Report on Student Financial Aid in Texas Higher Education for Fiscal Year 2008

Transcription

1 Report on Student Financial Aid in Texas Higher Education for Fiscal Year 2008 June 2009

2 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Texas Higher Education Coordinating Board A. W. "Whit" Riter III (Chairman) Tyler Fred W. Heldenfels IV (Vice Chairman) San Marcos Elaine Mendoza (Secretary of the Board) San Antonio Heather A. Morris (Student Representative) Lubbock Laurie Bricker Houston Joe B. Hinton Crawford Brenda Pejovich Dallas Dr. Lyn Bracewell Phillips Bastrop Robert W. Shepard Harlingen Robert Wingo El Paso Commissioner of Higher Education Dr. Raymund A. Paredes Coordinating Board Mission The Texas Higher Education Coordinating Board s mission is to work with the Legislature, Governor, governing boards, higher education institutions and other entities to help Texas meet the goals of the state s higher education plan, Closing the Gaps by 2015, and thereby provide the people of Texas the widest access to higher education of the highest quality in the most efficient manner. Coordinating Board Philosophy The Texas Higher Education Coordinating Board will promote access to quality higher education across the state with the conviction that access without quality is mediocrity and that quality without access is unacceptable. The Board will be open, ethical, responsive, and committed to public service. The Board will approach its work with a sense of purpose and responsibility to the people of Texas and will be committed to the best use of public monies. The Coordinating Board will engage in actions that add value to Texas and to higher education. The agency will avoid efforts that do not add value or that are duplicated by other entities. The Texas Higher Education Coordinating Board does not discriminate on the basis of race, color, national origin, gender, religion, age or disability in employment or the provision of services.

3 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Table of Contents Page About the THECB Financial Aid Report 1 Summary: Fiscal Year Figure 1: Types of Aid to Students in Texas, FY 2008 Figure 2: Sources of Aid to Students in Texas, FY 2008 Financial Aid to Students FY Figure 3: Financial Aid to All Recipients by Income (Grants vs. Loans), FY 2008 Sources of Aid Distributed by Student Category FY Figure 4: Percentage of Aid Funds by Type for Basic Needy Students, FY 2008 Table 1: Basic Needy Student Population Details Figure 5: Percentage of Aid Funds by Type for Needy Students Using Aid, in Part, to Replace Family Contribution, FY 2008 Table 2: Needy Students Using Aid, in Part, to Replace Family Contribution Population Details Table 3: Students Receiving No Aid Population Details Financial Aid Received by Students Home Regions FY Figure 6: Home Regions and Numbers of Students Receiving Financial Aid Figure 7: Home Regions and Amount of Aid Disbursed to Students Coordinating-Board Administered Financial Aid Programs: Awards and Dollars FY Table 4 State Financial Aid Programs: Awards and Dollars Major Grant Program Recipients by Income and Ethnicity, FY Table 5: Funds Awarded through State Grant Programs in Millions (Current Dollars) Figure 8: TEXAS Grant Awards by Income Level of Recipients, FY Figure 9: TEG Awards by Income Level of Recipients FY Figure 10: TEOG Awards by Income Levels of Recipients, FY Figure 11: FY 2008 Enrollments, TEXAS Grant Funds Received, and Award Amounts Figure 12: FY 2008 Enrollments, TEG Funds Received, and Award Amounts Figure 13: FY 2008 Enrollments, TEOG Funds Received, and Award Amounts TEXAS Grant and Closing the Gaps 13 Figure 14: TEXAS Grant Expenditures, FY (Current Dollars) Figure 15: Impact of Constant-Level Funding on TEXAS Grant Recipient Projections FY Table 6: New Students Served at Different TEXAS Grant Funding Levels Institutional View of Student Aid in Texas FY Figure 16: Percent of Financial Aid Awarded by Aid Type and Type of Institution FY 2008 Figure 17: Average Financial Aid per Recipient by Type of Institution, FY 2008 Average Unmet Need for Aid Recipients in Texas FY Figure 18: Average Unmet Financial Need per Recipient by Type of Institution, FY 2008

4 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Financial Aid in Texas Compared to Rising Costs, FY Figure 19: Rising Costs and Financial Aid Resources (Constant 2008 Dollars in Millions) Financial Aid Growth in Texas: Grant vs Loan Programs, FY Figure 20: Financial Aid in Texas, FY (Constant 2008 Dollars in Millions) Aid in Texas vs the Nation, FY Figure 21: Grant Aid and Loans as a Percent of Total Aid Received, Students in Texas vs Students Nationwide, FY National Trends in Student Aid, FY Figure 22: Seven Years of Grant and Scholarship Growth in the Nation, FY (Constant 2008 Dollars in Millions) Figure 23: Loan Growth in the Nation, FY (Constant 2008 Dollars In Millions) Conclusions: Financial Aid and the Value of an Education 23 Figure 24: Education Pays Appendices Appendix A: Data Restrictions and Variables 24 Appendix B: Needs Analysis and Awarding Methodology 25 Appendix C: Elements in the THECB Financial Aid Database 26 Appendix D: Included in the FY 2008 Financial Aid Database 27 Appendix E: Glossary 29 Appendix F: FY 2008 Cost of Attendance Budgets for Texas and Independent Nonprofit and Universities 34 Appendix G: Financial Aid Resource Tables FY Appendix H: Demographic Tables FY 2008 All Students 49 Appendix I: Demographic Tables FY 2008 Basic Needy Students 65 Appendix J: Demographic Tables FY 2008 Needy Students Using Aid, 81 in Part, to Replace Family Contribution Appendix K: FY 2008 Percent of Headcount Enrollment Receiving 97 Tuition Equalization Grants by Ethnicity Appendix L: Exemption and Waiver Summary 99 Appendix M: List of Figures and Tables 103

