Urban Wire Simplification Cannot Be the Only Goal of Student Aid Reform
Sandy Baum, Kristin Blagg
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Policy analysts have long argued that simple student aid programs are more effective than complicated ones. Higher education grant programs can increase educational opportunities if students know about them, understand them, and can easily apply for them. But if students have to navigate multiple programs with different eligibility requirements, complete complex application forms, or meet challenging standards, they are less likely to participate. As a result, students most in need of financial assistance are less likely to enroll and succeed in college.

Although simplifying grant programs can benefit these students in need, creating a single grant program that merges two disparate goals will likely serve neither goal well. A recent proposal for reforming Mississippi’s state grant program, which seeks to increase access, affordability, and attainment among students with low incomes and to reward students for academic achievement, provides an instructive example.

The Mississippi state government recently sought to develop a single, simple program to replace its three existing grant programs, each with different application requirements and eligibility criteria. The proposed new program, the Mississippi One Grant (MOG), would replace a need-based program that covers tuition prices for students with low incomes who score at least 20 on the ACT. It would also replace two programs that offer smaller awards to students with high academic achievement and to students who have an ACT score of at least 15 but are not eligible for the maximum Pell grant.

If adopted, the MOG program would base awards on a combination of students’ financial circumstances and ACT scores, requiring students to score at least 18 on the test. The average score in the United States is 20.3, and in Mississippi it is 18.1. Students from families with lower incomes would receive larger awards than those from more affluent families with the same test scores, but higher ACT scores would yield increases in grant aid at a rate comparable to increases in financial need. As a result, MOG awards for high-achieving students with low incomes would be smaller than those they receive under the current system, meaning the new program would sacrifice existing funding for students with low incomes in the interest of rewarding more high-scoring students. And students with ACT scores below the state average would receive no aid, regardless of their financial circumstances.

Although states should work toward simpler financial aid systems, they should also recognize that financial aid has the greatest effect when awarded to students with limited financial resources. Need-based aid increases educational attainment, whereas merit-based aid rewards and encourages students who are already likely to succeed. For students with low incomes, the size of the grant matters more, as for many, extra dollars can make the difference between enrolling and persisting in college or entering the labor market without a college credential.

Attempting to design a single state grant program that meets the needs of students with low incomes and rewards high school achievement violates the long-established principle of economic policy design that suggests the number of policy instruments should match the number of policy targets.

Institutional admissions requirements, not financial aid programs, should sort students into postsecondary pursuits. By excluding students with high levels of need who have already met institutional admissions standards from receiving adequate grant aid because they do not meet state-set academic standards, this policy will create barriers to their enrollment and success.

Separating programs aimed at need- and merit-based goals does not require abandoning all academic requirements for need-based aid. Baseline standards for academic progress can provide constructive incentives for recipients of need-based aid. Requiring that students complete a minimum number of credit hours each semester so they stay on track to graduate is one such example. This standard also avoids continuous funding of students who have little chance of earning credentials.

Policymakers can simplify and strengthen need-based state grant programs to make them more accessible to and effective for students with lower incomes. Strong program design can also contribute to increasing overall effectiveness. As such, policymakers should avoid introducing sharp differences in the aid for students with similar characteristics and in similar circumstances. Denying grant aid to students who score just below an ACT threshold—a score of 17 instead of an 18—is likely to create an inequitable cliff.

The state will always face trade-offs between controlling the budget and providing the financial support on which so many students depend. Designing programs that singularly serve students who cannot afford college on their own is the most promising strategy for ensuring a high return on the state’s investment.

If students are admitted to college, the state has a strong interest in supporting their success, whether or not they have stellar academic qualifications. Simple programs are better than complicated programs. But denying sufficient financial aid to students with low incomes accepted by the state’s institutions will hurt the students, their institutions, and their state.

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Research Areas Education
Tags Higher education Paying for college Postsecondary education and training State programs, budgets
Policy Centers Center on Education Data and Policy
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