Merit and Need: The HOPE Scholarship and the Pell Grant for USG First-Time Freshmen, Fall 2001

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1 Merit and Need: The HOPE Scholarship and the Pell Grant for USG First-Time Freshmen, Introduction Like other state-based merit scholarships throughout the nation, Georgia s HOPE Program has been criticized for subsidizing the college costs of affluent students at the expense of financially needy students. An assumption underlying this criticism is that needy students do not meet the academic standards for the scholarships at the same rate as students without need. This assumption is generally validated by the large correlation between socio-economic status (SES) and measures of academic achievement. The students who are most in need of financial assistance are eligible to receive the federal Pell Grant. This report will examine HOPE Scholarship and Pell Grant recipients in the University System of Georgia for the most recent first-time freshman cohort for which that financial aid data are available. 1 Pell Grant Background The federal commitment to need-based grant aid was launched via the Higher Education Act of 1965 s specification of the Educational Opportunity Grant Program (EOG). In the 1972 Amendments to the Higher Education Act, the Program was modified and renamed the Supplemental Educational Opportunity Grant Program (SEOG). Also at that time, Congress designed the Basic Educational Opportunity Grant Program (BEOG) to be the floor of the eligible student s financial aid package to defray the costs of postsecondary education. The objective of the BEOG Program, known since 1980 as the Pell Grant, was to assist low-income aid applicants in financing their higher educational attendance costs through the provision of federally funded gift aid. The Pell Grant is the largest undergraduate grant program administered by the U.S. Department of Education. The federal policy has been clear and consistent that the Pell Grant would not cover all college attendance costs, but would be the first source of aid in financing college costs. With this grant as the floor of the applicant s aid package, other financial aid from federal, state, and institutional sources would be used to assist in financing the student s direct and indirect college attendance costs. It is likely that because of strict interpretations of the federal Pell specification, the initial HOPE Scholarship policies lessened the state s merit-award to Georgia s most financially needy students. Until officials changed the state s regulations in July 2000, HOPE awards were added 1 There is a one-year time lag in officially identifying all HOPE Scholars due to retroactive award policies and year-end budget closures. December 2003 Page 1 of 9

2 after the federal Pell Grant dollars in compiling a student s total financial aid package. Some of the HOPE Scholarship criticism dissipated when this change occurred and allowed Pell Grant recipients to apply their HOPE award to costs beyond tuition, such as housing and other living expenses. Pell Grant Eligibility Federal Pell Grant eligibility is determined by a set of federal financial guidelines for U.S. citizens or permanent residents who are enrolled in an eligible program of study at the undergraduate level and who have not already received a bachelor s degree. The determination of eligibility is made through the Free Application for Federal Student Aid (FAFSA) process. When the student submits the FAFSA, the Department of Education calculates the student s financial eligibility for assistance using the national need analysis formula. This formula determines a student s expected family contribution (EFC) by factoring in the parents and/or student s income and assets (excluding home), the family s household size, and the number of family members attending postsecondary institutions. 2 Postsecondary institutions act as disbursing agents for the Department of Education. The institution that the student attends disburses the federal Pell Grant according to the Department of Education s payment schedule. 3 The amount of Pell Grant awarded is based on the student s EFC, the cost of attendance, and enrollment status. Until recently, USG did not collect data on Pell Grants. 4 This paper presents the first analysis of the new data system, and reviews the relationship between HOPE Scholarships and Pell Grants for students attending USG institutions. 2 The national need analysis formula determines financial eligibility for all federal student aid and is applied uniformly to all applicants. The EFC is determined as the sum of: (1) a percentage assessment of net income (remaining income after subtracting allowances for basic living expenses) and (2) a percentage assessment of net assets, other than a home (remaining assets after subtracting an asset protection allowance). See for more information and EFC calculation worksheets. 3 See for the Department of Education s payment schedule. 4 The USG implemented the Financial Aid Reporting System in November December 2003 Page 2 of 9

3 HOPE Scholarship Recipients Almost one quarter of the HOPE Scholarship recipients from the first-time freshman cohort also received the Pell Grant. Over 5,000 students qualified for the low income, federal need-based grant, in addition to receiving the state s merit-based award. Figure 1 HOPE Scholarship Recipients with Pell Grant Proportion of USG HOPE Eligible First-Time Freshmen, HOPE & Pell Recipients HOPE Recipients 5,029 16, December 2003 Page 3 of 9

