Monday, March 14, 2011

Financial aid cuts produce ripple effect in higher education funding

Don Bennett, HECB executive director, and Rachelle Sharpe, director of student financial assistance, told House Higher Education Committee members Thursday that cuts to financial aid programs are placing higher education beyond the financial reach of thousands of students. The cuts also represent a drain in an important potential funding source for higher education. If fewer students enroll because they can’t get financial aid, institutions lose significant tuition revenue.
Current and proposed cuts in financial aid, in combination with continuing reductions in direct state support, have stalled progress on increasing degree production, a primary goal of the state’s Strategic Master Plan for Higher Education, Bennett said.
He added it will likely take 20 years for the state to recover from the deep budget cuts to higher education dealt out over the last three years, and much longer if additional deep cuts are made in the coming biennium. He spoke at the end of two days of testimony from the state’s public two- and four-year institutions on the effect of the continuing budget cuts.
Bennett emphasized that cuts in financial aid to students have a direct impact on overall institutional funding. For example, the $25 million cut to the State Need Grant program in the 2011 supplemental budget approved in February represents, in reality, an additional cut of that magnitude in state support for the two- and four-year public colleges and universities.
The institutions will have to come up with the money to cover this year’s SNG commitments to students from their operating budgets, Bennett said. Retained tuition revenue may be used for part of this, but in some instances institutional operating reserves may be driven down to unacceptable levels and funding for other necessary programs and services marginalized.
Reducing financial aid at a time when tuition is being raised sharply puts many more students at the margins of affordability, said Rachelle Sharpe. Far too many students, faced with what they consider unacceptable levels of debt, simply opt out. This failed potential puts a drag on the effort to increase degree production.
The Governor’s proposed 2011-13 budget provides an additional $91 million for the State Need Grant program in the next biennium, Sharpe said. But this simply holds harmless from tuition increases the existing number of students now being served by SNG. It doesn’t take into account the many thousands of additional students who have enrolled in higher education during the recession and who qualify for financial aid. Meeting this additional need would require another $125 million for the State Need Grant program in the coming biennium.
More than 70,000 students are helped annually by State Need Grants, which accounts for 95 percent of all state financial aid distributed. In each of the last two academic years, the program has not been able to serve 20,000 students who are enrolled and qualify for a grant. This compares with fewer than 2,000 un-served students just three years ago.
These 70,000 students who receive State Need Grants represent nearly a quarter of all students enrolled in Washington’s public higher education institutions. Funding for the second largest need-based aid program, State Work Study, also has been cut severely and is halved in the Governor’s 2011-13 budget proposal. It is estimated nearly 7,000 students would be affected by this reduction. For many of these students, the extra money earned through SWS jobs is critical to their continued participation in higher education.

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