Khwaja, Tehmina

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College of William & Mary: W&M Publish

The William & Mary Educational Review Volume 2 Issue 1 Article 11 12-1-2013 Rethinking Financial Aid Policy Tehmina Khwaja COMSATS Institute of Information Technology, Pakistan Follow this and additional works at: https://scholarworks.wm.edu/wmer  Part of the Education Commons Recommended Citation Khwaja, Tehmina (2013) "Rethinking Financial Aid Policy," The William & Mary Educational Review: Vol. 2 : Iss. 1 , Article 11. Available at: https://scholarworks.wm.edu/wmer/vol2/iss1/11 This Articles is brought to you for free and open access by the Journals at W&M ScholarWorks. It has been accepted for inclusion in The William & Mary Educational Review by an authorized editor of W&M ScholarWorks. For more information, please contact scholarworks@wm.edu. 22Executive SummaryIn the face of competition from other nations,higher education in the United States has slippedfrom the status it has enjoyed over the years. Withthe economic downturn and changingdemographics, new challenges have emerged thatnecessitate reevaluation of higher educationpolicies. One consistent trend in recent years hasbeen the steady increase in college tuition rateswhich has put higher education out of reach formany capable aspiring students. The lack ofaccessibility of higher education is detrimental tothe economic growth of the country since a vastnumber of talented students who cannot afford togo to, or stay in, college are not able to enter thejob market as trained professionals. Financial aidpolicies can go a long way in addressing theseissues. Redistributive policies geared towardcapacity building are recommended to enhanceaccessibility of higher education. The short termoutcomes of such policies will be an increase inequality of opportunity and diversity on collegecampuses, while in the long run such policy changewill lead to economic prosperity of the countryand uplift of the communities of the individualswho benefit from these policies.IntroductionThe Virginia Higher Education OpportunityAct of 2011 also known as the Top Jobs Act states:The objective of this chapter is to fuel strongeconomic growth in the Commonwealth andprepare Virginians for the top job opportunities inthe knowledge-driven economy of the 21st centuryby establishing a long-term commitment, policy, andframework for sustained investment and innovationthat will enable the Commonwealth to build uponthe strengths of its excellent higher educationsystem and achieve national and internationalleadership in college degree attainment and personalincome, and that will ensure these educationaland economic opportunities are accessible andaffordable for all capable and committedVirginia students.To achieve this worthy objective, and as noted inthe Act, it is imperative to make higher educationaccessible and affordable to all citizens. In thecurrent climate of economic uncertainty, manycapable individuals who wish and/or need toobtain a college education are unable to realizetheir dreams because they do not possess thefinancial means to do so. For such aspiringstudents, financial aid and assistance can facilitatecollege attendance and completion.The current situation of higher educationaccessibility and affordability leaves much to bedesired. Davies (2006) documented worryingstatistics of how the United States measures upagainst other nations with the country slipping interms of rates of the young population’s highereducation attainment. Davies (2006)demonstrated as well how the states fare in termsof affordability with almost all states, includingVirginia, scoring an F on the affordability reportcard. With rising tuition costs, increasingnumbers of students rely on financial aid toattend comprehensive universities (Hemelt &Marcotte, 2011).Financial Aid and Student PersistenceThe positive link between needs-basedfinancial aid and low income students’ collegepersistence is well supported in the literature(Alon, 2011; Curs & Harper, 2012; George-Jackson, Rincon, Martinez, & Hillman, 2012;Lassila, 2011; Novak, McKinney, & Baum, 2011;Singell, 2004). This link between financial aidand low income student retention is even moresignificant by racial groups as decreasing levelsof financial aid exacerbate racial inequalities(Kim, 2004; St. John, Paulsen, & Carter, 2005).Students from wealthy backgrounds oftenreceive institutional and state grants, but theirpersistence is not dependent on these grants(Alon, 2011).When aid is available to low income studentsin response to legislative mandates, it is notalways sufficient to aid low income students’persistence; for instance, the initial financial aidfor students in Science Technology, Engineering,and Mathematics (STEM) fields, meant to offsethigh