5 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 About the THECB Financial Aid Report The Texas Legislature, Coordinating Board and people of Texas have been concerned for many years about the ability of Texas students to pay for college. The Texas Charter for Higher Education (1987) called for public higher education to be accessible to all those who seek and qualify for admission. Neither financial nor social status should serve as a barrier to opportunities for higher education in Texas. Financial aid as well as academic and social support services should be available. Texas colleges and universities shall actively recruit and retain students from populations that have not heretofore fully participated in higher education. 1 Closing the Gaps by 2015 (2000) states, Economically disadvantaged students represent an increasing proportion of the state s traditional college-age population and should be considered a high priority for grant aid. 2 An unknown number of students never consider higher education because they believe they cannot afford it. and universities can attract students who historically have not believed that higher education is within their reach by making certain that higher education is affordable through financial aid. 3 Since 1993, the Legislature has included in the General Appropriations Act a provision that calls for the Coordinating Board to prepare and submit to the Legislative Budget Board an annual report on financial aid in Texas. This report provides an update on the financial aid expenditures for the academic year and an analysis of students attending nonprofit institutions in Texas who participated in need-based student aid programs. 4 It is important to note that the data presented here may differ slightly from statistics found in other reports. 5 For this report, 145 Texas public and independent colleges and universities (all institutions participating in state financial aid programs) contributed financial aid data for Fiscal Year All data in the report are from the 2008 Financial Aid Database unless otherwise noted. 1 Texas Charter for Higher Education, 1987, 2 Grant Aid includes grants, scholarships, exemptions, waivers and categorical aid (aid brought to the school by the student). 3 Closing the Gaps by 2015, 2000, 4 Appendix B describes the federal student aid awarding methodology. 5 See Appendix A for a description of data restrictions and variables. Page 1

6 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Summary: Fiscal Year 2008 Students enrolled in Texas institutions of higher education in received a total of $5.84 billion in the form of grant aid (awards such as grants and scholarships that are free to students and do not have to be repaid), work-study awards (part-time jobs provided to needy students through the financial aid office), and loans (funds provided to students with the understanding that they will be paid back with interest over time). Almost 623,000 students in Texas received some type of need-based aid. This represents 51 percent of all students enrolled in fall 2007 at public and independent nonprofit colleges and universities and 87 percent of the students who enrolled and applied for need-based aid. The TEXAS Grant program provided $200 million to more than 54,400 students enrolled in Texas public and independent colleges and universities. More than 80 percent of the recipients were from families with annual incomes less than $40,000. Approximately 347,000 students (56 percent of all need-based aid recipients) were granted Federal Pell Grants totaling more than $911 million. The federal government provided 71 percent of the aid received. Figure 1: Types of Aid to Students in Texas, FY 2008 Work Study $0.060 billion 1% Grant Aid $2.406 billion 41% Loans $3.372 billion 58% As shown in Figure 1, Grant aid in Texas accounted for 41 percent of the aid awarded statewide to students enrolled in nonprofit institutions of higher education. Students participating in federal, state, and institutional work-study programs received $60 million in assistance (1 percent of the total aid). Loans, by far the highest-volume type of aid in the state, accounted for 58 percent or $3.4 billion in student aid. Of this amount, 92 percent was distributed through federal loan programs, a reliance on federal resources that is addressed in Figure 2 (page 3). Page 2

7 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Figure 2: Sources of Aid to Students in Texas, FY 2008 Inst. $868 million 15% Other $393 million 7% State $420 million 7% Federal $4,158 million 71% Federal aid, including loans, grant aid, and work-study, accounted for 71 percent or $4.16 billion ($251 million more than in FY 2007) of student aid. State aid, including the same elements, totaled $419.6 million or 7 percent of student aid ($15 million more than in 2007). 6 The TEXAS Grant Program accounted for the majority of growth in state aid. Student loans accounted for $187 million (38 percent) of the total growth in aid (federal, state and independent) between FY 2007 and FY Growth in grant aid accounted for 61 percent of the growth, or $300 million. Institutional aid, financial aid provided by the institution, accounted for 15 percent of the total aid, or $868 million. It included $99 million in exemptions and waivers for public institution attendees who completed the Free Application for Federal Student Aid (FAFSA), 7 $132 million for the Texas Educational Grant Program, $546 million in other institutional grant aid, $1 million in institutional work-study, $2 million in deposit scholarships, and $90 million in grant, loan, and work-study funds generated through set-asides from designated tuition. Other aid includes Merit Aid received by the institutions, Categorical Aid, and Alternative Loans. Merit aid received by the institution equaled $89 million, or 1.5 percent of all funds. Categorical aid is made up of funds from organizations outside the institution, such as Parent Teacher Organizations and the Veteran s Administration, that are not part of the aid package awarded by the institution s financial aid office and may not include a financial need requirement. In Texas it accounted for 2 percent or more than $140 million to support the education of students with financial need. Alternative loans, which account for 3 percent or almost $164 million, are designed to help fill the gap between a student s aid and resources (including Expected Family Contribution (EFC)) and the amount needed to cover the total cost of attendance. 6 Financial Aid Database, Fiscal Year institutions, through the Integrated Fiscal Reporting System, reported granting exemptions in FY 2008 to 154,939 students for $129 million in foregone tuition and fee revenues. For that same year, 47,976 students were reported as receiving waivers valued at $236 million. Of the 22,884 awards reported through the Financial Aid Database, 21,314 went to students attending public institutions and are included in these totals. See Appendix L for a summary report of public institution exemption and waivers in FY Page 3

