ADVI SORY COMMI TTEE

ON STUDENT FI NANCI AL
ASSI STANCE

Presentation Prepared for:

G
The Illinois Board of Higher
Education
Higher Education Summit:
“Dollars & Sense”

November 9, 2005
Chicago, Illinois
 Overview of Presentation

A  About the Advisory Committee

C  Access and Persistence for Students

from Low- and Moderate-Income
S Families: G

F  Defining terms
Identifying the problem
A


 Pinpointing causes
 Specifying solutions

 ACSFA Reauthorization
Recommendations

2
 Overview of the
Advisory Committee

A  Independent: created by Congress in

1986
C  Purpose: To advise Congress and the
S Secretary of G
Education on higher
education and financial aid policy
F  Primary Goal: To make
A 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
3
A
C
S Defining
G Terms
F
A

4
 Defining Terms

Cost of Attendance vs. Net Price

A Cost of Attendance or Published
C Price: tuition and fees + room and board
+ books and supplies + transportation +
S G
basic living costs
F Net price: cost of attendance – grant aid
(what students and families actually pay)
A 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

5
 Defining Terms

College Costs vs. Student Costs

A “How much it costs colleges to operate and
how much institutions charge for their
C product are linked only indirectly and
S inconsistently. When a college's costs go
G
down, tuition does not typically drop
F with it. Ideas for reducing institutions'
costs would not necessarily translate into
A savings for students unless colleges took
steps to guarantee that result.”

Dr. David W. Breneman, Dean

Curry School of Education
University of Virginia

6
 Defining Terms

Lowering Costs for Whom?

A “Slowing the spiraling published tuition levels

is critical, but costs of attendance will always
C be too high to make college accessible to
students from low-income families without
S innovative and generous programs of grant
aid…any solution to the college affordability
F problem must involve reductions in the cost
A 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 7
A
C
S Identifying
G
the
F Problem
A

8
 Identifying the Problem

Factors Affecting Access and Persistence

“… access and persistence behavior is very
A complex: a sequential process beginning before
C middle school with numerous factors involved,
many of which are interrelated. These factors,
S of course, include:
G family income and
background, including parents’ education; level
F of academic preparation; adequate
counseling and mentoring; quality and timing
A 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
9
Chair
 Identifying the Problem

ACSFA Focus: The Role of Financial

Aid
A “The message … is not that financial aid is
C more important than family background, or
parents’ education, or academic preparation,
S Ginformation. Rather, the
or counseling, or
message is that inadequate financial aid,
F at the margin, has undermined all of our
efforts and the hard work of students in all of
A 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 10
 Identifying the Problem
Enrollment Rate of High School Graduates
by Income, 1975-2003

A
C
S G
F
A

Courtesy: Michael McPherson

(2005)

11
 Identifying the Problem
Percentage of 1992 High School Graduates
Attending College in 1994, by Achievement
Test
and Socioeconomic Status Quartile
A
C SES Quartile
Achievemen
S t Quartile G
Lowest Highest
F
A Highest 78% 97%

Lowest 36% 77%

Source: Access Denied, p.

13

12
 Identifying the Problem
Postsecondary Enrollment Rates of 1992
High School Graduates, by Family Income
and
Math Test Scores, at Four-year Public
Colleges
A
Lowest
C TEST
SCORES
Income
Highest
Income Level
Level
S Lowest G
15% 27%
F Scores
Middle
A Scores
33% 59%

Top Scores 68% 84%

Source: Education Pays 2004, pg.

30
Courtesy: Michael McPherson
(2005)
13
A
C
S Pinpointing
F Causes
A

14
 Pinpointing Causes
Key Findings from Access Denied (2001)

A
Large differences persist in
C


enrollment rates by income

S  Priorities have shifted to merit aid
F and affordability for the middle
A class

 High unmet need for low-income

students has a negative impact on
their enrollment patterns

15
 Pinpointing Causes
State Grant Aid: Need vs. Merit Aid

A Need-based grants

C Non need-based grants

Need-based grants

S
F
A Non need-based grants

Source: Trends in Student Aid

(2005)
Courtesy: Dr. Sandy Baum

16
 Pinpointing Causes
Contribution of Empty Promises (2002)

A  Focused only on those low-income students

who were college-qualified, high school
C graduates to isolate the effects of
financial aid
S  Refined the discussion of financial barriers
F to focus on net price or work/loan
burden
A  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
17
 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
A Public Two-Year College (Constant
Public Four-Year Comprehensive
1999 Dollars)

