Why increasing state grant aid is critical to boosting college graduation
Arizona’s 56 percent cut in state funding for higher education over the past nine years has led to tuition increases of 88 percent at state universities, causing fewer students, especially those from low-income families, to continue their education after high school.
To reduce that financial barrier to the training necessary to succeed in today’s global workforce, Arizona should increase its state-sponsored grant aid, according to College Success Arizona’s recent report “Expanding opportunity in Arizona: How state grant aid increases college participation and drives attainment” released January 2017.
“It’s fundamental to the future growth of the state’s economy,” said Steve Seleznow, president and chief executive officer of Arizona Community Foundation and a board member of College Success Arizona. “If we want to build a robust economy here that is not boom-and-bust but that’s sustainable long term, it requires us to build a talent pool.”
Arizona’s future workforce requires a large number of people with advanced skills and talents developed through post-secondary education “whether it’s a four-year degree, a two-year degree or a certification that enables them to pursue a career with a living wage,” Seleznow said.
The best tools to do that are “One, community college. Two, is your higher ed system. And three, is state grant aid programs that enable more of those kids to be able to take advantage of the education that is available to them,” Seleznow said.
Only 29 percent of Arizona’s low-income students participated in post-secondary education in 2013, nearly 27 percent lower than the national average, according to the report.
“Low-income students, which represent half of our youth population, simply aren’t going to college as a result of the state’s lack of student aid support,” said Rich Nickel, president and chief executive officer of College Success Arizona. “If we want to enjoy the massive economic and social benefits that other states are reaping from higher attainment rates, this trend cannot continue.”
These young people often are stuck in low-skilled, low-paying jobs, limiting their long-term earning ability, Nickel said.
The benefits extend beyond business, industry and personal income.
Educating low-income students reduces state social spending, because “college breaks the cycle of poverty in a family,” Seleznow said.
The U.S. economy has created about 11.6 million jobs since the Great Recession, and of those 99 percent have gone to individuals with some postsecondary education and 72 percent have been filled by individuals with a bachelor’s degree, according to the report.
Cuts shift state’s responsibility
The state also eliminated funding for the Maricopa and Pima community college systems, making Arizona’s largest community colleges rely on tuition and property tax revenue.
“Essentially, the state has shifted to the institutions its responsibility of keeping higher education affordable for all Arizonans,” Nickel said.
To reverse this trend, the Arizona Board of Regents has slowed tuition increases and recommended that the state funding formula provide 50 percent of the cost of education for Arizona residents, an increase from the 34 percent the state currently provides.
“This isn’t just affecting children from low-income families, parents of moderate income are struggling with this too,” Seleznow said.
Arizona Community Foundation, which runs the largest private scholarship program in the state, says that “as tuition increases, the scholarship funds we have can send fewer and fewer kids to college,” Seleznow said. “There needs to be combination of private support like we’re providing and public support because it’s an investment in building the intellectual capital of the state.”
Once a student is enrolled, Arizona universities and colleges help students with the greatest need “by offering substantial institutional aid as part of the overall financial aid package,” Nickel said. This aid is drawn from of a percentage of tuition and other fees from each student, which institutions use to meet their enrollment goals.
Nickel called on Arizona’s leaders to rethink the state’s financial aid program.
“Across the country, both conservative and progressive states have long and successful histories of sustaining state-funded aid programs,” Nickel said. “Data shows that more than $11 billion in state-funded aid is dispersed collectively across the United States.”
State aid for low-income students
Unlike many other states, Arizona has reduced state grant aid programs that help low-income students attend public or private postsecondary institutions, Nickel said.
The amount of need-based state grant aid distributed from 2010 to 2015 declined from $7.5 million in fiscal year 2008 to 2.5 million in fiscal year 2015, a drop of 67 percent, while the number of students eligible for federal need-based aid rose from 33,844 to 50,201, an increase of 48 percent, according to the Arizona Commission for Postsecondary Education and the Arizona Board of Regents.
“Indeed, Arizona ranks in the bottom six states in the amount of state supported need-based aid available for students,” Nickel said.
The federal Pell grant — the primary grant aid available for high need students — has not kept up with the rising costs of college, and students are increasingly wary of taking on debt, even as an investment in themselves, Nickel said.
The national average for need-based aid is just more than $500 per undergraduate student. Arizona provides less than $50 in need-based aid per student, while Texas provides almost $700 per student.
“The result is that many college-ready students in Arizona are left behind,” Nickel said.
Simply put, Arizona is being outpaced by its peer states, Seleznow said.
“Irrespective of where you are on politics, if you look at those states in the study, you see they are investing more than we are,” Seleznow said. “Why is it that other states find this an important choice, but we don’t?”
Only four states provide less grant aid than Arizona – Alabama, Idaho, Mississippi and Utah, Seleznow said.
In Arizona, people who are over 50 years old are two to eight percentage points above the national average in educational attainment, but every five-year age bracket below age 50 is two to eight percentage points below the national average, Seleznow said.
“Arizona has historically imported its intellectual capital, it has not invested in building its intellectual capital,” Seleznow said. “Over the years, we’ve lost the intellectual capital we’ve built to other places that have more robust economies and jobs.”
Currently, Arizona is seeking to meet its Achieve60AZ goal to increase the number of Arizonans ages 25 to 64 with post-secondary degrees or credentials from the current 42 percent to the goal of 60 percent attainment by 2030.
In Arizona, much of that opportunity lies with low-income families and the states’ growing Latino population.
“Not only is this good for individual students and their families, the economic benefits help the entire state,” Nickel said.
College Success Arizona’s 2016 report “Doubling Arizona’s Economic Growth” showed that a university graduate in Arizona adds more than $660,000 to the state’s economy over time. If Arizona met its goal for educational attainment, and aligned its attainment rate to the state’s future labor needs, more than $7 billion could be added to the state economy, Nickel said.
“A well-designed state aid program could be the most effective tool to encourage participation and attainment among the very students Arizona is depending on to be the future leaders and economic drivers in our state,” Nickel said.
College Success Arizona has analyzed state grant aid programs across the country designed to help low-income students graduate, and examined research from national organizations such as the Lumina Education Foundation, the Education Commission of the States and the National Governors Associations, Nickel said.
In late 2015, the Arizona Commission on Postsecondary Education brought together a Financial Aid Taskforce made up of education finance experts to determine the characteristics of a well-designed state grant aid program.
“While College Success Arizona has not yet made our final recommendations, we believe that a few characteristics are especially important for Arizona,” Nickel said. “We are looking for a state program that is substantial in its support to students, particularly low-income students, and that is targeted, student-focused, sustainable and portable.”
Recommendations will be available in another College Success Arizona policy brief released in early Spring of 2017, Nickel said.