The primary goal of financial aid is to expand opportunities for students in families with relatively low resources to enroll in higher education. Since 1965, the federal government has been the largest source of financial aid (through the Pell Grant), providing students with both grants and loans. The second largest source has been institutional grants and loans. However, in spite of numerous sources of aid, student demand exceeds the resources available. While increasing financial aid dollars would help more students access postsecondary education, this response alone is not adequate because continually increasing the amount of aid available is not sustainable. To address this challenge, policymakers seek to increase the effectiveness of financial aid.
Through this work, Insight developed and produced a policy brief including a series of recommendations to HCM Strategists and the North Carolina Student Aid Study Group—a joint effort of the University of North Carolina System and the North Carolina Community College System—to improve its financial aid programs. In preparing this brief, Insight—
- Conducted a literature review on what was known about leveraging aid to promote student success
- Analyzed data from the National Association of State Student Grant and Aid Programs, the Education Commission of the States, and the National Center for Education Statistics
- Conducted research on state financial aid strategies
The policy brief discussed characteristics of state grant aid programs and provided state case studies illustrating how several states have tried to increase the effectiveness of their aid policy. The brief concluded with specific recommendations for North Carolina:
- Improve the transparency of financial aid (students and parents are often unable to estimate aid levels because the formula to determine aid is not provided).
- Focus on postsecondary completion in addition to access by supporting year-round attendance and allowing educational models outside the 2- and 4-year structure, such as online learning models and short-term competency-based certificates.
- Consider the unintended consequences of monetary incentives (performance-based financial aid may result in undesired responses such as taking easier courses).
- Pilot and assess strategies before statewide rollout because findings from the state case studies demonstrate unexpected outcomes.
Policy issue brief:
Richburg-Hayes, L., & Jacobson, Z. (2018). North Carolina student aid study group: Optimizing state financial aid for student success. Insight Policy Research.