8 Percent of Recipients Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Financial Aid to Students FY 2008 Appendix B provides an overview of the process used to assess student financial need. Figure 3 shows the distribution of financial aid recipients in Texas by family income. Two trends are indicated: Low-income students are most likely to receive grant aid, as would be expected. Of the students receiving aid, 91 percent in the $0 $9,999 income range received grants and scholarships; 53 percent received loans. Students in the $60,000+ income bracket 8 often have high expected family contribution (EFC) levels based on the federal need analysis system. If the expected family assistance is not available or forthcoming, students may need or choose to borrow funds to cover the costs of an education. Of the students receiving aid, only 47 percent in the $60,000+ income range received grant aid; 85 percent received loans. Figure 3 represents the inverse relationship between income and the receipt of grants as well as the positive correlation between income and borrowing. Figure 3: Financial Aid to All Recipients by Income (Grants vs. Loans), FY % 90% 80% 70% 60% 50% 40% 30% Grant Aid Loans 20% 10% 0% $0 to 9,999 $10,000 to 19,999 $20,000 to 29,999 $30,000 to 39,999 Income $40,000 to 49,999 $50,000 to 59,999 $60,000 + Texas aid recipients on both ends of the income spectrum rely heavily on student loans to finance their education. Even students with the fewest family resources for financing higher education have to rely, in part, on borrowing. Figures 4 and 5 on the following two pages show the reliance on loans for students with financial need divided into two groups: Basic Needy Students and Needy Students Using Aid in Part to Replace Family Contribution. 8 The calculation of Expected Family Contribution (EFC) is sensitive to the size of the family and the number of children in college at the same time. A three-member family with an income of $60,000 would show a higher EFC than an eight-member family with the same income. The difference would be even greater if the second family had more than one person in college at the same time. Page 4

9 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Sources of Aid Distributed by Student Category FY 2008 Data from the Financial Aid Database is used to divide students 9 into three general categories: Basic Needy Students, Needy Students Using Aid in Part to Replace Family Contribution, and Students Who Received No Aid. 1) Basic Needy Students are students who received at least one type of need-based aid and whose resources, including contributions from family income and financial aid, are equal to or less than the cost of attendance. In this category, 81 percent of the students had family incomes of less than $40,000. The median income was in the $15,000 20,000 bracket and the average expected family contribution was $1,870. A total of 457,583 students, or 73 percent of all students receiving need-based financial aid in Texas, are in this category. Figure 4 shows the distribution of aid by type for students in this category. Figure 4: Percent of Aid Funds by Type for Basic Needy Students, FY 2008 Work-Study $0.048 billion 1% Loans $1.781 billion 49% Grant Aid $1.823 billion 50% Table 1 Basic Needy Student Population Details Total number of students 457, % 1st-time Entering Freshmen 62, % Dependent 208, % Other Undergraduates 350, % Independent 248, % Graduates 44, % income 0 - $9, , % TX Residents 432, % income $10,000 - $19,999 96, % Nonresidents 23, % income $20,000 - $29,999 75, % Residency unknown 1, % income $30,000 - $39,999 52, % Full-time enrolled 343, % income $40,000 - $49,999 33, % 3/4-time enrolled 51, % income $50,000 - $59,999 20, % 1/2-time enrolled 50, % income $60,000 - $69,999 12, % Less than 1/2-time enrolled 12, % income > = $70,000 21, % 9 To be included in the Financial Aid Database, students must have completed a Free Application for Federal Student Aid (FAFSA) and be admitted to the institution. Page 5

10 Texas Higher Education Coordinating Board: Financial Aid Report FY ) Needy Students Using Aid in Part to Replace Family Contribution. A second group of students, made up of 165,238 or 27 percent of all aid recipients, differs from the previous one in that the awards they received, when added to their expected family contributions, exceeded their costs of attendance. For most students, this occurred when they took out loans to replace all or a part of their expected family contribution. Others received some need-based assistance, but also merit-based aid that caused their total resources to exceed cost. Most of the students in this second group come from families with moderate incomes. As a result, the financial aid system (Federal Methodology) expects their families, on average, to provide $14,505 more per year from their own resources than it expects from families in the Basic Needy Students group. Unable to provide this amount from personal sources, many of the families rely on certain types of aid (primarily unsubsidized student loans) to finance the education. In this category, only 28 percent of the students were from families with incomes less than $40,000/year. The median income was in the $70,000-75,000 bracket, and the average expected family contribution was $16,375. Figure 5 shows the distribution of aid by type for these students. Figure 5: Percent of Aid Funds by Type for Needy Students Using Aid, in Part, to Replace Family Contribution, FY 2008 Grant Aid $0.583 billion 27% Loans $1.590 billion 73% Work-Study $0.012 billion 0% Table 2 Needy Students Using Aid, in Part, to Replace Family Contribution Population Details Total number of students 165, % 1st-time Entering Freshmen 22, % Dependent 100, % Other Undergraduates 111, % Independent 64, % Graduates 31, % income 0 - $9,999 9, % TX Residents 153, % income $10,000 - $19,999 10, % Nonresidents 9, % income $20,000 - $29,999 12, % Residency unknown 1, % income $30,000 - $39,999 13, % Full-time enrolled 135, % income $40,000 - $49,999 11, % 3/4-time enrolled 13, % income $50,000 - $59,999 11, % 1/2-time enrolled 15, % income $60,000 - $69,999 12, % Less than 1/2-time enrolled 1, % income > = $70,000 83, % Page 6