tuition rates in these fields, does not keeppace with rising tuition costs over time (George-Rethinking Financial Aid PolicyTehmina KhwajaThe William & Mary Educational Review23Jackson, Rincon, Martinez, & Hillman, 2012).George-Jackson et al. (2012) observed that theseincreasing costs particularly impact low incomestudents, and suggested a reevaluation of thedifferential tuition and aid policies in STEM fields.Since lack of, or fluctuation in, financial aidimpacts low income students more than highincome students (Alon, 2011), the financial aid thatis currently being given to students from moreprosperous homes should be diverted to thosewho belong to low socioeconomic status (SES).The framework recommended for this policychange is Lowi’s redistributive technique (Fowler,2009). A redistributive policy is “one that shiftsresources or power from one social group toanother” (Fowler, 2009, p. 243). Within thisframework, students from low SES homes will begiven more financial aid opportunities than thosethat are from high SES homes. McDonnell andElmore’s (1987) policy instrument of capacitybuilding, defined as an investment in “material,intellectual or human resources” (p. 134), is themain intent of this redistribution. Other policyinstruments recommended by McDonnell andElmore (1987), including mandates, defined asrules “governing the actions of individuals andagencies” (p. 138); inducements, the allocation offinancial or in-kind resources in exchange for“production of value” (p. 138); and hortatorypolicies, defined as policies that are meant topersuade through symbolism and imagery (Fowler,2009), can be used in combination with capacitybuilding to ensure implementation of theredistributive policy.The impact of such policy change will be farreaching. If more students from low SESbackgrounds gain access to higher education, andif they are able to persist with financial support,they will, in turn, be able to augment their socio-economic status with greater economicopportunities. An outcome of this individualprosperity will be the economic uplift of theircommunities. Thus, this investment in humanresources will have considerable implications asstudents, their communities, and, eventually, thenation as a whole will benefit from this investment.Many students miss out on financial aidopportunities that are available to them becausethey are either unaware that such opportunitiesexist (Lassila, 2011) or find the system too complexto comprehend (Melguizo & Chung, 2012).The Politics of Financial AidSince most higher education policy makingoccurs at the state level in the United States(Cheslock & Hughes, 2011), the politically drivennature of higher education policy at the statelevel merits attention for effective advocacy.Doyle (2012), for example found that liberalideology of state policy actors is not related toincrease in financial aid; however, legislativeprofessionalism and higher levels of financial aidare correlated. Doyle (2012) also observed thatfinancial aid is driven by the relative strength ofprivate institutions of higher education in a state.Support for the high percentage of financial aidofferings by private, selective institutions can alsobe found in Melguizo & Chung (2012).Tandberg (2010) found a correlation betweenliberal ideology and state spending on highereducation and concurred with Doyle (2012) thatstate legislative professionalism and highereducation spending are correlated. Thecorrelation between legislative professionalismand support of higher education comes as nosurprise, as more professionalized legislatures arecomprised of highly educated legislators who aresympathetic to higher education (Tandberg,2010).Tandberg (2010) also found that a state’shigher interest group ratio has a significant andpositive influence on spending on highereducation. If institutions pool resources andapproach the powers that be with knowledge andtact, they can achieve their policy goals. In theloosely coupled system (Birnbaum, 1988; Weick,2000) of education, an incremental approachwhich "emphasizes mobilized interest groupswhich negotiate solutions to problems in anenvironment of limited knowledge," rather thana rational approach which "explains policychange as the result of mobilizing coherentsolutions to problems on the basis of knowledgeand authoritative consensus" (Leslie & Berdahl,2008, p. 310) might be more effective. Thus,advocates of increasing spending on highereducation financial aid can use the system totheir advantage.ConclusionPromotion of postsecondary education isessential to economic prosperity and its long-term benefits to individuals, society, and thenation as a whole cannot be denied. Access oflow income students to a college education mustThe Wren's Nest24not fall prey to a political system based