C and Baccalaureate College

Private Four-Year Comprehensive
and Baccalaureate College

S $11,261 $11,450

$7,521 $7,528
F $6,238 $6,391

A
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)

18
 Pinpointing Causes
Key Findings from Empty Promises

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

A
C Total Total Annual College Expenses $12,000
Grant Aid
S $3,825
(32% )
Total Grant Aid
Federal & State Grants
I nstitutional & Other Grants
$3,825
$3,325
$500

F Family Work and

Family Work and Loan Burden
College Work Study
Stafford Loan
$8,175
$1,000
$2,625

A Loan Burden Expected Family Contribution $750

Unmet Need
$8,175 $3,800

(68% )

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.

19
 Pinpointing Causes
Key Findings from Empty Promises

FI GURE 12: THE FULL ACCESS PI PELI NE

A 95%
College-Qualified High School Graduates

91%
88%
C 70%
63% 62%
83% High-income (unmet need = $400)
Low-income (unmet need = $3,800)

62%
S 52%

F 22% 21%
4%
A Expect in 8th Plan in 12th Take Entrance Enroll in a Four- Do Not Enroll in Complete a
Grade to Finish Grade to Attend a Exam and Apply Year College Any College Bachelor's
College Four-Year Degree
College
High unmet need has a significant sequential and cumulative impact on college-
qualified low-income high school graduates throughout the Access Pipeline.

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

20
 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

A College-Qualified
(in millions)

C
4.4
Total Not Attending a Four-Year College Within Two Years
3.9
Total Not Attending Any College Within Two Years
3.5

S 2.6
3.0

F
2.1 2.0
1.7 1.8
1.6
1.4
1.2 1.2
1.0

A 0.4
0.2
0.8
0.4
0.6
0.8

2001 2002 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.S. Department of Education, NCES (1997) and (2001)

21
 Pinpointing Causes

Losses Attributable to Financial Barriers

FIGURE 2: ACCESS OUTCOMES FOR EVERY 100 LOW-INCOME 8TH GRADERS

A 18 attend a
4-year college

C 36
Do not complete
high school

S 34
Complete high
9 attend a
less-than-
4-year college

F
school college
qualified
30
A 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)

22
 Pinpointing Causes
The Current Condition of Access:
Work/Loan and Net Price

A TABLE 2: STUDENT WORK/LOAN BURDEN AND FAMILY NET PRICE

FACING DEPENDENT STUDENTS AT 4-YEAR PUBLIC COLLEGES

C Parents'
Income
Cost of
Attendance
Expected Family
Contribution
Total
Grants
Student Work/
Loan Burden*
Family
Net Price**

S $0-9,999

$10,000-19,999
$15,054

$14,191
$

$
221

655
$5,966

$5,841
$8,867

$7,695
$9,088

$8,350

F $20,000-29,999 $14,538 $ 1,542 $5,300 $7,696 $9,238

A
$30,000-39,999 $14,638 $ 3,016 $3,697 $7,925 $10,941

$40,000-49,999 $14,721 $ 4,869 $2,531 $7,321 $12,190

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

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

A TABLE 1: FINANCIAL AID PACKAGE

State University, Resident Student

C In its publication, “What

Every Student Should Cost of Attendance $17,279
EFC – $260
S
Know About Federal
Aid,” the American Financial Need $17,019
Council on Education Federal Pell Grant $3,800

F (ACE) illustrates that the

financial aid package of
State Need-based Grant
Federal SEOG
Federal Work-Study
$2,000
$1,000
$2,300

A
the lowest income
Federal Direct Subsidized Loan $2,625
resident students at a
Federal Perkins Loan $2,500
state university can now
Federal PLUS Loan (recommended) $2,760
include over $10,000 in
Total Aid $16,985
annual work-loan Unmet Need $ 34
burden: $2,300 in work Source: American Council on Education
and nearly $8,000 in Courtesy: National Association of Student Financial Aid Administrators
loans per year.