11 Texas Higher Education Coordinating Board: Financial Aid Report FY ) Needy Students Who Received No Aid. A third group of students was included in the Financial Aid Database for the first time in FY Those were students enrolled in college who applied for, but did not receive any aid. The number of students in this group equaled 93,261. In this category, 57 percent of the students were from families with incomes less than $40,000/year. The median income was in the $30,000 35,000 bracket, and the average expected family contribution was $7,164. Why would students who apply for aid fail to receive any? Members of the Coordinating Board s Financial Aid Advisory Committee felt the following were the primary reasons: Although they completed the federal application for aid, the students failed to provide all the required documents. Although students were eligible for aid and applied on time, there was not enough grant aid available, and the students chose not to accept loans and/or work-study. Students were awarded aid, but the aid required a certain minimum level of enrollment (usually at least half-time). The students dropped classes and lost eligibility. Students were late in applying for aid. When the aid offices received their applications the schools no longer had grant aid funds available and the students declined the schools offers of loans and/or work-study. 10 Some families resources exceeded the cost of attendance (according to federal need analysis calculations), disqualifying the students for most aid, and the families chose to acquire assistance through private sources. Continuing students could not qualify for aid because they failed to meet academic progress requirements, were in default on student loans, or in some other way were ineligible. Continuing or transfer students could no longer receive aid (or a specific type of aid, such as loans) because they had reached the programs aggregate limits. Students were not enrolled in certificate or degree plans a requirement for most financial aid. Students did not take enough hours to qualify for financial aid. Table 3 Students Receiving No Aid Population Details Total number of students 93, % 1st-time Entering Freshmen 14, % Dependent 47, % Other Undergraduates 74, % Independent 46, % Graduates 4, % income 0 - $9,999 19, % TX Residents 89, % income $10,000 - $19,999 12, % Nonresidents 3, % income $20,000 - $29,999 12, % Residency unknown % income $30,000 - $39,999 9, % Full-time 34, % income $40,000 - $49,999 7, % 3/4-time 11, % income $50,000 - $59,999 6, % 1/2-time 17, % income $60,000 - $69,999 5, % Less than 1/2-time 30, % income > = $70,000 20, % 10 Efforts are underway to develop a common priority application date for admissions and financial aid, to encourage a cultural shift for students to apply early. For more information: Council of University Presidents and Chancellors Enrollment Services Efficiency Committee Chair, Dr. Troy Johnson, University of North Texas, troy.johnson@unt.edu. Page 7

12 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Financial Aid by Students Home Regions FY 2008 Of the $5.84 billion awarded to students attending institutions of higher education in Texas, $5.3 billion was awarded to 586,000 students whose permanent homes were in Texas. These students represented 94 percent of all aid recipients. The balance of funds went to approximately 37,000 aid recipients from other states and countries who are attending college in Texas. Figure 6 below shows the number of students from each region in Texas receiving some form of student financial aid, and Figure 7 shows the amounts students received to help meet the costs of college. Figure 6: Home Regions and Numbers of Students Receiving Financial Aid Figure 7: Home Regions and Amount of Aid Disbursed to Students Page 8

13 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Coordinating Board-Administered Financial Aid Programs: Awards and Dollars FY 2008 Table 4 is a summary of the expenditures and number of recipients in FY 2008 for the Texas financial assistance programs administered by the Coordinating Board. For a complete list of program eligibility requirements and award amounts, see 11 Table 4 State Financial Aid Programs: Awards and Dollars FY 2008 Number of Recipients FY 2008 Disbursements TEXAS Grant Program 54,448 $199,640,555 Tuition Equalization Grant Program 31,143 $102,841,147 Hinson-Hazlewood College Student Loan Program 12 9,732 $98,343,922 B-On-Time Loan Program 13 6,819 $32,183,482 Educational Aide Exemption Program 12 5,013 $12,168,488 Early High School Graduation Scholarship 12 5,737 $5,595,454 Texas College Work-Study Program 14 5,189 $6,199,802 Texas Educational Opportunity Grant 4,526 $6,992,213 Professional and Vocational Nursing Scholarship Programs 1,175 $960,875 Engineering Scholarship $789,000 Fifth Year Accounting Student Scholarship $555,499 Temporary Assistance to Needy Family (TANF) Exemption Program $128,258 License Plate Insignia Scholarship Program $43,407 Texas New Horizons Scholarship Program 16 1 $4,438 Total 124,453 $466,446, At this site, Select Get All the Facts, Select Paying for College and then, Types of Financial Aid. 12 Program data are obtained from in-house Coordinating Board reports. Program is not reported separately in the Financial Aid Database Report. 13 Program data are obtained from in-house Coordinating Board reports because some loans were awarded to students without need who were not included in the Financial Aid Database. 14 The Texas College Work-Study amount reported includes employer matching funds. 15 Statistics for the License Plate Insignia Scholarship only include awards to students attending independent institutions. Awards to students attending public institutions are not administered by the Coordinating Board. 16 The New Horizons Scholarship Program is being phased out and replaced by the TEXAS Grant Program. Statistics reflect awards to the few students who are completing their periods of eligibility. Page 9

