Financial Aid Across the States

Financial aid is really complicated. That’s according to a recent report by the American Association of State Colleges and Universities, which argues that while Americans often think of need-based and merit-based financial aid grants as conflicting ways to spend money, in fact they often work together, sort of.

Currently all states have both need-based and merit scholarships. How far these scholarships go to actually pay for college, however, depends on many factors. As the report explains:

The core concept of all state-based financial aid programs is to help state residents gain access to and pay for college. That being said, philosophies differ on whether increasingly scarce state financial aid resources should be allotted to the neediest students, the most meritorious students, the students who are both the neediest and the most meritorious, or in some other manner entirely. Therefore, important structural elements of state aid programs are different restrictions that can be added to “need” (as defined by income) in order to allot funds.

But there’s no consistency across states. As the report explains, most states require students seeking aid to be working toward a degree. But some states give state money merely for career development. Some states require that students take a certain series of courses in high school in order to obtain college scholarships. Arkansas’s Academic Challenge Scholarship provides scholarship money to students any state institutions, but awards more money to students enrolled at four-year institutions, even though two-year institutions might be a more efficient college choice. Some states require that students “pledge to remain drug-free” in college.

There’s some logic behind all of these restrictions, though it’s unclear how well these requirements actually work. States also have dramatically different thresholds for both financial need and academic merit.

Do states with one set of criteria produce more college graduates? Are some college graduates better educated or prepared for the workplace? No one seems to know. While the report recommends more cross-border compacts, which would allow students from one state to pay in-state tuition to attend public universities in another, it’s really hard to figure out which states actually have the sort of programs of which families might want to take advantage.

As the report explains, however, the states do have a few things in common: “The most recent trend in [need- and merit-based state financial aid] programs—despite their relatively small share of total undergraduate state financial aid expenditures—is to cut them.”

Well at least the problems students face are similar.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer