Higher

Education

Insight

Associates Feasibility Study for Restructuring

Texas Student

Financial Aid Programs

Texas Higher Education

Coordinating Board Meeting

April 24, 2008

Higher

Education

Insight

Associates

Presenters from Higher

Education Insight Associates

Larry Matejka

Ross Hodel

Sheila Pruden

Higher

Education

Insight

Associates

Historical Context

TEXAS Grant Program created

Closing the Gaps adopted

Recommended curriculum adopted

B-On-Time program created

Tuition deregulated

Recommended curriculum becomes the

default

Higher

Education

Insight

Associates

Rider 49 and THECB Additions

1. Require FAFSA for admission

2. TEXAS Grant and all student aid programs direct grant & common formula

3. Set-asides TEXAS Grant

4. Index grants to room & board

5. Disburse as stipends (maximize federal tax credits)

6. Disburse to students via debit card

7. Add a merit component to the TEXAS Grant

8. B–On-Time – role and funding

9. Collapse small grant programs

Higher

Education

Insight

Associates

Feasibility Study

In the context of Closing the Gaps’ goals

Participation

Success

“The right money to the right

students at the right time.”

Higher

Education

Insight

Associates

November 13 – April 24

Interviewed over 25 policy makers &

governmental officials

Conducted 4 Advisory Committee meetings

Conducted student focus group

Interviewed program directors in 14 Peer States

Surveyed all TX institutions

Consulted national experts

Met with THECB staff

Reviewed relevant literature and data

Participation

% of 18-24 Enrolled

0% 10% 20% 30% 40% 50%

Indiana

Texas

North Carolina

Georgia

Florida

Washington

Virginia

Ohio

US

Pennsylvania

Illinois

Massachusetts

New Jersey

New York

California

Michigan

6-Year Completion

% of First-time Full-time Freshmen

0% 10% 20% 30% 40% 50% 60% 70% 80%

Georgia

Texas

Florida

Ohio

Michigan

US

Indiana

New York

Illinois

North Carolina

New Jersey

California

Virginia

Washington

Pennsylvania

Massachusetts

Participation Completion

Texas

Sources: Measuring Up 2006. NCES , Digest of Education Statistics, 2006.

Higher

Education

Insight

Associates

College Participation

Race & Income 2002-04

% of 18-24 year olds

enrolled 2002-04Texas US Average

Top 20% income 51% 52%

White 36 39

Lowest 20% income 28 32

Non-white 26 29

Sources: Measuring Up 2006.

52

50

48

46

44

42

40

38

36

34

32

30

28

26

24

22

20

Canada

Japan

Korea

Sweden/Finland/Norway

Belgium

United States

Spain/France/Ireland

Australia/Denmark

U.K.

New Zealand

Switzerland/Iceland

Netherlands

Greece

Germany

Poland

Mexico

Massachusetts

Minnesota

North Dakota

Connecticut/Colorado/New York

New Jersey/Vermont/New Hampshire

Maryland/Nebraska/Illinois

Virginia/IowaRI/SD/WI/WA

Pennsylvania/Kansas/Delaware

Hawaii

Utah/Montana

Michigan/North Carolina/Georgia

OH/MO/OR/WY/CA/FL/ME

Indiana

Idaho/South Carolina/Arizona

Texas/Alabama/Tennessee/AlaskaOklahoma

Kentucky/New Mexico

Mississippi/Louisiana

West Virginia/Arkansas

Nevada

Percent of Adults 25-34 with Postsecondary

Degree

TexasSource: Presentation by Dwayne Matthews of the Lumina Foundation and the Hunt Institute at the National Governors Association Conference, July 2007. Data are from the Organization for Economic Co-operation and Development.