14 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Major Grant Program Recipients by Income and Ethnicity, FY Figures 8, 9 and 10 on the following page illustrate income distributions for students receiving assistance through the state s three main grant programs the Toward EXcellence, Access and Success (TEXAS) Grant, Tuition Equalization Grant (TEG) and Texas Educational Opportunity Grant (TEOG) programs for the past nine years (seven years, for TEOG, which began in 2002). The figures reflect numbers of recipients in each income bracket. Fluctuations in the numbers of awards are primarily the result of changes in program funding levels. Table 5 provides the funding levels and total numbers of awards per year for each program. As shown by the figures on page 11, the three programs serve different populations. All three programs require recipients to show financial need and awards cannot exceed a student s need. However, financial need is a function of both cost and family resources. The same family, attending a community college, a public university, or an independent institution will show three levels of need, as their family resources are compared to three levels of cost. TEXAS Grants were available to students attending public and independent institutions until FY 2006, when the state began phasing independent institutions out of the program. Therefore, program income ranges in the earlier years are broader than at present. In addition, the program was fully funded in FY 2003, allowing all eligible students with financial need to receive awards. Therefore, a significant number of middle-income students entered the program at that time. As demand has increased relative to available funding, however, the program has targeted its funds to the neediest students, and average incomes have decreased. Additional appropriations in FY08 allowed this trend to reverse. TEG is limited to students attending independent institutions institutions that typically have the highest average costs. Therefore, its recipients spread across the income brackets with more students from middle-income brackets receiving awards than for TEXAS Grant or TEOG. TEOG is limited to students attending public two-year institutions institutions that have the lowest average costs. As would be expected, the vast majority of its recipients are in the lower income brackets. Table 5 Number of Recipients and Funds Awarded through State Grant Programs In Millions (Current Dollars) FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 TEXAS Grant Funds $19.76 $34.69 $ $ $ $ $ $ $ TEXAS Grant Recipients 10,865 17,395 45,722 68,555 64,108 60,130 61,057 52,562 54,448 TEG Funds $59.44 $59.44 $82.02 $81.63 $70.62 $70.20 $87.26 $98.83 $ TEG Recipients 26,472 25,612 32,986 33,738 27,911 26,177 30,035 30,316 31,143 TEOG Funds n/a n/a $4.93 $4.62 $4.81 $4.84 $4.25 $4.74 $6.99 TEOG Recipients 5,096 4,480 4,508 4,530 3,892 3,707 4,526 Page 10

15 Students Served Students Served Students Serveed Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Figure 8: TEXAS Grant Awards by Income Level of Recipients, FY ,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 - FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 $60,000 + $50,000 to $59,999 $40,000 to $49,999 $30,000 to $39,999 $20,000 to $29,999 $10,000 to $19,999 $0 to $9,999 Figure 9: TEG Awards by Income Level of Recipients, FY ,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 $60,000 + $50,000 to $59,999 $40,000 to $49,999 $30,000 to $39,999 $20,000 to $29,999 $10,000 to $19,999 $0 to $9,999 Figure 10: TEOG Awards by Income Level of Recipients, FY ,000 5,000 4,000 3,000 2,000 1,000 - FY02 FY03 FY04 FY05 FY06 FY07 FY08 $60,000 + $50,000 to $59,999 $40,000 to $49,999 $30,000 to $39,999 $20,000 to $29,999 $10,000 to $19,999 $0 to $9, Sources: Financial Aid Databases FY Page 11

16 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Figures 11, 12 and 13 compare TEXAS Grant, TEG and TEOG recipients by ethnicity with regard to enrollment percentages, shares of grant recipients and share of funds. In all three programs, African- American and Hispanic students receive funds and awards in excess proportion to their share of enrollments. These programs are being used to encourage students of color to attend and remain in college one of the state s primary goals, as expressed in Closing the Gaps by Figure 11: FY 2008 Enrollments, TEXAS Grant Funds Received, and Award Recipients 18 60% 50% 40% 30% 20% 10% 0% Fall 07 Enrollment Funds Received Recipients 50% 52% 49% 24% 28% 24% 16% 15% 11% White, Non-Hispanic African-American Hispanic or Latino Figure 12: FY 2008 Enrollments, TEG Funds Received, and Award Recipients 18 70% 60% 50% 40% 30% 20% 10% 0% Fall 07 Enrollment Funds Received Recipients 59% 47% 49% 27% 26% 16% 16% 16% 11% White, Non-Hispanic African-American Hispanic or Latino Figure 13: FY 2008 Enrollments, TEOG Funds Received, and Award Recipients 18 60% 50% 40% 30% 20% 10% 0% Fall 07 Enrollment Funds Received Recipients 49% 46% 48% 32% 33% 33% 12% 15% 15% White, Non-Hispanic African-American Hispanic or Latino 18 THECB enrollment data, available through Page 12

