Financial Aid Study Update #3

1. Financial Aid Study Update #3 INDIANA Commission for Higher Education june 11, 2010

2. HEA 1001-2009(ss) SECTION 489 “The commission for higher education with the assistance of the state student assistance commission shall study the funding of college scholarship programs provided by the state student assistance commission and the state's public universities.”

3. Caveats The study is due June 30, 2010, and will be delivered to the State Budget Committee. Today is intended to seek Commission endorsement of the policy direction presented The specific questions asked in the legislative charge will be addressed The study has also raised many complicated and important issues that cannot all be addressed given the limited resources and time, but beg for further investigation Study has found significant gaps in the data connecting financial aid to student achievement that must be addressed Ongoing study of these issues should be a regular practice

4. Specific Legislative ChargeThe study must examine the following issues: The limits established for awards and the differences between the limits established for private and public universities. 1. Award Methodology: SSACI calculates awards caps (limits) through FAFSA data, Federal PC/EFC calculation and budget rationing 2. Timing of awards: Award caps announced typically sometime between March and June 3. Public / Private cap differences 4. Efficacy: Are we distributing awards to the right students, and are the awards leading to access and completion

5. Recommendations • Methodology • SSACI should continue to use the existing methodology Tuition & fees (caps) – Ability to pay (PC/EFC) = Grant amounts • Caps are necessary device to ration funds and no better policy discovered in the study • FAFSA (generates PC/EFC) is a valuable tool for both collecting data and identifying relative need

6. Recommendations • Timing of awards • The sooner awards can be announced the better for families and colleges • Students and parents want transparency and financial planning ability • Colleges want to compete for students with financial aid packages • SSACI desires to wait crucial information is known • FAFSA’s aren’t filed until March 10 – then know relative need of students • State budget is not passed until April (sometimes later) and concerns over mid-year budget adjustments • Enrollment data is better over time • Federal NPC requirements and a useful and widely available College Cost Estimator would ease some concerns over late announcements

7. Recommendations • Public / Private caps • Students should be able to continue to take SSACI awards to public or private colleges • The private colleges are an integral part of Indiana higher education system and SSACI grants afford students some choice in college selection • SSACI should apply consistent methodology across programs • The difference in the award cap between public and private colleges should continue existing state policy – a higher award to a student attending a private school is acceptable because there is no state subsidy to private school • [Recommend no changes in state policy for proprietary colleges – more study is needed]

8. Recommendations • Efficacy: Are we distributing awards to the right students, and are the awards leading to access and completion • The answer is … Incomplete • Significant gaps in data • Existing DOE, SSACI, CHE and DWD data must be married • Additional data must be identified and collected • Time and resources must be garnered to study this further

9. Specific Legislative ChargeThe study must examine the following issues: 2) The extent to which criteria for establishing the eligibility of an applicant should consider receipt of Pell Grants, other wrap-around assistance provided by the university, tax credits, and other assistance. • No … and Yes • Do not recommend formally considering Pell grant aid in the award methodology (though this deserves further study) • Pell recipients are very low income students • However, we must recognize the total financial aid picture

10. Specific Legislative ChargeThe study must examine the following issues: • Do not recommend formally considering institutional grant aid in the award methodology (though this deserves further study) • The Commission recommended institutions wrap around their financial aid with state and federal funds, but recognize the decision rests with the trustees. • Models include Pell Promise and 21st Century Covenant • Institutions use financial aid to attract and retain students • A merit based financial aid program rewards achievement • However, we must recognize the total financial aid picture

11. AGI / EFC Conversion Source: CHE 2008 SIS data Students binned by EFC divided into six roughly equal sections Includes all students attending Indiana public postsecondary institution who filed a FAFSA

12. Student Grant Sources: All Students Indiana Public Postsecondary Institutions

13. Student Grant Sources: Dependent Resident Students at 4-year Public Institutions

14. Specific Legislative ChargeThe study must examine the following issues: 3) The relative amounts of assistance provided on the basis of merit and on the basis of need. • Does not require a policy position – data to be distributed • However, Commission believes SSACI should focus on need-based financial aid • O’Bannon grant amounts based on high school graduation diploma should continue • SSACI programs that are primarily based on other than need based analysis should be reconsidered

15. Specific Legislative ChargeThe study must examine the following issues: 4) Whether means tests should be required for students participating in the twenty-first century scholars program as those students enter college. • The 21st Century Scholars Program has some proven benefits to students (high school graduation) and other benefits that need to be better identified and measured • The 21st Century Scholars Program has been a national model for student aid programs around the country for several years • It is a well known and beloved program both in the eyes of the public and among policy makers • Any changes to the program must be well reasoned and carefully implemented

16. Specific Legislative ChargeThe study must examine the following issues: IC 21-12-6-1Twenty-first century scholars program; established Sec. 1. The twenty-first century scholars program is established to do the following:        (1) Reduce the number of students who withdraw from high school before graduation.        (2) Increase the number of students who are prepared to enter the workforce upon graduation.        (3) Increase the number of students entering postsecondary educational institutions in Indiana.        (4) Encourage eligible students to attend postsecondary educational institutions in Indiana by reducing the financial burden on the eligible students and their families.        (5) Decrease drug and alcohol abuse by encouraging higher educational pursuits.        (6) Increase individual economic vitality.        (7) Improve the overall quality of life for many Indiana residents.

17. Recommendations The 21st Century Scholars Program must refocus itself as a program intended to raise the ability, aspiration and preparation of low income students to be good citizens, complete high school, attend and be successful in college, and successful in life All administrators of the program must improve their delivery and efficacy of program services from enrollment in the program to college completion All participants in the program must commit to participating in the programs designed for their benefit

18. Recommendations The fidelity of the 21st Century Scholars Program must be maintained through rigorous monitoring of enrollment and participation The fiscal environment of the state and burgeoning enrollment in the program lead to an inescapable conclusion that Indiana must consider a means test for 21st Century Scholars students as they attend college. Further study is needed.

19. Specific Legislative ChargeThe study must examine the following issues: 5) Scholarships and awards provided for members of the military and national guard. • Substantial financial aid is available from the federal and state governments for current and former members of the military and their families • Coordination of these awards is minimal and needs to be improved • The SSACI programs for military families is financed by SSACI, but administered by the IDVA and National Guard • The recommendation is the fiscal and administrative duties should be assigned to one entity –that is, either these are student aid programs administered by SSACI and follow SSACI policies, or they are military benefits administered by the appropriate military agency

20. Specific Legislative ChargeThe study must examine the following issues: 6) Scholarships and awards provided to the individuals being held in state correctional facilities. • There is a positive public policy rationale to funding education for incarcerated prisoners at taxpayer expense • Reduced recidivism, good behavior in correctional institutions, job prospects upon release, time off sentence for education attainment • Paying for prisoner education through SSACI has several disadvantages • Limited academic offerings because of SSACI rules • Deadlines and SSACI procedures including March 10 deadline and inconsistent funding levels across institutions • State should consider funding prisoner education through the Indiana Department of Corrections

21. Next Steps CHE and SSACI staff will complete white paper CHE will hold executive committee meeting to act on the white paper before June 30, 2010