Tuesday, October 07, 2008

Community Colleges and Need-Based Financial Aid

by Daniel Bennett

The Advisory Committee on Student Financial Assistance recently released a report entitled Apply to Succeed: Ensuring Community College Students Benefit from Need-Based Financial Aid. The report outlines the importance of community colleges in educating the US workforce and discusses the low application rates among the millions of students in these institutions.

It was reported that 55% of all community college students failed to apply for financial aid by completing the FAFSA during the 2003-04 school year, compared with only 37% of all students at 4 year institutions during the same year. Among full-time students at community colleges, 38% did not complete the FAFSA. Of the full-time students that did not apply, 49% of dependent students, 53% of independent students without dependents, and 29% of independent students with dependents reported annual family income less than $20,000, which would most likely have made those students eligible for a full Pell Grant. A survey of students cited various reasons for failure to apply, including:
*Thought they were ineligible for financial aid (39%)
*Had sufficient funds to pay for college expenses (35%)
*The financial aid application was too complex (6%)
*Did not want to provide sensitive information (2%)
*Other (18%)

The report indicates there is a lack of information being disseminated to students, especially first generation and low-income ones, concerning the procedure for aid determination and the potential benefits. Legislative changes enacted by the 2007 CCRAA increased financial aid eligibility for millions of students, but many students are still unaware of the changes and how it may affect their eligibility.

The ACSFC's policy recommendations include:
1) Communicate increased federal aid eligibility widely and effectively
2)Make applying for financial aid easy and a priority
3)Encourage students to moderate the number of hours worked
4) Improve implementation of the auto-zero EFC

First, sorting through financial aid information can be intimidating and cumbersome. CCAP supports simplification of FASFA along the lines of the proposed Spelling's Plan for Simplification that would drastically shorten the application from more than 100 questions to 27. High school guidance counselors and college financial aid administrators are essential players in the financial aid game and need to be better trained to educate students on the process and availability of aid. Colleges and universities could collectively sponsor a public service campaign to spread the word. This could include easy-to-understand information pamphlets, commercial advertisement and stakeholder training sessions. Such a campaign would be beneficial to all, as economies of scale would be realized and institutions could potentially increase their enrollment and retention rates and thus, increase their revenues. An increased number of graduates could have positive externalities on the economy as a whole, as some advocates suggest.

Many students at community colleges work while attending school full-time, which some suggest has an adverse effect on the persistence of their studies and the probability of degree completion. The report advocates advising students to work less hours and take advantage of financial aid, so that they may focus on their studies. While it is true that some students may work too many hours to allow sufficient preparation and study time for their courses, I believe that working part-time while in school can add value to an education, as it provides students with work experience and teaches them to manage their time more efficiently. Not to mention that these student jobs may lead to management positions upon completion of a degree. These sort of benefits are especially important at the community college level where institutions may not offer professional development opportunities (clubs/organizations) or have large career centers with extensive alumni relations.

While I do support the cause to make financial aid information more readily available and understood, I don't believe that we should downplay the importance of student work experience. There is a catch 22 to beginning a career that colleges often fail to inform students - many jobs require experience, but you can't get that experience without working. Internships and co-ops are the ideal experiences to have while in school, but not all students (especially those from low-income families) have the opportunity or access to engage in these types of positions. Therefore, jobs in retail, hospitality and customer service, among others, can provide valuable work experience for student that they can leverage to find a more suitable (and hopefully higher paying) job in the future. The key is striking a balance between work and school and for student's employers to ascertain their need to study.

The ACSFC report discussed the increased number of students who begin their college career at a community college with the intention to transfer into a 4 year institution. While this makes financial sense for many low and middle income students, the viability of the credits being transferable needs to be considered. Some 4 year schools will not accept transfer credits from 2 year schools, which leads to gravely inefficient use of financial aid resources if a student has to repeat essentially the same classes. Not to mention that it increases the time to degree completion, which may lead some students to not finish.


Cowboy said...

I guess I don't understand "needs based" lending. IMHO, needs based financing will require taxpayer funded loans and will require the full faith and backing of the government (taxpayers) - like GNMA.

On one hand, CCAP's position is that colleges & universities should not be in the student loan business. Yet here I read "...college financial aid adminisrators are essential players in the financial aid game..." So it is unclear to me what CCAP's position is.

Given the current state of financial markets, and likely much more stringent lending standards coming - my guess is "needs based" financing is going to disappear unless student loans become a category of their own with unique regulations, unless colleges are going to have a free hand to whom they lend - which I find troubling at the very least.

The other statement that leaves me scratching my head is tying retention rates to needs based loans. I suppose you're saying. that an increase in overall enrollment will increase retention rates. That may be true by the number students graduating - but does the retention rate as a percentage increase?

capeman said...

cowgirl's perplexity re CCAP's position is well-founded. The disjunction is because some of the bloggers other than the Doc actually want to deal with the real world, and make a difference there.

Cowboy said...

Benny - Don't push me mate.

Angelina said...

I got a grant from the federal government for $12,000 in financial aid, see how you can get one also at