17 Millions Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 TEXAS Grant and Closing the Gaps For the state s future economic well-being, Texas must enroll more students in higher education and help them acquire critical knowledge and skills. With an undereducated workforce, Texas will be unable to attract, retain, and grow businesses and industries that offer high paying jobs. A 2007 study by the Perryman Group, A Tale of Two States And One Million Jobs!, 19 speaks to the economic and social benefits to the state if the goals outlined in Closing the Gaps by 2015 are achieved. The study points out that Texas will prosper if those goals are reached. It emphasizes that the gains that can be made by investing in higher education and achieving the goals of Closing the Gaps are remarkable. Financial aid will play a vital role in allowing access to higher education for hundreds of thousands of Texas students over the next decade. Demographic trends show that most of these new students will come from families with few financial resources and no history of participation in higher education. 20 To attract these students to higher education, financial aid will have to be available. The Towards EXcellence, Access and Success (TEXAS) Grant program plays an essential part in this effort. This program is the state s largest financial aid program. Figure 14 shows program funding since its inception in FY If fully funded the TEXAS Grant program can provide reliable assistance to low-income students with unmet financial need and help achieve the goals set out in Closing the Gaps. At FY 2009 funding levels (Figure 15, page 14), the number of new students unable to enter the TEXAS Grant program is estimated to equal 49,034 in FY 2010, and is expected to increase slightly to 50,600 by FY $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 Figure 14: TEXAS Grant Expenditures, FY (Current Dollars) FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 Fiscal Years 19 A Tale of Two States And One Million Jobs!, An Analysis of the Economic Benefits of Achieving the Future Goals of the Closing the Gaps Initiative of the Texas Higher Education Coordinating Board, March 2007, available through 20 Texas State Data Center and Office of the State Demographer, 21 TEXAS Grant projections, calculated in the Student Services Division, THECB, May Financial Aid Databases FY An additional $7.1 million in FY 2007and $2.9 million in FY 2008 was provided through Tuition Equalization Grant Program appropriations for students attending private institutions and receiving continuation TEXAS grants. Page 13

18 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Figure 15: Impact of Constant-Level Funding on TEXAS Grant Recipient Projections FY ,000 70,000 60,000 50,000 40,000 30,000 20,000 New Students Unable to Receive Awards New Students Receiving Awards at Constant Funding New Students Receiving Awards at Full Funding 10, Funding for the biennium was $427.9 million $92.6 million more than for , allowing a significant number of new students to enter the program. The TEXAS Grant Program makes a commitment to continuing students who meet program requirements. Therefore, in 2010 these additional students will receive renewal awards, causing the number of new recipients under constant funding levels to decline. Table 6 shows that with full funding, the TEXAS Grant Program could better help Texas meet the goals set out in Closing the Gaps by providing assistance to approximately 296,533 more students in the period of FY 2010 FY 2015 than it could with constant funding at the biennium level. Table 6 New Students Served at Different TEXAS Grant Funding Levels New Recipients at Full Funding New Recipients at Constant Funding New Students Unable to Receive Awards FY ,224 16,190 49,034 FY ,971 16,188 49,783 FY ,726 18,480 48,246 FY ,490 18,480 49,010 FY ,264 18,425 49,839 FY ,046 18,425 50, , , , THECB May Recipient projections for 2010 and beyond are based on serving all students with financial need. Page 14

19 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Institutional View of Student Aid in Texas FY 2008 Figure 16 illustrates the distribution of aid by type (loans, work-study, and grant aid) for the various types of Texas public and private nonprofit institutions submitting data for this report. Although it is a type of grant aid, TEXAS Grant is shown separately because of high interest in this program. The reliance on grant aid and loans at public and private universities is similar, in spite of the fact that on average, private universities annual costs exceed those of their public counterparts by approximately $8, Students at two-year institutions rely less on loans than do their university counterparts. As the cost of attendance rises for both public and private universities and health-related institutions, loans continue to account for the majority of financial aid. Figure 16: Percent of Financial Aid Awarded by Aid Type and Type of Institution FY % Texas Grant Grant Aid Work-Study Loans 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Universities Private Universities 2-Year Private 2-Year Health- Related Insts. Private Health- Related Insts. 24 Appendix E: Institutional Budgets for FY 08. Page 15

20 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Figure 17 shows that aid recipients attending public and private universities receive more loan than grant aid (loans represent 63 and 54 percent of all aid, respectively) while aid recipients attending public two-year institutions (community colleges, technical colleges, and state colleges) receive more grants than loans. At public two-year institutions loans represent only 32 percent of the aid received. Based on FY 2008 data, aid recipients attending public or private health-related institutions receive, on average, $25,000 $35,000 in aid per year. Eighty-eight percent of the public health-related institution funds and 89 percent of the private health-related institution funds are in the form of loans. Figure 17. Average Financial Aid per Recipient by Type of Institution, FY 2008 $40,000 $35,000 $30,000 $25,000 Grant Aid $20,000 $15,000 Work-Study Loans $10,000 $5,000 $0 Private Health- Related Health- Related Private Universities Universities Private 2- Year 2-Year Page 16

21 Average Resources per Aid Recipient Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Average Unmet Need for Aid Recipients in Texas FY 2008 Figure 18 compares the average cost of attendance at each type of institution in Texas to the average resources available to aid recipients. The line represents costs and includes tuition and fees, books, supplies and living expenses. The bars include family contribution (derived by the federal government based on information submitted via the Free Application for Federal Student Aid), grant aid, workstudy, and loans all resources available to the students. The gap between the red line (cost) and the top of each bar is the average unmet need that faces aid recipients in that sector. For students attending public universities, costs exceed resources 25 on average by $4,105 and by $5,261 at public two-year institutions. Figure 18: Average Unmet Financial Need per Recipient by Type of Institution, FY 2008 Loans Work-Study Grant Aid Expected Family Contribution Cost of Attendance $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 Private Health- Related Health- Related Private Universities Universities Private 2-Year 2-Year 25 Expected Family Contributions calculations for this chart were adjusted to reflect the use of borrowing to replace family contribution. Page 17

