are interrelated. These factors, of course, include: family income and G background, including parents’ education; level of academic preparation; adequate counseling and mentoring; quality and timing of information; the delivery system, including application forms and processes; and, last but not least, financial aid.”
Dr. Juliet V. Garcia, President University of Texas at Brownsville Former ACSFA Chair and Vice Chair
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Identifying the Problem

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ACSFA Focus: The Role of Financial Aid
“The message … is not that financial aid is more important than family background, or parents’ education, or academic preparation, G or counseling, or information. Rather, the message is that inadequate financial aid, at the margin, has undermined all of our efforts and the hard work of students in all of the other areas, and—all things being equal— will continue to do so. … The nation needs a comprehensive strategy and approach that addresses all the factors simultaneously.”
Dr. Juliet V. Garcia, President University of Texas at

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Identifying the Problem
Enrollment Rate of High School Graduates by Income, 1975-2003

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Courtesy: Michael McPherson (2005)

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Identifying the Problem
Percentage of 1992 High School Graduates Attending College in 1994, by Achievement Test and Socioeconomic Status Quartile

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Achievemen t Quartile G

SES Quartile Lowest 78% 36% Highest 97% 77%
Source: Access Denied, p. 13

Highest Lowest

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Identifying the Problem
Postsecondary Enrollment Rates of 1992 High School Graduates, by Family Income and Math Test Scores, at Four-year Public Colleges TEST SCORES Lowest Scores Middle Scores Top Scores Lowest Income Level 15% 33% 68% Highest Income Level 27% 59% 84%

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Source: Education Pays 2004, pg. 30 Courtesy: Michael McPherson (2005)

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Pinpointing Causes

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Pinpointing Causes
Key Findings from Access Denied (2001)

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Large differences persist in enrollment rates by income Priorities have shifted to merit aid and affordability for the middle class High unmet need for low-income students has a negative impact on their enrollment patterns

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Pinpointing Causes
State Grant Aid: Need vs. Merit Aid

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Need-based grants

Need-based grants

Non need-based grants

Non need-based grants

Source: Trends in Student Aid (2005) Courtesy: Dr. Sandy Baum

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Pinpointing Causes
Contribution of Empty Promises (2002)

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Focused only on those low-income students who were college-qualified, high school graduates to isolate the effects of financial aid Refined the discussion of financial barriers to focus on net price or work/loan burden Calculated aggregate national losses from the access pipeline over the upcoming decade Measured the impact of financial barriers across the full access pipeline through degree completion
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Pinpointing Causes
Key Findings from Empty Promises
FI GURE 4: AVERAGE ANNUAL WORK AND LOAN BURDEN FACING FAMILIES OF HI GH SCHOOL GRADUATES WI TH HI GH UNMET NEED I N 1992 AND 1999 (Constant Public Two-Year College Public Four-Year Comprehensive and Baccalaureate College Private Four-Year Comprehensive and Baccalaureate College
$11,261

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1999 Dollars)

$11,450

$7,521
$6,238

$7,528
$6,391

1992

1999

The families of low-income high school graduates with high unmet need faced record levels of work and loan burden even at public colleges from 1992 to 1999.
Source: Calculated from data in U.S. Department of Education, NCES (2002)

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Pinpointing Causes
Key Findings from Empty Promises

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FI GURE 6: WORK AND LOAN BURDEN FACI NG LOW-I NCOME FAMI LI ES WI TH HI GH UNMET NEED AT A TYPI CAL FOUR-YEAR PUBLI C COLLEGE

Total Grant Aid $3,825 (32% ) Family Work and Loan Burden $8,175 (68% )

Total Annual College Expenses Total Grant Aid Federal & State Grants I nstitutional & Other Grants Family Work and Loan Burden College Work Study Stafford Loan Expected Family Contribution Unmet Need

$12,000 $3,825 $3,325 $500 $8,175 $1,000 $2,625 $750 $3,800

I n 2002, family work and loan burden — expenses after all grants — constituted 68 percent of total expenses for low-income high school graduates at public four-year colleges.

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Pinpointing Causes
Key Findings from Empty Promises
FI GURE 12: THE FULL ACCESS PI PELI NE College-Qualified High School Graduates

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95% 70%

88% 63%

91% 62%

83% 52%

High-income (unmet need = $400) Low-income (unmet need = $3,800)

62%

22% 4%
Expect in 8th Plan in 12th Take Entrance Grade to Finish Grade to Attend a Exam and Apply College Four-Year College Enroll in a FourYear College Do Not Enroll in Any College

21%

Complete a Bachelor's Degree

High unmet need has a significant sequential and cumulative impact on collegequalified low-income high school graduates throughout the Access Pipeline.