Higher

Education

Insight

Associates

Progress

Improved college prep course-taking

Increased college participation rates

Increased overall enrollment 20%

Improved 6-year baccalaureate

completion (96-97 to 03-04)

Texas 44% up to 51%

US 52% up to 55%

Sources: Measuring Up 2006. THECB data, NCES Digest of Education Statistics

Higher

Education

Insight

Associates

Principles1. Develop comprehensive system with

consistent eligibility criteria, purposes, & transitions

2. Build on strengths of current programs

3. Support state’s highest priorities

4. Focus on low- & middle-income students

5. Simplify for students & families

6. Incorporate positive financial incentives

7. Address needs of both traditional & non-traditional students

8. Improve accountability structure

Higher

Education

Insight

Associates

Recommendations

14 recommendations

Laying the cornerstone

Participation and success

Efficiency and accountability

Higher

Education

Insight

Associates

Findings and Recommendations –

Laying the Cornerstone

Findings

TEXAS Grant is “the student aid program

of the future”

TEXAS Grant is making a difference

Higher

Education

Insight

Associates

TEXAS Grant

Making a Difference

2000 Public

University Cohort

by 2006

% Graduated % Still

Enrolled

% Graduated

+ Enrolled

All Students 57 18 75

No Grant 64 14 78

TEXAS Grant 54 22 76

Other

Financial Aid

48 20 68

Source: THECB Staff

Higher

Education

Insight

Associates

Findings and Recommendations –

Laying the Cornerstone

Recommendation 1:

Maintain the TEXAS Grant as the cornerstone

program for a comprehensive student financial aid

system.

Recommendation 2:

Develop a long-range plan for aligning and merging

the Tuition Equalization Grant and the Texas

Educational Opportunity Grant with the TEXAS

Grant to form one comprehensive financial aid

program based on family financial strength and

academic merit.

Rider 49 – TEXAS Grant –direct grant & common formula

0 10 20 30 40 50 60 70

More explainable to students

Combined effort to secure funds

Loss of flexibility

More low-income students served

Easier program administration

More equitable treatment of students

More explainable to policymakers

Percent age

Disagree

Neither

Agree

Expected Results of One Program

Source: Institutional Survey

Higher

Education

Insight

Associates

Findings and Recommendations –

Laying the Cornerstone

Recommendation 3:

Align the award criteria and allocationformulas for TXG, TEG, and TEOG whilekeeping separate funding streams.

Recommendation 4:

Assure that the least advantaged students,those from families in the three lowest familyincome quintiles, receive the greatest benefitfrom public funds.

Higher

Education

Insight

Associates

2006 Texas Family Income Quintiles

MIN MAX MEAN

Q1 $0 $22,000 $12,208

Q2 $22,001 $39,299 $30,587

Q3 $39,300 $61,684 $49,345

Q4 $61,685 $98,249 $77,490

Q5 $98,250 on up $173,724

Source: Current Population Survey

Source: THECB Staff

Distribution of Aid by Income

Pell, Texas Grant, & Tuition Equalization Grant2006-2007

0

10

20

30

40

50

60

70

$0-20,000 21,001-40,000 40,001-60,000 60,001-80,000 80,001-

100,000

Pell

TXG

TEG

Higher

Education

Insight

Associates

Findings and Recommendations

Participation and Success

Findings

Few independent students are served

Merit programs in other states are

entitlements

About one half of the eligible students are

getting a TEXAS Grant

Recommended curriculum now default

Renewal criteria may be counterproductive

Number of Recipients

Dependent and Independent

0

100,000

200,000

300,000

400,000

Pell TXG TEG TEOG

Dep Ind

Source: THECB Staff

Higher

Education

Insight

Associates

Findings and Recommendations –

Participation and Success

Recommendation 5:

Maintain components of the TEG Grant

and the TEOG Grant that serve non-

traditional students until they can be

consolidated into the TEXAS Grant

program.

Recommendation 6:

Maintain the set-aside funds as institution-

based and administered programs.

Rider 49 – Set-asides –TEXAS Grants

Higher

Education

Insight

Associates

Characteristics of Public- 4

TPEG Recipients, 2006-07

Dependent Independent

# recipients 33,955 33,290

Mean taxable income $40,131 $19,114

% with zero EFC 25.0 42.2

% Male 40.8 34.8

% Minority 65.2 48.1

% Father, no college 51.5 47.9

% Mother, no college 53.5 51.8

% with Pell Grant 61.4 49.6

% with TXG Grant 32.1 2.8

% with Stafford Sub 60.5 75.4

Source: THECB Data Base

Higher

Education

Insight

Associates

Findings and Recommendations

Participation and Success

Recommendation 7: Add a merit criterion

for initial eligibility for the Texas Grant to

provide incentives for students with the

most potential.