22 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Financial Aid in Texas Compared to Rising Costs - FY Figure 19: Rising Costs and Financial Aid Resources (Constant 2008 Dollars in Millions) $12,000 $10,000 Loans $8,000 $6,000 Work-Study Grant Aid $4,000 Cost of Attendance $2,000 $0 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 Figure 19 shows the aggregate costs of attending college faced by students receiving need-based aid during the past seven years, compared to the total amount of financial aid they received. The trend is not encouraging. Aid as a percentage of the cost of attendance has remained at approximately 55 percent, leaving a significant financial burden on students and their families at a time when the state is trying to increase enrollments. Throughout this seven-year period, loans have represented approximately 58 percent of the aid received. In FY 2002 aid represented 56.3 percent of the costs faced by financial aid recipients. For FY 2008 the figure dropped to 55.5 percent. More significant is the trend in the difference between the cost of attendance and the aid received by students. In FY 2002, the difference was $2.8 billion in constant 2008 dollars. By FY 2008, that difference had grown to $4.7 billion. In terms of individual aid recipients, the burden has grown from $6,501 in FY 2002 to $7,502 in 2008 (expressed in constant 2008 dollars). Growth in financial aid is not keeping pace with growth in costs. Page 18

23 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Financial Aid Growth in Texas: Grant vs. Loan Programs - FY Figure 20: Financial Aid in Texas, FY (Constant 2008 Dollars in Millions) $7,000 $6,000 $5,000 $4,000 $3,000 Grant Aid Loans Total Aid $2,000 $1,000 $0 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY08 Figure 20 shows that the total amount of aid received by Texas students in FY 2008 ($5.84 billion) was significantly larger (62 percent) than in FY Both grant and loan volumes have increased. It also shows that loan volumes have annually exceeded grant aid volumes. Loans have traditionally represented percent of the aid received by Texas students, as opposed to grant aid, at percent. In FY 2008 loans provided 59 percent of all aid; grant aid, 40 percent. Work-study provided 1 percent. Grant aid increased between FY 2002 and FY 2003 primarily as a result of growth in TEXAS Grant funding, but then leveled off. Increases in funding for state 26 and institutional grants 27 were offset in 2005 and 2006 by decreases in federal grants. In FY 2007, continued growth in state and institutional programs and the initiation of two new federal grant programs (the National Science and Mathematics Access to Retain Talent (SMART) Grants and Academic Competitive Grants) contributed to grant aid s most significant increase since FY 2002 ($265 million). Grant aid grew an additional $187 million in FY 2008, primarily from increases in institutional, private, Federal Pell, and TEXAS Grant program funding. 26 The main state grant programs are the TEXAS Grant and Tuition Equalization Grant Programs. 27 Institutional grants are funded through statutory tuition set-asides for the Texas Educational Grant and through designated tuition set-asides (the so-called HB3015 grants). Page 19

24 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Aid in Texas vs the Nation 28 - FY During the past seven years, students attending nonprofit institutions in Texas have relied more heavily on loans than have students nationwide. For students in Texas, federal, state and institutional workstudy programs provide 1-2 percent of the aid per year. Of the remaining funds, on average, 41 percent were in the form of grant aid and 58 percent were loans. This split is shown by the columns in Figure 21. Nationwide during this time period, grant aid averaged 49 percent and loans averaged 51 percent of the available funds. These statistics are depicted by the lines in Figure 17. If the split of funds between grant aid and loans for students attending college in Texas had matched national statistics in FY 2008, Texas students would have borrowed $277.5 million less than they did. Spread across the 389,166 students who took out loans, the average impact would have been $713 per student. 70% Figure 21: Grant Aid and Loans as a Percent of Total Aid Received, Students in Texas vs Students Nationwide, FY % 50% 40% 30% 20% 10% 0% FY02 FY03 FY04 FY05 FY06 FY07 FY08 Grant Aid - Students in Texas Grant Aid - Nationwide Loans - Students in Texas Loans - Nationwide The grant aid and loan lines for the nation cross between FY 2003 and FY Since that time, the majority of aid nationwide has been in the form of loans. This has been true throughout the sevenyear period for aid in Texas. 28 Two data limitations should be considered when state and federal statistics are compared. (1) Statistics about state aid are limited to aid received by students attending nonprofit institutions and reported through the Financial Aid Database Report; and (2) National statistics include funds to students attending for-profit institutions. The College Board publication, Trends in Student Aid, 2008 provides adjustment percentages for the major federal programs, however, its latest figures were for FY 2007, and we therefore applied the same percentage adjustment to FY 2008 amounts as for FY Federal statistics cited in this section have been adjusted, to the extent possible, to reflect data comparable to state figures. Page 20

