According to the College Board, federal grant, loan, and work-study programs accounted for for 71 percent of all available student aid during the 2012-2013 academic year. That translates into $170 billion out of a total $238.5 billion. Grants from institutions and private sources account for another 22 percent ($59 billion), and state grants provide over 4 percent ($9.7 billion).
The opportunity to gain a college education helps advance the American ideals of progress and equality. The precedent for direct aid to students was set by the 1944 G.I. Bill, and expanded in the National Defense Education Act of 1958. The Higher Education Act of 1965, which formed the basis for the current federal student aid system, embodied the principle that all qualified students should be able to attend college, regardless of their financial means. Without financial aid, a majority of students would be unable to go to college.
A college education benefits not only the individual, but our country and economy as a whole. A highly educated work force has become an essential component of economic growth and competitiveness–it is estimated that increases in national educational attainment have accounted for almost 30 percent of the growth in national income in the 20th century. Because they earn more, save more, and are unemployed less frequently, college graduates make fewer demands on the public purse and pay more taxes. When the federal government helps students attend college, it invests in our nation’s future and ensures that students are prepared with the skills to perform the jobs of the 21st century.
No. The federal student aid programs work together to provide a customized comprehensive financial aid package for each student, that taps the partnerships of institutions, states, and families, to ensure qualified low-income students have the same opportunities as their higher-income peers. Since 1972, the Higher Education Act has authorized the Pell Grant as the foundational grant program to partner with 1) campus-based programs in which institutions match federal dollars for Supplemental Opportunity Grants, Federal Work Study and Perkins Loans; 2) the LEAP state grant in which states match federal dollars for need-based grants; and 3) with family contributions to get low-income students into and through college. Click here to see example packages for different types of institutions.
Eligibility for most federal student aid is based on need. The amount of aid is determined by formulas that factor in family and individual income, and the cost of education.
- Pell Grants target the neediest students, while the campus-based programs (Supplemental Educational Opportunity Grants, Federal Work-Study, and Perkins Loans) provide federal funds that allow colleges to design packages of assistance tailored to students’ individual needs, ensuring that the neediest students are provided with an aid package that enables them to complete their degree program.
- Subsidized student loans give students from low- and middle-income families access to low-cost loan capital.
- TRIO programs help low-income students who are the first in their families to attend college. Support services include counseling, tutoring, and mentoring.
- GEAR UP works with entire cohorts of students from seventh grade through high school to prepare for college.
- Graduate programs create incentives for bright students to enter fields that are critical but not necessarily lucrative.
Investment in grant aid allows qualified students to pursue their higher education goals without excessive debt. Students are increasingly forced to finance their education through loans rather than grants or work-study. Loans accounted for just 20 percent of federal assistance in 1976, but in 2009-10, loans made up about two-thirds of all federal aid. During this same time, funding for federal grant programs has failed to keep pace with inflation
Student financial aid programs account for about 1 percent of the federal budget. The federal appropriation for Pell and campus-based student aid programs in 2009-10 was $30.9 billion, which helped almost 8 million students continue their education. Much of this funding goes to undergraduate students from low-income families.