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Higher Education: Handbook of Theory and Research pp 125–160Cite as

The Financial Aid Picture: Realism, Surrealism, or Cubism?

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Part of the book series: Higher Education: Handbook of Theory and Research ((HATR,volume 26))

Abstract

Financial aid for college students has undergone a number of changes throughout the years. This chapter provides a history of financial aid that has been provided by the federal and state governments, colleges, and universities to undergraduate students and how the structure of financial aid programs has changed over time. The metaphor of three art movements is applied—Realism, Surrealism, and Cubism—to analyze the current structure of the nation’s financial aid system to understand how financial aid has been transformed from a focus on meeting the college access needs of low-income students to myriad purposes often in conflict with each other.

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Notes

  1. 1.

    This chapter does not discuss financial aid provided from private sources such as philanthropic organizations or sources like tuition assistance from employers. In addition, the focus is on financial aid for undergraduate students.

  2. 2.

    Congress set maximum authorized awards for the program, but the actual maximum grant award was established by the annual appropriations established by Congress.

  3. 3.

    The grants category is for all types of federal grants, which includes, besides Pell Grants, programs such as veterans’ and active duty military grants. In 2008–2009, Pell Grants represented almost three-quarters of the total of federal grants.

  4. 4.

    The federal College Work Study program has remained small relative to the other programs, and its funding has decreased over the years from $1.8 billion in 1979–1980 to $1.2 billion in 2008–2009.

  5. 5.

    Parts of this section have been adapted from Heller (2002a).

  6. 6.

    Eligibility for means-tested financial aid is based on income in the year prior to attending college, so for students in the 2007–2008 NPSAS survey, income data from 2006 are used.

  7. 7.

    The credit crisis and recession that began in 2008 had a large impact on the private student loan markets, with many lenders leaving the market. The College Board (2009b) reported that overall (graduate and undergraduate combined) borrowing from private lenders, which had been growing steadily over the prior decade, dropped by half between 2007–2008 and 2008–2009, from $23.8 to $11.9 billion.

  8. 8.

    This total is only for the borrowing incurred by the student and excludes parent PLUS loans or other borrowing by parents such as through home equity loans.

  9. 9.

    An income in this level would not qualify students for federal means-tested grants or most state need-based grant programs. Students and parents can estimate their eligibility for need-based federal grants and loans at http://www.fafsa4caster.ed.gov/F4CApp/index/index.jsf or http://www.finaid.org/calculators/finaidestimate.phtml

  10. 10.

    It should be noted here that students attending college come from families that overall have slightly higher incomes than the population at large. While the NPSAS sample has a median income of $67,754, all families in the United States with at least one child under the age of 18 had a median income of $56,788 in 2006 (U.S. Census Bureau, 2010a).

  11. 11.

    Federal methodology is the formula used by the US Department of Education in assessing eligibility for Title IV student aid. Institutional methodology is the more liberal formula used by some institutions in determining need that uses a broader definition of student and family income and assets, which generally results in a higher Expected Family Contribution.

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Acknowledgments

The author wishes to acknowledge the invaluable research assistance of Rachel Frick Cardelle in the preparation of this work.

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  1. Center for the Study of Higher Education, The Pennsylvania State University, University Park, PA, 16802-3203, USA

    Donald E. Heller

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Correspondence to Donald E. Heller .

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  1. CEPR, 100 Ball Hall, Memphis, TN, 38152-3570, USA

    John C. Smart

  2. Dept. Educational Policy, &, Leadership Studies, University of Iowa, Lindquist Center N491, Iowa City, 52242-1529, Iowa, USA

    Michael B. Paulsen

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Heller, D.E. (2011). The Financial Aid Picture: Realism, Surrealism, or Cubism?. In: Smart, J., Paulsen, M. (eds) Higher Education: Handbook of Theory and Research. Higher Education: Handbook of Theory and Research, vol 26. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-0702-3_4

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