25 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 National Trends in Student Aid, FY As in Texas, the national trend of student aid shows growth, but not in all programs. Overall funding for aid during the seven-year period between 2002 and 2008 increased by more than 50 percent in constant 2008 dollars. supply 44 percent of all grant aid, including awards funded through tuition set-asides, exemptions and waivers, and merit aid awarded through the institutions from their own endowments. are the largest source of grant aid, surpassing even the Federal Pell Grant Program. Except for a minor drop in 2006, state grant programs have shown a steady growth for the period between 2002 and Figures 22: Seven Years of Grant and Scholarship Growth in the Nation, FY (Constant 2008 Dollars in Millions) $35,000 $30,000 $25,000 $20,000 Federal Grants State Grants $15,000 Institutional Grants $10,000 $5,000 Private/Employer Grants $0 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY08 29 College Board: Trends in Student Aid, 2008, adjusted to reflect constant 2008 dollars, and reflect only funds received by students attending nonprofit institutions. See Appendix A: Data Restrictions and Variables. Page 21

26 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Figure 23 shows that nationwide, nonfederal loans increased in volume more rapidly than federal loans prior to FY 2008 but in 2008 the nonfederal loan volume actually decreased while Federal Subsidized and Unsubsidized Stafford Loans continued to grow. The Stafford Loan programs are still the largest. Parent Loans for Undergraduate Students (PLUS) showed the fastest growth among the federal programs prior to FY 2008, when they also experienced a decrease. Nationally, federal loans now constitute 39 percent of total aid to undergraduate and graduate students attending nonprofit institutions. Figures 23: Loan Growth in the Nation, FY (Constant 2008 Dollars in Millions) $25,000 $20,000 $15,000 Subsidized Stafford Loans Unsub. Stafford Loans $10,000 PLUS Loans Other Federal Loans $5,000 Nonfederal Loans $0 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY08 30 College Board: Trends in Student Aid, 2008, adjusted to reflect constant 2008 dollars, and reflect only funds received by students attending nonprofit institutions. See Appendix A: Data Restrictions and Variables. Page 22

27 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Conclusions: Financial Aid and the Value of an Education Figure 24: Education Pays 31 Figure 24, taken from the Bureau of Labor Statistics website, shows average weekly earnings and unemployment rates for persons who have attained different levels of education. 28 According to A Tale of Two States And One Million Jobs! a report issued in 2007 by The Perryman Group, these earnings gaps are expected to grow. Additionally: The shift to a knowledge-based economy emphasizing technology has increased the educational requirements in many industries. A decrease in the relative importance of labor unions and high-paying manufacturing jobs for those with low levels of education (partly a consequence of global competition) has further widened the gap between earnings for those with a high school diploma and those with some form of higher education. In the early 1980s, the average earnings of a full-time male worker between the ages of 35 and 44 with a bachelor s degree were 38 percent higher than one with a high school diploma. In the early 2000s, the difference had climbed to 94 percent. 32 The $5.84 billion in student financial aid awarded in Texas in may create the false illusion that there is adequate assistance for higher education. But most of this aid was acquired by individuals accepting loans. For the lowest-income families, an increasing loan burden may appear daunting. Decreasing the higher education financial burden of the most needy families through prudent investment in need-based aid such as the TEXAS Grant Program can help students afford college and will send a strong signal of our state s commitment to higher education for all Texans. 31 U.S. Department of Labor, Bureau of Labor Statistics, 32 A Tale of Two States And One Million Jobs!, An Analysis of the Economic benefits of Achieving the Future Goals of the Closing the Gaps Initiative of the Texas Higher Education Coordinating Board, March 2007, page 17, available through Page 23

28 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Appendix A: Data Restrictions and Variables The limitations of the data used in this report are as follows: 1. The Texas Financial Aid Database does not include information on merit-based aid, such as academic or athletic scholarships, unless students who received such aid also completed an application for need-based aid the Free Application for Federal Student Aid or the Texas Application for Student Financial Aid. The total amount of grant aid awarded to students in Texas is understated as a result. 2. The Texas Financial Aid Database does not include information on students attending for-profit institutions in Texas. It only includes data for students attending nonprofit public or independent institutions in the state. National data for Pell Grants, Stafford Subsidized and Unsubsidized Loans, and PLUS loans were adjusted to reflect only funds going to students attending nonprofit institutions. 33 National data for other federal grants, institutional aid, and non-federal loans include data of for-profit institutions. 3. The data only include student loans accepted rather than funds offered. Some students decline some or all of the student loan funds offered to them and instead choose to work, reduce costs, or find alternative means of support. 4. The data only include work-study funds that were earned rather than funds offered. Some students work fewer hours than their work-study awards would have authorized, and therefore earn less than their original award amounts. Some (for instance, nursing students with laboratory courses) have heavy course loads and decline work-study awards, choosing to take additional loans instead. 5. Because most tuition exemption and waiver programs are not need-based, the Financial Aid Database does not accurately reflect the number or value of the exemptions and waivers awarded to students attending public institutions of higher education. It only includes data for such students who also received some type of need-based aid. 6. Students who were offered only loans and declined to accept those loans are not reflected in the total number of students. Students who received need-based grant aid but declined loans are included in the total number of students since they received the grant aid. 7. National data is based on the federal academic year (July 1, 2006 to June 31, 2007). State data is based on each institution s academic year Neither state nor national data capture information on: a. Student wages that are not a result of formal work-study programs; b. Consumer loans used to finance education (only educational loans are included); c. Credit card debt used to finance education. 33 Trends in Financial Aid, 2008, College Board, page An informal survey conducted by Coordinating Board staff in fall 2003 indicated that 72.1 percent of the institutions define their academic year in terms of fall, spring, and summer, and 18.3 percent counted summer as the beginning of the year, followed by fall and spring. The rest of the respondents used other variations. Page 24