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 Pinpointing Causes

The Current Condition of Persistence:

Bachelor’s Degree Attainment by Income
A TABLE 3: BACHELOR’S DEGREE ATTAINMENT RATES OF
COLLEGE-QUALIFIED 1992 HIGH SCHOOL GRADUATES, BY 2000
C Percent Earning Bachelor’s Degrees By 2000
Family Income
S In 1988 All
Students
Students Whose Students Whose
Parents Did Not Parents Did
Attend College Attend College
F Less than $20,000 38.4% 32.9% 41.1%

A $20,000 - $34,999
$35,000 - $49,999
46.1%
55.5%
38.2%
43.9%
48.7%
59.9%
$50,000 and above 71.4% 60.5% 73.7%
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

A
C 1992-

S 1993
2003-
F 2004

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

Baum

26
 Pinpointing Causes
Percentage of Family Income Required to Pay
for College at Public 4-year Colleges (2004)

A National Ranking Lowest Highest

Income Income
C (#1 = Best)
All income levels Quintile Quintile
S Michigan (#40) 78.7% 9.1%

F Illinois (#36) 72.3% 9.1%

Indiana (#31) 66.4% 9.1%
A National (#29) 68.6% 8.2%
Iowa (#28) 63.3% 9.7%
Wisconsin (#4) 49.9% 7.4%

Source: Measuring Up: the State-by-State Report Card

(2004)

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 Pinpointing Causes
Student Work/Loan Burden in Illinois

A 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
C Expected Student

S Parents’
I ncome
Cost of
Attendance
Family
Contribution
Total Grants Work/ Loan
Burden
Family
Net Price

F $0 –
19,999
$14,829 $834 $7,597 $6,398 $7,232

A $20,000 –
$15,015 $2,630 $6,244 $6,141 $8,771
39,999

Source: 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
A
C
S
F
A

Source: Illinois Student Assistance

Commission

29
 Pinpointing Causes
Declining Purchasing Power of the MAP Grant:
Percentage of average tuition and fees covered
by the maximum announced MAP award

A
C
S
F
A

Source: Illinois Student Assistance

Commission

30
A
C
S Specifying
F Solutions
A

31
 Specifying Solutions
Lowering Unmet Need and Work-Loan Burden
FIGURE 17: EQUALIZING AVERAGE UNMET NEED AT
FOUR-YEAR PUBLIC COLLEGES BY FAMILY INCOME

A Income = $75,000 - above

College-Qualified High School Graduates

About $3,000 in additional grant aid would

C
(Unmet Need = $400)
Income = 0 - $49,999 equalize unmet need at public colleges
(Unmet Need = $3,400)
Unmet Need = $3,400

S
Unmet Need = $3,000

F Unmet Need = $400

A Unmet Need = $100

Public Two-Year College 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

 ACSFA does not make recommendations to

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

33
 Specifying Solutions
ACSFA Role in HEA Reauthorization and
Reauthorization Recommendations

A  Provide technical assistance to

C House and Senate staff across a broad
range of student aid issues.
S  Made two recommendations:

F  To create a new access and

persistence partnership; and
A  To simplify student aid delivery,
forms, and processes from middle
school through degree completion.

34
 Specifying Solutions
ACSFA Partnership Proposal

Recommendation: Create an access and persistence

A partnership between the federal government, states,
colleges, and private philanthropic groups.
C Purpose

S  Implement a comprehensive strategy effectively

aimed at all of the factors that affect access and

F 
persistence.
Improve integration and coordination among

A 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

35
 Specifying Solutions
ACSFA Simplification Recommendations

A  The Student Aid Gauntlet Report

 One-year study from Congress
C  Ten recommendations to simplify the

S application process and specific

aspects of need analysis
F
 Examples of Key Recommendations:
A  Create a comprehensive system of

early financial aid information

 Simplify and streamline FAFSA on the

Web

36
A
C
Panel Discussion
S
and Questions
F
A

37
 Contact Information

Judith N. Flink
A Vice Chairperson of the Advisory Committee,
Executive Director of University Student Financial
C Services,
The University of Illinois
S jflink@uillinois.edu

F Nicole A. Barry
Deputy Director
A nicole.barry@ed.gov
Erin B. Renner
Assistant Director
erin.renner@ed.gov

(202) 219-2099

38