4 Pell Grant Recipients Approximately three quarters of the 6,789 Pell Grant recipients in the first-time freshman cohort also received the HOPE Scholarship. These statistics certainly would appear to negate the assumption that financially needy students are unable to qualify for merit-based aid; however, what remains unknown is the number of students with financial need who do not enter college. Figure 2 Pell Grant Recipients with HOPE Scholarship Subset of USG HOPE Eligible First-Time Freshmen, Pell & HOPE Recipients Pell Recipients 5,029 1, December 2003 Page 4 of 9

5 USG HOPE-Eligible First-Time Freshmen by Award Status In, USG institutions enrolled 27,210 first-time freshmen from Georgia high schools. 5 System-wide, over 18 percent of these students received both the Pell Grant and the HOPE Scholarship. Table 1 lists the percentage breakdown by institutional sector. Regional and state universities had the highest proportion of students who qualified for both the Pell Grant and the HOPE Scholarship. Among the institutional sectors, two-year and state colleges had the highest proportion of students who were entitled to the Pell Grant, but not the HOPE Scholarship (see Appendix 1). Table 1 Research Universities Regional Universities State Universities Pell & HOPE HOPE Alone Pell Alone 1,045 5, , ,728 4, No Pell or HOPE State Colleges Two-Year Colleges , , , ,240 System Average , , , , This cohort, restricted to those who graduated from Georgia high schools since 1993, is referred throughout as the HOPEeligible population. December 2003 Page 5 of 9

6 Gender Differences by Award Status There are gender differences in the award status distribution of HOPE Scholarships and Pell Grants. Clearly, the majority of the HOPE-eligible first-time freshmen who entered in received the scholarship. Approximately 60 percent of both the male and female cohorts qualified for the HOPE Scholarship (see Table 2). A higher proportion of females received both the Pell Grant and HOPE Scholarship. Males were more likely than females to receive neither the Pell Grant nor the HOPE Scholarship. However, 6.5 percent of both the male and female first-time freshman cohorts only qualified for the Pell Grant (see Appendix 2). Table 2 Male Pell & HOPE HOPE Alone Pell Alone 1,684 7, No Pell or HOPE 2,361 Female , , , December 2003 Page 6 of 9

7 Race/Ethnic Differences by Award Status Table 3 shows that Caucasian students were more likely to receive the HOPE Scholarship alone than other student groups (for example, 69.9 percent compared to 30.8 percent for African- Americans). Over one-half of the African-American cohort received a Pell Grant, either alone (19.4 percent) or in combination with a HOPE Scholarship (36.5 percent). Asian students who received the Pell Grant also tended to be HOPE Scholarship recipients. Of the 394 Asian students who received the Pell Grant, 90 percent (353) also received the HOPE Scholarship. Approximately 19 percent of Hispanic and Native American students received neither HOPE nor Pell (see Appendix 3). Table 3 Caucasian Pell & HOPE HOPE Alone Pell Alone 2,339 13, No Pell or HOPE 2,871 African-American , , , Multi-Racial Asian Hispanic Native American December 2003 Page 7 of 9

8 Average Pell Grant Award Pell Grants range from less than $400 up to a maximum of $4,050 per year. System-wide, 34.6 percent of first-time freshmen receiving both the HOPE Scholarship and the Pell Grant were awarded dollars in the maximum range. In contrast, 4.2 percent of these students received the minimum Pell Grant award. In general, institutional sectors paralleled the distribution observed at the System level; however, some variability was seen between individual institutions. The largest number of first-time freshmen with HOPE and Pell is at Georgia State University, where 41 percent (222 students) received the maximum grant amount. Over 55 percent of Fort Valley State University students receiving both HOPE and Pell received the maximum grant, as compared to 16.7 percent at Coastal Georgia Community College (see Appendix 4). Figure 3 Pell Grant Recipients with HOPE Scholarship Range of Average Pell Awards, First-Time Freshmen > $3,601 $3,201 - $3,600 $2,801 - $3,200 $2,401 - $2,800 $2,001 - $2,400 $1,601 - $2,000 $1,201 - $1,600 $801 - $1,200 $401 - $800 < $ ; n = ; n = ; n = ; n = ; n = ; n = ; n = ; n = ; n = ; n = 1, ,000 1,200 1,400 1,600 1,800 2,000 Conclusion Throughout the past decade, the HOPE Scholarship Program has assisted students in pursuit of higher education by providing merit-based funding for tuition, fees and books. However, economic forecasts suggest that lottery revenues will be inadequate to fund the HOPE Scholarship within the next few years if current policy remains in place. The USG will monitor any changes to the HOPE Scholarship policy, especially with regard to those students in most need of financial assistance. December 2003 Page 8 of 9

