A National Analysis of Variations in State Financial Aid Program Design and Student Success

In this brief, we examined how state-level financial aid policies relate to students’ enrollment and completion using detailed data on states’ financial aid programs available for first-time entering college students for fiscal years 2004-2020. We found little consistent evidence of a relationship between student outcomes and the amount of aid per recipient, though, we did find practically significant correlations with aid eligibility criteria. Among institutions located in states with aid disbursed based on financial need and academic merit, requiring a college entrance exam for eligibility was associated with smaller enrollments and lower graduation rates compared to institutions that did not require the exams. This finding was not replicated when we explored requiring exams for institutions in states with aid disbursed solely based on academic merit.

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The Relationships Between State Higher Education Funding Strategies and College Access and Success

We compiled the first longitudinal dataset with detailed funding information to help us examine whether different funding strategies affect college access and completion, with a focus on outcomes among racially minoritized students. We found no relationships between funding mechanisms and student outcomes at community colleges. However, at public universities, we found that funding strategies with a base-plus component may bake in already-existing funding inequities. This leads to a system in which racially minoritized students, particularly Black students, face challenges when seeking to complete a degree.

Robert KelchenApril 26, 2023Robert Kelchen, Justin Ortagus, Kelly Rosinger, Dominique Baker, Mitchell Lingo

The Landscape of State Funding Formulas for Public Colleges and Universities

This brief offers a detailed overview of how states and higher education systems allocate funding to public colleges and universities and how funding mechanisms have changed over time. We find growth in the number of “hybrid” funding models that incorporate enrollment, performance, and/or prior year allocation (base+) considerations in both the two- and four-year sectors. At the same time, funding formulas with a student enrollment component remained the predominant funding mechanism in the two-year sector. We find a decreasing number of four-year systems with funding provisions aimed at improving the research capacity of institutions since the Great Recession. We see a steady number of two- and four-year sectors that include provisions that seek to provide more equitable funding for institutions based on the institution’s characteristics or the characteristics of students enrolled at the institution.

The Revenue Implications of Community Colleges’ Reliance on Local Funding

In this brief, we explore the relationship between community colleges’ reliance on local funding and their total institutional revenue. We find that community colleges’ level of reliance on local funding is negatively related to their total institutional revenue for rural community colleges and community colleges serving an above-average share of low-income students.

Justin OrtagusMarch 23, 2022Justin Ortagus, Dominique Baker, Kelly Rosinger, Robert Kelchen, Mitchell Lingo

State Snapshots of Funding for Public Colleges and Student Financial Aid: California, Florida, And Texas

In Fiscal Year 2018, states allocated approximately $99 billion for appropriations for public colleges and universities and $12 billion for students through financial aid programs. States face an economic recession that is estimated to reduce state budgets by $200 billion in Fiscal Years 2020 and 2021 in the midst of the COVID-19 pandemic. In the coming years, state legislatures will grapple with difficult decisions regarding how to fund higher education. This brief highlights variations in state approaches to funding for higher education in three large and diverse states that together enroll around 30% of all undergraduate students in the United States: California, Florida, and Texas.

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Trends in State Funding for Student Financial Aid

Student financial aid has comprised a rising share of states’ funding for higher education over the past two decades. In the midst of the COVID-19 pandemic, states are making consequential budget cuts that will impact higher education institutions and the students they serve. States have responded to recessions by slightly increasing the amount of aid disbursed based on financial need, though that has not changed the overall trend of states prioritizing merit-based aid over need-based aid. This brief examines changes in the share of funds states allocate toward need-based financial aid and the amount of state and local funding students receive at various institution types over the past two decades.

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Justin OrtagusSeptember 30, 2020Dominique Baker, Kelly Rosinger, Justin Ortagus, Robert Kelchen

Trends in State Funding for Public Higher Education

As a result of the coronavirus pandemic, public colleges and universities are facing unprecedented financial stress. Regardless of the path that a college is taking for the fall term, these losses are likely to continue with fewer students on campus and increased costs related to health and safety. State funding plays a crucial role in supporting public colleges, but funding generally declines during recessions as states prioritize protecting other budget areas (such as K-12 education and health care). Higher education’s use as a balancing wheel during recessions means that state funding cuts during economic downturns can be large, and it can take colleges years to recover.

Justin OrtagusAugust 31, 2020Robert Kelchen, Justin Ortagus, Dominique Baker, Kelly Rosinger

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