The Campus-Based Financial Aid Programs: A Review and Analysis of the Allocation of Funds to Institutions and the Distribution of Aid to Students (CRS Report for Congress)
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| Release Date |
Revised Jan. 25, 2007 |
| Report Number |
RL32775 |
| Report Type |
Report |
| Authors |
David P. Smole, Domestic Social Policy Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
The Federal Supplemental Educational Opportunity Grant, Federal Work-Study, and Federal Perkins Loan programs are collectively referred to as the campus-based financial aid programs largely because participating institutions play a central role in their operation, and because the aid they make available to students comprises federal funds matched in part with institutional funds. In recent years, the programs have been criticized because a large share of funding is allocated to institutions on the basis of amounts received in prior years for "base guarantees" as opposed to being allocated exclusively on the basis of aggregate student financial need. They also have been criticized because the current funding procedures allow institutions that receive proportionately greater funding on a per-student basis to provide larger awards to students with higher incomes than can be provided to lower-income students at institutions that receive less funding. In recent Congress bills have been introduced to modify the funding procedures by gradually phasing out base guarantee funding and requiring all campus-based funding to be allocated to institutions according to existing need-based "fair share" formulas.
This report describes and analyzes (a) the process through which federal funds are allocated to institutions under the campus-based programs, (b) the potential for allocating all campus-based funding according to the existing need-based formulas, and (c) the current distribution of aid to students. It will be updated to track legislative proposals addressing the campus-based allocation procedures. Major findings presented in the report include the following:
Under each program, the majority of funds are allocated to institutions on the basis of amounts received in prior years, while only a modest amount are allocated according to aggregate student financial need as calculated according to "fair share" formulas.
Under the need-based formulas, the cost of attendance at an institution is the dominant factor in determining institutional need.
Much greater amounts of institutional need are calculated on a per-student basis at high-cost institutions than at low-cost institutions.
At low-cost institutions, institutional need comprises limited amounts of aggregate student need attributable to large numbers of predominately low-income students, while at high-cost institutions, it tends to comprise greater amounts of need attributable to a smaller number of mostly middle- and upper-income students.
It is estimated that if the allocation procedures were to be modified so that funding was allocated entirely on the basis of institutions' proportionate share of institutional need, more institutions would receive allocation increases than would receive allocation decreases.
Larger proportions of students at higher-cost institutions receive campus-based aid, and receive larger awards, than do comparable students at lower-cost institutions; however, average awards at higher-cost institutions cover a smaller percentage of costs.
