In 2018, Georgia lawmakers voted to create the state’s first financial aid program specifically for working-class students. A year later, a higher education board in Utah redistributed millions of dollars in financial aid to prioritize students who couldn’t afford college on their own. Virginia’s governor followed earlier this year with a proposal to use American Rescue Plan funds to increase aid for low-income students.
Across the country, a trend is taking shape: States are increasingly looking to shift financial aid dollars to working-class students, mainly in an effort to boost the number of people in the workforce with college degrees.
Last month, a little-known state education board proposed a drastic overhaul of financial aid in Mississippi. Under the Post-Secondary Board’s proposal, the state’s three main existing financial aid programs would be consolidated into a single award called the “Mississippi One Grant.”
If the policy is adopted by the Legislature in 2022, white students would see their financial aid awards increase, while Black and low-income students’ awards would decrease by hundreds, in some cases thousands, of dollars, putting Mississippi at odds with how other states are seeking to distribute financial aid.
As state lawmakers consider whether to take up the proposal this legislative session, Mississippi Today talked with national experts about how this program compares to those in other states.
Historically, states have used financial aid as a tool to help students afford college. This goes back to the 1970s when Congress created the LEAP Program, which provided a matching incentive for states to create need-based financial aid programs.
Two decades later, a shift occurred. In 1993, using funds from the state lottery, Georgia developed the HOPE Scholarship, which awards aid solely on the basis of merit. Fourteen states, primarily those in the South, followed by creating similar programs. By 2008, state spending on merit-based programs had ballooned by 230% over the prior 10 years, according to the National Association of State Student Grant and Aid Programs (NASSGAP). In comparison, spending on need-based programs increased by 105%.
The growth in merit-aid programs can be partly explained by their popularity, said Tom Harnisch, the vice president for government relations at the State Higher Education Executive Officers Association.
“Merit-based aid programs are very popular with policymakers because they help out students from middle and upper-middle income and even wealthy families, and those people vote,” he said.
That movement is starting to lose steam. Harnisch said that states seem to be moving back to need-based aid programs and away from the kind of model the Post-Secondary Board has proposed Mississippi adopt.
“There’s a growing sense of, while all state financial aid is important, how do you get the best bang for your buck?” Harnisch said. “And that is through investing in students based on their financial need.”
Most states now offer undergraduate grant programs that factor in a student’s income, according to NASSGAP. And the states that don’t are considering revamping their programs. Higher ed boards in Louisiana and Missouri are facing calls to redistribute financial aid to working-class students who need help paying for college.
There are several reasons for the trend back toward need-based aid. One significant driver, said Frank Ballmann, the director of federal relations at NASSGAP, is a new focus on the state-level at increasing the number of college graduates in the workforce.
“That’s really where states tend to focus more on need-based aid because you could have say, a rich kid — that student is going to get a degree regardless of if you give aid or not,” Ballmann said. “Only question is if you’re gonna keep them in the state.”
Research is mixed on whether merit-aid policies are an efficient way for states to meet their workforce goals. Merit-aid is often touted as one way to stop brain drain, but it’s unclear if this is the case in Mississippi: A study from Mississippi State University research center NSPARC commissioned in 2018 found that the Mississippi Eminent Scholars Grant did not increase in-state enrollment of high-achieving students.
“The causality can get pretty muddled pretty quickly when you think about it,” said Sarah Pingel, a principal at the Education Commission of the States. “Did the presence of this merit aid program cause someone in the higher-income bracket to want to achieve in high school and go right to college and be successful?”
Merit aid also tends to do little to help working-class students attend or graduate from college. This is because states typically use ACT or SAT scores to evaluate merit, and these tests tend to favor white, wealthier students.
“Test scores reflect a bunch of things, but there is a very strong relationship between ACT and SAT scores and every possible measure of socioeconomic status: family income, parental education, the money available to their local school district,” said Bob Schaeffer, the executive director of the National Center for Fair and Open Testing. “When you use test scores to award state tuition aid, you end up giving the majority of the money, the lion’s share of the money, to kids who’ve had the most opportunities in life.”
Need-based aid, on the other hand, is seen as an effective tool for states wanting to produce more college graduates, another reason for the new trend. In Mississippi, NSPARC found that about 75% of students who received HELP as a degree-seeking freshmen graduated in six years, compared to about 67% of students who were eligible for HELP but did not receive it.
Georgia created its first need-base grant in 2018 partly in an effort to increase the number of college graduates in the state, though it has yet to fully fund the program. Utah redesigned its financial aid programs specifically to be more fair in how it doles out help for college. The student who led Utah’s redesign task force told the Salt Lake Tribune in 2019 that the new program was “an attempt to be more equitable.”
As Mississippi’s legislators consider the One Grant, Harnisch said he hopes they focus on Mississippi’s own workforce development goals: The state has set a goal to have 55% of its workforce complete college by 2030. States across the country have modeled the best policies for tackling this gap, he said — and it’s not the one Mississippi is considering.
“The key thing for states like Mississippi is to invest in need-based aid programs,” Harnisch said. “Those programs help the students who are on the margins, who may or may not go to college. That’s the dial that can be most easily moved, and those are the students who often will stay in the state.”