on self-interest and profit. Diversion of financial aid fromhigh income students to low income students isstrongly recommended, as this policy change willpay dividends in the long run. Not only will it leadto economic prosperity for the individuals, but alsotheir communities. The beneficiaries of financialaid can contribute greatly to uplifting theircommunities, thus achieving the policy objective ofcapacity building.Implications and RecommendationsIn light of the significance of financial aid forretention of students in general, and low incomestudents in particular, it is important to note andremedy the current situation in which studentsfrom more affluent families are beneficiaries offinancial aid that could enable students from lowSES homes to attend and persist in college.Policymakers at both the state and institutionallevels should also ensure clear communicationabout financial aid opportunities to make sure thatstudents do not miss out on opportunities that areavailable to them.ReferencesBirnbaum, R. (1988). How colleges work: Thecybernetics of academic organization andleadership. San Francisco, CA: Jossey-Bass.Cheslock, J. J., & Hughes, R. P. (2011). Differencesacross states in higher education financepolicy. Journal of Education Finance,36(4), 369–393.doi:10.1353/jef.2011.0009Curs, B. R., & Harper, C. E. (2012). Financial aidand first-year collegiate gpa: A regressiondiscontinuity approach. The Review ofHigher Education, 35(4), 627–649.doi:10.1353/rhe.2012.0040Davies, G. K. (2006). Setting a public agenda forhigher education in the states: Lessonslearned from the national collaborativefor higher education policy. Denver, CO:The Education Commission of theStates.Doyle, W. R. (2012). The politics of publiccollege tuition and state financial aid. TheJournal of Higher Education, 83(5), 617–647.doi:10.1353/jhe.2012.0033Fowler, F. (2009). Policy studies for educationalleaders: An introduction (3rd Ed.).Boston, MA: Prentice Hall.George-Jackson, B. C. E., Rincon, B., Martinez,M. G., & Hillman, N. W. (2012). Low-income engineering students:Considering financial aid and differentialtuition associate editor. Journal ofStudent Financial Aid, 42(2), 4–24.Retrieved fromhttp://www.nasfaa.org/research/Journal/Journal_of_Student_Financial_Aid_-_Current_Issue.aspxHemelt, S. W., & Marcotte, D. E. (2011). Theqimpact of tuition increases onenrollment at public colleges anduniversities. EducationalEvaluation and Policy Analysis, 33(4),435–457. Retrieved fromhttp://epa.sagepub.com/cgi/doi/10.3102/0162373711415261Kim, D. (2004). The effect of financial aid onstudents’ college choice: Differences byracial groups. Research in HigherEducation, 45(1), 43–70.doi:10.1023/B:RIHE.0000010046.57597.43Leslie, D. W., & Berdahl, R. O. (2008). Thepolitics of restructuring higher educationin Virginia: A case study. The Review ofHigher Education, 31(3), 309-328.McDonnell, L. M., & Elmore, R. F. (1987).Getting the job done: Alternative policyinstruments. Educational Evaluation andPolicy Analysis, 9(2), 133–152.Melguizo, T., & Chung, A. (2012). College aidpolicy and competition for diversity. TheReview of Higher Education, 35(3),403–430. doi:10.1353/rhe.2012.0021Novak, B. H., Mckinney, L., & Baum, S. (2011).The consequences of leaving money onthe table: Examining persistence amongstudents who do not file a FAFSA .Journal of Student Financial Aid, 41(3),5–24. Retrieved fromhttp://www.nasfaa.org/research/Journal/Journal_of_Student_Financial_Aid.aspxSingell Jr., L. D. (2004). Come and stay a while:Does financial aid effect retentionconditioned on enrollment at a largepublic university? Economics ofEducation Review, 23(5), 459–471.The William & Mary Educational Review25doi:10.1016/j.econedurev.2003.10.006St. John, E. P., Paulsen, M. B., & Carter, D. F.(2005). Diversity, college costs, andpostsecondary opportunity: Anexamination of the financial nexus betweencollege choice and persistence for africanamericans and whites. The Journal ofHigher Education, 76(5), 545–569.doi:10.1353/jhe.2005.0035Tandberg, D. (2010). Interest groups andgovernmental institutions: The politicsof state funding of public highereducation. Educational Policy, 24(5), 735-778.Virginia Higher Education Opportunity Act of2011. Chapter 869, § 23-38.87:10. (April6, 2011). Retrieved fromhttp://lis.virginia.gov/cgi-bin/legp604.exe?111+ful+CHAP0828+pdfWeick, K. E. (2000). Educational organizationsas loosely coupled systems. In M. C.Brown, II (Ed.), Organization &Governance in Higher Education (5thEd.) (pp. 36-49). Boston, MA: PearsonCustom Publishing.About the authorTehmina Khwaja is a PhD student in the EducationalPolicy, Planning, and Leadership program, focusing onHigher Education.The Wren's Nest

Rethinking Financial Aid Policy

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