Score 1300 or above on the SAT or

Rank in the top 40% of the class or

Complete the Distinguished

Curriculum

THECB – Adding a merit component

SAT Scores - Texas Students

Average Scores by Race/Ethnicity,

Income, and Class Rank

100

300

500

700

900

1100

1300

1500

1700

1900

All

Mex

Amer

Other H

isp

Afri/Amer

$50-

60K

$40-

50K

$30-

40K

$20-

30K

$10-

20

$0-1

0K

Top 10

%

2nd 10

%

3rd & 4th

Lowes

t 60

%

Race/Ethnicity Income Class Rank

Source: College Board SAT, 2007 College-Bound Seniors, State Profile Report, Texas. *US Sum of Means = 1511, range 600-2400

Higher

Education

Insight

Associates

Findings and Recommendations

Participation and Success

Recommendation 8:

Develop an eligibility pathway for needy non-

traditional and independent students for a Texas

Grant:

Earn an associate degree or

Complete 12 hours of transferable general

education courses with a GPA of 3.0 or

Complete 24 hours of transferable courses

(general education and/or major-specific courses)

with a GPA of 3.0

THECB – Adding a merit component

Higher

Education

Insight

Associates

Findings and Recommendations

Participation and Success

Recommendation 9:

Align renewal criteria for TEXAS Grant with

the satisfactory academic progress

standards for the Pell and institutional

programs.

THECB – Adding a merit component

Primary Need-Based Grant Program

Initial Merit Requirement? Requirement

RenewalRequirements

California Yes 2.0 - 3.0 GPA Federal SAP

Texas Yes RHSC 2.5/24hrs/75%

New York No Federal SAP

Florida No Federal SAP

Illinois No Federal SAP

Pennsylvania No Federal SAP

Ohio No Federal SAP

Michigan Yes

ACT = 90

comprehensive Federal SAP

Georgia Yes

College Prep 3.0

GPA; other 3.2

3.0 and 30 semester

Hrs.

North Carolina No Federal SAP

New Jersey No Federal SAP

Virginia No Federal SAP

Massachusetts No Federal SAP

Washington No Federal SAP

IndianaDepends on HS

Diploma

Incentives for

Some Diplomas Federal SAP

Source: Peer State Interviews

Higher

Education

Insight

Associates

Findings and Recommendations

Efficiency and Accountability

Recommendation 10: Maintain a decentralized

approach to administration of the TXG and the

TEG Grant with the following changes:

A uniform formula for determining students’ awards

based on family financial strength and merit.

A common process for allocating grant funds to

institutions.

A common FAFSA application priority date

Phase out priority for renewals

Higher

Education

Insight

Associates

Findings and Recommendations

Efficiency and Accountability

Recommendation 11:

Maintain the B-On-Time program as a

secondary incentive program for the 36%

of Texas students who attend college on a

full-time basis.

THECB – Role and funding of Be-on-Time and Small Programs

Higher

Education

Insight

Associates

Findings and Recommendations

Efficiency and Accountability

Recommendation 12:

Collapse several smaller programs into

two; a workforce shortage program and a

college readiness/early commitment

program.

Add sunset provisions to all new small

programs.

Higher

Education

Insight

Associates

Findings and Recommendations

Efficiency and Accountability

Recommendation 13:

Continue use of institution-level debit

cards. Do not use a debit card at the state

level to distribute aid. Ensure the state’s

contribution is recognized on institutional

award notifications.

Rider 49 – Disburse grants via debit card

Higher

Education

Insight

Associates

Findings and Recommendations

Efficiency and Accountability

Recommendation 14:

Develop an accountability system that

monitors:

students’ progress and success

institutional effectiveness in administering

state programs

progress toward state-wide goals for

participation and success.

Rider 49 – Disburse grants via debit card