State Funding for Need-Based Aid Averages Less Than $500 per Student

In 2011-12, the 50 states and the District of Columbia spent a total of $6.8-billion on need-based grant aid for college students, according to the most recent report from the National Association of State Student Grant and Aid Programs. That might sound like a lot, but it averages out to $482 per enrolled undergraduate student.

That’s less than one-fifth of what the federal government spent on Pell Grants, the main program for needy students.

Yet when President Obama held a summit of university leaders and state higher-education officials at the White House this month to discuss college access and affordability, increasing states’ need-based financial aid didn’t appear on the agenda.

About 40 percent of the 109 colleges and universities at the White House summit made commitments to increase institutional financial aid as part of their efforts to improve college access for low-income students. But of the 23 states and Washington, D.C., that were represented at the summit, not a single one made increasing financial aid one of their commitments.

One reason might be that state financial aid is restricted by state higher-education spending generally, which is still recovering slowly from the recession. And that funding is determined by state legislatures, not the higher-education officials who went to the White House.

“States can’t print money and can’t really run deficits—at least not for a long time like the federal government can,” said Frank Ballmann, director of federal relations for the association of state student-aid programs.

State funds for need-based aid are actually rising, just not as quickly as federal support for needy students. On a national scale, state-funded need-based aid rose 6.4 percent from 2010-11 to 2011-12, more than in any year since the beginning of the recession. And states’ need-based aid has risen about 40 percent in real terms since 2001, according to the association’s annual survey. Meanwhile, the federal government increased Pell Grants spending by more than 60 percent from 2008 to 2012.

Sources: National Association of State Student Grant and Aid Programs annual survey and New America Foundation

Together, states allocate 13 percent of their total higher-education spending to student grants, but many states do less than that. The federal government, in comparison, devotes about 20 percent of its total higher-education spending to grants, almost all of that to lower-income families.

In part, that is because the federal government gets a better return on investment for student aid than states do, Mr. Ballmann said.

“There’s no guarantee that if Pennsylvania, for example, gives aid to a student in Pennsylvania, that that’s where they will stay and work when they graduate,” Mr. Ballman said. “On the federal level, it’s a much more clear-cut investment.”

Still, some states provide considerably more need-based aid than others do. Some of the most populous states, including California, Illinois, New York, and Pennsylvania, also offer the most need-based aid on a per-student basis.

Four states—Georgia, New Hampshire, South Dakota, and Wyoming—don’t direct any grant money specifically to need-based aid, choosing instead to spend their funds on merit-based aid.

Following is a sortable table of how much need-based aid all 50 states and Washington, D.C., provide per full-time-equivalent undergraduate enrolled in the state and the percent of state higher-education aid allocated to student grant aid (need-based and non-need-based).

Note: Total state higher education spending is not calculated for Washington D.C.
Source: National Association of State Student Grant and Aid Programs annual survey

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