Source: Calculated from data in U.S. Department of Education, NCES (1997) and (2002)

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Pinpointing Causes
Key Findings from Empty Promises
FI GURE 16: CUMULATI VE I MPACT OF HI GH UNMET NEED ON LOW- AND MODERATE-INCOME HI GH SCHOOL GRADUATES FROM 2001 TO 2010 College-Qualified (in millions) Total Not Attending a Four-Year College Within Two Years Total Not Attending Any College Within Two Years

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4.4 3.9 3.5

3.0 2.6 2.1 1.7 1.2 0.8 0.4 0.2 0.4 2002 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0

2001

2003

2004

2005

2006

2007

2008

2009

2010

Between 2001 and 2010, high unmet need will prevent 4.4 million high school graduates from attending a four-year college, and 2 million of them from attending any college at all.
Source: Calculated from data in U Departm .S. ent of Education, N CES (1997) and (2001)

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Pinpointing Causes
Losses Attributable to Financial Barriers
FIGURE 2: ACCESS OUTCOMES FOR EVERY 100 LOW-INCOME 8TH GRADERS

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18 attend a 4-year college

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Do not complete high school

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Complete high school college qualified

9 attend a less-than4-year college

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Complete high school but are not college qualified
7 attend no college at all

Losses attributed to inadequate financial aid in "Empty Promises" included only those 16 out of every 100 low-income students who are qualified to attend a 4-year college but financially unable to do so.
Source: Calculated from data in U.S. Department of Education, NCES (1997) and (2002)

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Pinpointing Causes
The Current Condition of Access: Work/Loan and Net Price

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TABLE 2: STUDENT WORK/LOAN BURDEN AND FAMILY NET PRICE FACING DEPENDENT STUDENTS AT 4-YEAR PUBLIC COLLEGES
Parents' Income $0-9,999 $10,000-19,999 $20,000-29,999 $30,000-39,999 $40,000-49,999 Cost of Attendance $15,054 $14,191 $14,538 $14,638 $14,721 Expected Family Contribution $ $ 221 655 Total Grants $5,966 $5,841 $5,300 $3,697 $2,531 Student Work/ Loan Burden* $8,867 $7,695 $7,696 $7,925 $7,321 Family Net Price** $9,088 $8,350 $9,238 $10,941 $12,190

$ 1,542 $ 3,016 $ 4,869

Source: Thomas Mortenson, NCES, NPSAS 2004 data * Cost of attendance minus expected family contribution minus total grants ** Cost of attendance minus total grants

Net price or work-loan burden at four-year public colleges is rising steadily for students from low- and moderate-income families 23

Pinpointing Causes
The Current Condition of Access: Work/Loan and Net Price

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TABLE 1: FINANCIAL AID PACKAGE State University, Resident Student

In its publication, “What Every Student Should Know About Federal Aid,” the American Council on Education (ACE) illustrates that the financial aid package of the lowest income resident students at a state university can now include over $10,000 in annual work-loan burden: $2,300 in work and nearly $8,000 in loans per year.

Cost of Attendance EFC Financial Need Federal Pell Grant State Need-based Grant Federal SEOG Federal Work-Study Federal Direct Subsidized Loan Federal Perkins Loan Federal PLUS Loan (recommended) Total Aid Unmet Need

$17,279 – $260 $17,019 $3,800 $2,000 $1,000 $2,300 $2,625 $2,500 $2,760 $16,985 $ 34

Source: American Council on Education Courtesy: National Association of Student Financial Aid Administrators

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Pinpointing Causes
The Current Condition of Persistence: Bachelor’s Degree Attainment by Income
TABLE 3: BACHELOR’S DEGREE ATTAINMENT RATES OF COLLEGE-QUALIFIED 1992 HIGH SCHOOL GRADUATES, BY 2000 Family Income In 1988 Less than $20,000 $20,000 - $34,999 $35,000 - $49,999 $50,000 and above Percent Earning Bachelor’s Degrees By 2000 Students Whose Students Whose All Parents Did Not Parents Did Students Attend College Attend College 38.4% 32.9% 41.1% 46.1% 55.5% 71.4% 38.2% 43.9% 60.5% 48.7% 59.9% 73.7%

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Source: NELS:88/2000. Analysis by JBL Associates

Large differences exist in bachelor’s degree attainment rates among college-qualified high school graduates by family income 25

Pinpointing Causes
The Cost of Public Four-year College as a Percentage of Family Income