9 For more information, write or Dr. Anoush Pisani Senior Research Associate Board of Regents of the 270 Washington St., SW Atlanta, Georgia December 2003 Page 9 of 9

10 Appendix 1 Financial Aid - HOPE and Pell HOPE-Eligible, First-Time Freshmen HOPE-Eligible First-Time Pell / No HOPE HOPE / No Pell Both HOPE and Pell Institution Freshmen Georgia Institute of Technology 1, , Georgia State University 2, , University of Georgia 3, , Research Universities 6, , , Georgia Southern University 2, , Valdosta State University 1, Regional Universities 3, , Albany State University Armstrong Atlantic State University Augusta State University Clayton College & State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State University Kennesaw State University 1, North Georgia College & State University Savannah State University Southern Polytechnic State University State University of West Georgia 1, , State Universities 8, , , Dalton State College Macon State College State Colleges 1, Abraham Baldwin Agricultural College Atlanta Metropolitan College Bainbridge College Coastal Georgia Community College Darton College East Georgia College Floyd College Gainesville College Georgia Perimeter College 1, Gordon College Middle Georgia College South Georgia College Waycross College Two-Year Colleges 7,358 1, , , System Totals 27,210 1, , , Notes: HOPE and Pell data are from FARS. HOPE- eligible cohort is defined as Georgia High School graduates since 1993 and any additional students receiving FARS106 HOPE according to GSFC records. 4/18/2003

11 Appendix 2 Financial Aid - HOPE and Pell HOPE-Eligible First-Time Freshmen by Gender HOPE-Eligible First-Time Pell / No HOPE HOPE / No Pell Both HOPE and Pell Institution Freshmen Female Georgia Institute of Technology Georgia State University 1, University of Georgia 2, , Research Universities 3, , Georgia Southern University 1, Valdosta State University Regional Universities 2, , Albany State University Armstrong Atlantic State University Augusta State University Clayton College & State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State University Kennesaw State University North Georgia College & State University Savannah State University Southern Polytechnic State University State University of West Georgia State Universities 4, , , Dalton State College Macon State College State Colleges Abraham Baldwin Agricultural College Atlanta Metropolitan College Bainbridge College Coastal Georgia Community College Darton College East Georgia College Floyd College Gainesville College Georgia Perimeter College 1, Gordon College Middle Georgia College South Georgia College Waycross College Two-Year Colleges 4, , Female Totals 15, , , Notes: HOPE and Pell data are from FARS. The HOPE- eligible cohort is defined as Georgia High School graduates since 1993 and any additional students receiving FARS106 HOPE according to GSFC records. 4/18/2003

12 Appendix 2 Financial Aid - HOPE and Pell HOPE-Eligible First-Time Freshmen by Gender HOPE-Eligible First-Time Pell / No HOPE HOPE / No Pell Both HOPE and Pell Institution Freshmen Male Georgia Institute of Technology Georgia State University University of Georgia 1, , Research Universities 3, , Georgia Southern University 1, Valdosta State University Regional Universities 1, , Albany State University Armstrong Atlantic State University Augusta State University Clayton College & State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State University Kennesaw State University North Georgia College & State University Savannah State University Southern Polytechnic State University State University of West Georgia State Universities 3, , Dalton State College Macon State College State Colleges Abraham Baldwin Agricultural College Atlanta Metropolitan College Bainbridge College Coastal Georgia Community College Darton College East Georgia College Floyd College Gainesville College Georgia Perimeter College Gordon College Middle Georgia College South Georgia College Waycross College Two-Year Colleges 3, , Male Totals 12, , , Notes: HOPE and Pell data are from FARS. The HOPE- eligible cohort is defined as Georgia High School graduates since 1993 and any additional students receiving FARS106 HOPE according to GSFC records. 4/18/2003

