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Report on Student Financial Aid in Texas Higher Education for Fiscal Year 2008 June 2009 Texas Higher Education Coordinating Board: Financial Aid Report FY 2008 Texas Higher Education Coordinating Board
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Report on Student Financial Aid in Texas Higher Education for Fiscal Year 2008 June 2009 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. 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 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 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 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 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 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 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 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 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 appli
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