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How have states and postsecondary institutions improved access to higher education for students with demonstrated financial need? How does financial aid increase student access and, ultimately, degree completion? The answers to these questions influence how policymakers and the public view postsecondary affordability.

While tuition and fees continue to outpace inflation, postsecondary enrollments also continue to increase. High enrollments produce heavy constraints on postsecondary systems and institutions. With less state and federal money available, institutions often raise tuition to make up the difference. However, financial aid and tuition discounting can maintain access for low-income students and families.

Data collected by the National Center for Education Statistics suggest a large discrepancy between institutions' tuition list price and the net cost of attendance for financially disadvantaged students. In this case, financial aid redistributes institutional revenues, so that those who might not otherwise attend college have the opportunity to enroll.

As sequestration of the federal budget threatens the Pell Grant and other Title IV financial aid programs, students will increasingly look to states and postsecondary institutions to fill the vacuum. Recently, several states have adopted student loan programs that mimic federal ones, especially for students intending to enter careers, such as teaching, engineering, and medicine.

Overall, state policymakers should think about affordability within the frame of the college completion agenda. With a growing number of enrollees coming from underrepresented groups, it is more important than ever for states to assess whether their financial aid and direct institutional funding strategies jointly produce a favorable environment for spurring economic growth.

 

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