Policy interactions between student financial aid and public benefits

Policy interactions between student financial aid and public benefits programs Student Financial Aid Research Network Amy Ellen Duke-Benfield, Senior Policy Analyst June 14, 2012

Project • Most low-income students have unmet need, even after receipt of financial aid • Receipt of public benefits, in addition to financial aid, could help decrease unmet need • Want to ensure students have sufficient resources to persist and complete college • Goals of the project:  Better understand the interactions between financial aid and public benefit programs  Identify policy opportunities at federal and state levels to enhance access to financial aid and public benefits

2

Three Main Areas of Research Looking at the intersection of public benefits, college attendance, and receipt of financial aid • Implications of college attendance on eligibility for public benefits • Treatment of public benefits by financial aid programs • Treatment of financial aid by public benefits programs • Packaging and sequencing of aid and public benefits • Presenting interim findings today

3

Programs Examined: Financial Aid • • • • • •

Pell Grants Federal Supplemental Educational Opportunity Grants Federal Work Study Perkins loans Stafford loans State financial aid programs (including need-based state grant aid and work study) • Institutional aid

4

Programs Examined: Public Benefits • Supplemental Nutrition Assistance Program (SNAP, formerly Food Stamps) • Temporary Assistance for Needy Families (TANF; cash welfare) • Child care subsidies--funded through the Child Care Development Block Grant, (CCDBG), Social Services Block Grant (SSBG), etc.; vouchers and reimbursements • Medicaid • State Children’s Health Insurance Program (SCHIP) • Unemployment Insurance benefits (UI) • Trade Adjustment Act Assistance (TAA) • Workforce Investment Act Individual Training Account vouchers (WIA)

5

Programs Examined: Tax Credits • • • •

American Opportunity Tax Credit (AOTC) Lifelong Learning Credit Earned Income Tax Credit (EITC) Child Tax Credit

6

Methodology • Federal level  Review of laws, regulations, and policy guidance

• State level:  Looked at 3 states  Review of laws, regulations, policy guidance  Interviews with public benefits and financial aid program administrators with focus on interpretation of laws, guidance  Caveat: Not a comprehensive scan of the inner workings of three states, though

• Local level  Interviews with aid administrators at low-cost, public colleges; WIB administrators; county public benefits administrators in state with county-level governance; focus on interpretation and implementation 7

Are Postsecondary Students Even Eligible for Public Benefits? • TANF • SNAP • WIA

• TAA • Unemployment Insurance • Child Care (next slide)

• Are we maximizing access for students?  Oftentimes a matter of will, sometimes of resource constraints  In those areas that eligibility is limited: Can eligibility be expanded?  In those areas where eligibility exists but is underutilized: Are states and others taking full advantage of potential for attendance? 8

Child care: Eligibility Implications of College Attendance and Receipt of Financial Aid • Title IV aid not addressed in Child Care Development Block Grant (CCDBG) law.  CCDBG is main funding source for child care subsidies  States determine eligibility  Q: Does the state have a shortage of resources, operate out of a notion of scarcity or treat child care as a necessary support for attending postsecondary?

• The federal flexibility in CCDBG leads to state-level variation in:  Eligibility,  Treatment of financial aid, and  Ability to receive additional aid. 9

Treatment of Financial Aid by Public Benefits Programs • According to the Higher Education Act, Title IV HEA Federal or Bureau of Indian Affairs financial aid/educational assistance should not count as income for means-tested benefits programs  The exemption can apply to state financial aid that is funded in part by federal funds

10

How Title IV Programs Treat Benefits in Determining Financial Aid Package Size Not considered

AOTC

X

EITC

X

Not mentioned

Count as income

Child care Child Tax Credit

X X

Medicaid

X

SCHIP

X

SNAP

X

TAA TANF

X X

UI WIA benefits

Treatment ambiguous

X (with exceptions) X 11

Treatment of State Aid by Public Benefits Programs Varies • State financial aid and state work study does not always receive the same treatment as federal aid • Special case: SNAP & financial aid  Follows federal law for federal programs  Treatment of state financial aid can vary whether used for direct or indirect educational expenses  Some confusion at state level regarding options states have to disregard state-funded and TANF-funded work study in SNAP o What opportunities exist to educate states about their options? o Are state agencies communicating with one another about what the federal rules are in their respective areas? 12

Importance of Packaging and Sequencing of Financial Aid • For public benefits and workforce programs, generally found that receipt of financial aid does not affect eligibility or benefit levels • Yet, how aid is combined and sequenced in that eligibility determination can matter • What signals can states send to support college attendance and completion?  Through policy in public benefits and financial aid programs  Through professional development for financial aid administrators and local program administrators 13

Importance of Packaging and Sequencing of Financial Aid • How aid is combined and sequenced at the institutional level matters  Combining federal and state financial aid with thirdparty sources, such WIA, TAA, or other workforce funding, can decrease loans in the package  Third-party sources, including state-funded retraining dollars, can serve as a stopgap for students applying for aid late until a financial aid determination is made or if program or student is ineligible for Pell o Both workforce training and state-funded retraining dollars tend to be quite limited, though

14

Importance of Packaging and Sequencing • HEA and WIA rules are somewhat contradictory  HEA: federal student aid cannot be counted in determining eligibility or need in other federal benefit and assistance programs  Yet, WIA requires local administrators to take Pell Grants and other forms of grant assistance into account when determining eligibility for WIA-funded training services; how they do so varies

• How can colleges and workforce boards coordinate the packaging of aid so it best benefits students? • What processes can be developed for workforce staff to get better information on financial aid and what programs are Title IV eligible, and to ensure clients apply for student aid? • How can workforce funds better compliment student aid?

15

Closing Questions • How can federal and state public benefits policies better support the pursuit and completion of postsecondary education? • How can colleges be more intentional about packaging various forms of assistance to help students cover unmet need? • What strategies can colleges use to better connect students to the public benefits for which they are eligible? • What messages do states send that either encourage or discourage sequencing and packaging of aid that helps students cover unmet need? • Are state agencies communicating sufficiently with each other so public benefits rules adequately reflect options to disregard aid? • How can the federal/state governments and colleges ease burden of verification on students receiving public benefits? 16