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19921993 20032004

Source: Trends in College Pricing (2005) Courtesy: Dr. Sandy Baum

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Pinpointing Causes
Percentage of Family Income Required to Pay for College at Public 4-year Colleges (2004)

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National Ranking (#1 = Best) All income levels Michigan (#40) Illinois (#36) Indiana (#31) National (#29) Iowa (#28) Wisconsin (#4)

Lowest Income Quintile 78.7% 72.3% 66.4% 68.6% 63.3% 49.9%

Highest Income Quintile 9.1% 9.1% 9.1% 8.2% 9.7% 7.4%

Source: Measuring Up: the State-by-State Report Card (2004)

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Pinpointing Causes
Student Work/Loan Burden in Illinois

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Source:

STUDENT WORK/ LOAN BURDEN AND FAMI LY NET PRI CE FACI NG DEPENDENT STUDENTS AT FOUR-YEAR PUBLI C COLLEGES I N I LLI NOI S, 2003-2004
Expected Family Contribution Student Work/ Loan Burden

Parents’ I ncome

Cost of Attendance

Total Grants

Family Net Price

$0 – 19,999

$14,829

$834

$7,597

$6,398

$7,232

$20,000 – 39,999

$15,015

$2,630

$6,244

$6,141

$8,771

Source: Thomas Mortenson, NCES, NPSAS 2004 data * Cost of attendance minus expected family contribution minus total grants ** Cost of attendance minus total grants

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Pinpointing Causes
Student Work/Loan Burden in Illinois
Declining Purchasing Power of the MAP Grant: Change in Pell Grant and MAP maximum awards over the past ten years, adjusted for inflation

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Source: Illinois Student Assistance Commission

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Pinpointing Causes
Declining Purchasing Power of the MAP Grant: Percentage of average tuition and fees covered by the maximum announced MAP award

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Source: Illinois Student Assistance Commission

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Specifying Solutions

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Specifying Solutions
Lowering Unmet Need and Work-Loan Burden
FIGURE 17: EQUALIZING AVERAGE UNMET NEED AT FOUR-YEAR PUBLIC COLLEGES BY FAMILY INCOME College-Qualified High School Graduates
Income = $75,000 - above (Unmet Need = $400) Income = 0 - $49,999 (Unmet Need = $3,400)

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About $3,000 in additional grant aid would equalize unmet need at public colleges
Unmet Need = $3,400

Unmet Need = $3,000

Unmet Need = $100 Public Two-Year College

Unmet Need = $400

Public Four-Year College

In 2002, equalizing financial barriers for college-qualified high school graduates at public colleges required an increase in grant aid of $3,000 for those with high unmet need.
Source: Calculated from data in U.S. Department of Education, NCES (1997)

Today, equalizing unmet need between low- and high-income students would require additional grant aid of over $4,000.

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Specifying Solutions
ACSFA Recommendations

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ACSFA does not make recommendations to Congress or the Secretary of Education concerning budget levels or appropriations. It was created to provide independent, bipartisan, technical and objective advice, not to make judgments about legislative funding priorities. We transmitted our findings that:

Record-level work-loan burden at public colleges will exacerbate income-related gaps in access and persistence, and Improvements in academic preparation, information, and counseling will not solve the problem.
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Specifying Solutions
ACSFA Role in HEA Reauthorization and Reauthorization Recommendations

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Provide technical assistance to House and Senate staff across a broad range of student aid issues. Made two recommendations:

To create a new access and persistence partnership; and To simplify student aid delivery, forms, and processes from middle school through degree completion.

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Specifying Solutions
ACSFA Partnership Proposal

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Recommendation: Create an access and persistence partnership between the federal government, states, colleges, and private philanthropic groups. Purpose  Implement a comprehensive strategy effectively aimed at all of the factors that affect access and persistence.  Improve integration and coordination among existing programs. Objective: Provide low-income students with:  Adequate grant aid to reduce work-loan burden  Early assurances of financial access to four-year institutions  Incentives to increase participation in early intervention programs
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Specifying Solutions
ACSFA Simplification Recommendations

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The Student Aid Gauntlet Report  One-year study from Congress  Ten recommendations to simplify the application process and specific aspects of need analysis Examples of Key Recommendations:  Create a comprehensive system of early financial aid information  Simplify and streamline FAFSA on the Web

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Panel Discussion and Questions

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Contact Information

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Judith N. Flink Vice Chairperson of the Advisory Committee, Executive Director of University Student Financial Services, The University of Illinois jflink@uillinois.edu Nicole A. Barry Deputy Director nicole.barry@ed.gov Erin B. Renner Assistant Director erin.renner@ed.gov (202) 219-2099

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