Policy interactions between student financial aid and public benefits programs

1
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
2
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

3
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

4
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

5
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 Childrens Health Insurance Program (SCHIP)
  
• Unemployment Insurance benefits (UI)
• Trade Adjustment Act Assistance (TAA)
• Workforce Investment Act Individual Training
  Account vouchers (WIA)

6
Programs Examined Tax Credits

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

7
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

8
Are Postsecondary Students Even Eligible for
Public Benefits?

• 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?

• TANF
• SNAP
• WIA

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

9
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.

10
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

11
How Title IV Programs Treat Benefits in
Determining Financial Aid Package Size
Not considered Not mentioned Count as income Treatment ambiguous
AOTC X
EITC X
Child care X
Child Tax Credit X
Medicaid X
SCHIP X
SNAP X
TAA X
TANF X
UI X (with exceptions)
WIA benefits X
12
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
• What opportunities exist to educate states about
  their options?
• Are state agencies communicating with one another
  about what the federal rules are in their
  respective areas?

13
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

14
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
  third-party 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
• Both workforce training and state-funded
  retraining dollars tend to be quite limited,
  though

15
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?

16
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?