13 Appendix 3 Financial Aid - HOPE and Pell HOPE-Eligible First-Time Freshmen by Race/Ethnicity HOPE-Eligible First-Time Pell / No HOPE HOPE / No Pell Both HOPE and Pell Institution Freshmen American Indian or Alaskan Native Georgia Institute of Technology Georgia State University University of Georgia Research Universities Georgia Southern University Valdosta State University Regional Universities Armstrong Atlantic State University Augusta State University Clayton College & State University Columbus State University Kennesaw State University North Georgia College & State University Southern Polytechnic State University State University of West Georgia State Universities Macon State College State Colleges Abraham Baldwin Agricultural College Coastal Georgia Community College East Georgia College Floyd College Gainesville College Georgia Perimeter College Two-Year Colleges American Indian or Alaskan Native Totals Notes: HOPE and Pell data are from FARS. The HOPE- eligible cohort is defined as Georgia High School graduates since 1993 and any additional students receiving FARS106 HOPE according to GSFC records. 4/18/2003

14 Appendix 3 Financial Aid - HOPE and Pell HOPE-Eligible First-Time Freshmen by Race/Ethnicity HOPE-Eligible First-Time Pell / No HOPE HOPE / No Pell Both HOPE and Pell Institution Freshmen Asian or Pacific Islander Georgia Institute of Technology Georgia State University University of Georgia Research Universities Georgia Southern University Valdosta State University Regional Universities Albany State University Armstrong Atlantic State University Augusta State University Clayton College & State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State University Kennesaw State University North Georgia College & State University Southern Polytechnic State University State University of West Georgia State Universities Dalton State College Macon State College State Colleges Abraham Baldwin Agricultural College Atlanta Metropolitan College Bainbridge College Coastal Georgia Community College Darton College East Georgia College Floyd College Gainesville College Georgia Perimeter College Gordon College Middle Georgia College Waycross College Two-Year Colleges Asian or Pacific Islander Totals 1, Notes: HOPE and Pell data are from FARS. The HOPE- eligible cohort is defined as Georgia High School graduates since 1993 and any additional students receiving FARS106 HOPE according to GSFC records. 4/18/2003

15 Appendix 3 Financial Aid - HOPE and Pell HOPE-Eligible First-Time Freshmen by Race/Ethnicity HOPE-Eligible First-Time Pell / No HOPE HOPE / No Pell Both HOPE and Pell Institution Freshmen Black, Non-Hispanic Origin Georgia Institute of Technology Georgia State University University of Georgia Research Universities Georgia Southern University Valdosta State University Regional Universities Albany State University Armstrong Atlantic State University Augusta State University Clayton College & State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State University Kennesaw State University North Georgia College & State University Savannah State University Southern Polytechnic State University State University of West Georgia State Universities 2, Dalton State College Macon State College State Colleges Abraham Baldwin Agricultural College Atlanta Metropolitan College Bainbridge College Coastal Georgia Community College Darton College East Georgia College Floyd College Gainesville College Georgia Perimeter College Gordon College Middle Georgia College South Georgia College Waycross College Two-Year Colleges 1, Black, Non-Hispanic Origin Totals 5,763 1, , , Notes: HOPE and Pell data are from FARS. The HOPE- eligible cohort is defined as Georgia High School graduates since 1993 and any additional students receiving FARS106 HOPE according to GSFC records. 4/18/2003

16 Appendix 3 Financial Aid - HOPE and Pell HOPE-Eligible First-Time Freshmen by Race/Ethnicity HOPE-Eligible First-Time Pell / No HOPE HOPE / No Pell Both HOPE and Pell Institution Freshmen Hispanic Georgia Institute of Technology Georgia State University University of Georgia Research Universities Georgia Southern University Valdosta State University Regional Universities Albany State University Armstrong Atlantic State University Augusta State University Clayton College & State University Columbus State University Georgia College & State University Georgia Southwestern State University Kennesaw State University North Georgia College & State University Southern Polytechnic State University State University of West Georgia State Universities Dalton State College Macon State College State Colleges Abraham Baldwin Agricultural College Bainbridge College Coastal Georgia Community College Darton College East Georgia College Floyd College Gainesville College Georgia Perimeter College Gordon College Middle Georgia College South Georgia College Waycross College Two-Year Colleges Hispanic Totals Notes: HOPE and Pell data are from FARS. The HOPE- eligible cohort is defined as Georgia High School graduates since 1993 and any additional students receiving FARS106 HOPE according to GSFC records. 4/18/2003

17 Appendix 3 Financial Aid - HOPE and Pell HOPE-Eligible First-Time Freshmen by Race/Ethnicity HOPE-Eligible First-Time Pell / No HOPE HOPE / No Pell Both HOPE and Pell Institution Freshmen Multi-Racial Georgia Institute of Technology Georgia State University University of Georgia Research Universities Georgia Southern University Valdosta State University Regional Universities Albany State University Armstrong Atlantic State University Augusta State University Clayton College & State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State University Kennesaw State University North Georgia College & State University Savannah State University Southern Polytechnic State University State University of West Georgia State Universities Macon State College State Colleges Abraham Baldwin Agricultural College Atlanta Metropolitan College Coastal Georgia Community College Darton College East Georgia College Floyd College Gainesville College Georgia Perimeter College Gordon College Middle Georgia College South Georgia College Waycross College Two-Year Colleges Multi-Racial Totals Notes: HOPE and Pell data are from FARS. The HOPE- eligible cohort is defined as Georgia High School graduates since 1993 and any additional students receiving FARS106 HOPE according to GSFC records. 4/18/2003

18 Appendix 3 Financial Aid - HOPE and Pell HOPE-Eligible First-Time Freshmen by Race/Ethnicity HOPE-Eligible First-Time Pell / No HOPE HOPE / No Pell Both HOPE and Pell Institution Freshmen White, Non-Hispanic Origin Georgia Institute of Technology 1, Georgia State University University of Georgia 3, , Research Universities 4, , Georgia Southern University 1, , Valdosta State University 1, Regional Universities 2, , Albany State University Armstrong Atlantic State University Augusta State University Clayton College & State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State University Kennesaw State University 1, North Georgia College & State University Savannah State University Southern Polytechnic State University State University of West Georgia 1, State Universities 5, , Dalton State College Macon State College State Colleges Abraham Baldwin Agricultural College Atlanta Metropolitan College Bainbridge College Coastal Georgia Community College Darton College East Georgia College Floyd College Gainesville College Georgia Perimeter College 1, Gordon College Middle Georgia College South Georgia College Waycross College Two-Year Colleges 4, , White, Non-Hispanic Origin Totals 19, , , Notes: HOPE and Pell data are from FARS. The HOPE- eligible cohort is defined as Georgia High School graduates since 1993 and any additional students receiving FARS106 HOPE according to GSFC records. 4/18/2003

19 Appendix 4 Average Annual Pell Awards for First-Time Freshmen from Georgia High Schools* with HOPE and Pell Institution Total < = $400 $401 to $800 $801 to $1600 $1201 to $1600 $1601 to $2000 $2001 to $2400 $2401 to $2800 $2801 to $3200 $3201 to $3600 > = $3601 Georgia Institute of Technology Georgia State University University of Georgia Research Universities 1, Georgia Southern University Valdosta State University Regional Universities Albany State University Armstrong Atlantic State University Augusta State University Clayton College & State University Columbus State University Fort Valley State University Georgia College & State University Georgia Southwestern State University Kennesaw State University North Georgia College & State University Savannah State University Southern Polytechnic State University State University of West Georgia State Universities 1, *"First-Time Freshmen from Georgia High Schools" are a subset of freshmen who have a graduation date from a Georgia high school of 1993 or later. These students are considered eligible for HOPE, but in order to receive HOPE must meet academic requirements (a 3.0 in core high school courses). This cohort also includes any additional first-time freshmen receiving HOPE according to GSFC records, but who did not appear to SIRS as Georgia high school graduates. This report includes only those students who received the HOPE Scholarship; it does not count HOPE Grant recipients as scholarship recipients. SRPT722a 09/24/2003

20 Institution Appendix 4 Average Annual Pell Awards for First-Time Freshmen from Georgia High Schools* with HOPE and Pell Total < = $400 $401 to $800 $801 to $1600 $1201 to $1600 $1601 to $2000 $2001 to $2400 $2401 to $2800 $2801 to $3200 $3201 to $3600 > = $3601 Dalton State College Macon State College State Colleges Abraham Baldwin Agricultural College Atlanta Metropolitan College Bainbridge College Coastal Georgia Community College Darton College East Georgia College Floyd College Gainesville College Georgia Perimeter College Gordon College Middle Georgia College South Georgia College Waycross College Two-Year Colleges 1, System Totals 5, , *"First-Time Freshmen from Georgia High Schools" are a subset of freshmen who have a graduation date from a Georgia high school of 1993 or later. These students are considered eligible for HOPE, but in order to receive HOPE must meet academic requirements (a 3.0 in core high school courses). This cohort also includes any additional first-time freshmen receiving HOPE according to GSFC records, but who did not appear to SIRS as Georgia high school graduates. This report includes only those students who received the HOPE Scholarship; it does not count HOPE Grant recipients as scholarship recipients. SRPT722a 09/24/2003