Blog Post | November 19, 2021

Simplifying State Financial Aid is Key to Long-term Recovery

Author: Manon Steel

The COVID-19 pandemic has been hard on Michigan’s colleges and college students. Between the fall 2019 and fall 2020, undergraduate enrollment declined nearly nine percent. This hit was not shared evenly among institutions with enrollment at public two-years falling by over 20 percent. The state is not likely to rebound any time soon with federal student aid applications (FAFSA) down to about 55 percent this September compared to nearly 60 percent at the same time last year.

Michigan’s financial aid programs could help stem enrollment declines if they were simplified. Last year, the Michigan legislature eliminated the application for the Tuition Incentive Program (TIP), making the program easier to access. They should continue this work by making all state financial aid dependable, predictable, and streamlined.

Michigan’s financial aid programs are a complicated patchwork of eight separate programs with eight different sets of requirements and rules. To receive a Michigan Competitive Scholarship, students must achieve a minimum SAT score or GPA; to receive Michigan Reconnect, students must submit an application and be older than 25; to receive TIP, students must have received Medicaid for 24 out of 36 months between grades 6 and 12. The rules for dropping a course, the GPA students must maintain to continue receiving financial aid, and the process for appealing a decision to lose aid in the event of hardship, differ by scholarship program, leaving students at risk of losing aid and making it impossible to automate key processes. As a result of these complexities, Michigan students almost never know how much aid they are likely to receive before they go to college.

These programs also fall far short of covering the high costs that students face at colleges and universities across the state. Since 2000, tuition has more than doubled in real dollars at state public four-year institutions while state spending on financial aid has decreased by about 98 percent. Michigan now has the highest median public university and community college tuition and fees in the Midwest.

Decades of research have shown that a complicated financial aid processes makes it harder for students to complete college, and Michigan cannot afford to continue suppressing college completion. The complexity and length of the FAFSA, for example, has been found to be a deterrent for some students accessing aid. Communities with greater concentrations of residents with college degrees have higher incomes, lower dependence on social services, and greater economic growth. Currently, about 90 percent of Michiganders over the age of 25 have a high school diploma, but only around 30 percent have a bachelor’s degree. That’s why the state has made it a priority to reach 60 percent of working age adults with a degree or skills certificate by 2030.

This problem most acutely affects underrepresented students – low-income students, students of color, and adult students – and contributes to persistent completion gaps in Michigan. Of the Bachelor’s degrees awarded in Michigan between 2019 and 2020, seven percent went to Black students, five percent went to Latinx students, and over 70 percent went to white students. To reach parity with state demographics, the number of degrees awarded to Black students would need to double. These students are disproportionately eligible for Michigan Reconnect and Futures for Frontliners, the same programs that are the most difficult to maintain and the least generous in covering the full cost of college.

Increasing overall state investment in financial aid will take time and significant resources.  But the state could, right now, with a few simple low-cost changes, make a real difference for students. First, policymakers should align all the state aid program rules to one another. Second, they should align them to the rules for receiving a federal Pell Grant. These changes will make the process of communicating, understanding, accessing, receiving, and maintaining aid clearer and easier for students and counselors while saving taxpayers money by eliminating unnecessary bureaucracy.

Over the long term, policymakers could streamline and simplify financial aid by allowing students to use their aid at the college of their choice.  Michigan Tuition Grants can only be used at private, non-profit, four-year colleges and universities in Michigan while Michigan Reconnect, Futures for Frontliners, and TIP Phase I awards can only be used at Michigan community colleges.  Such restrictions have the potential to limit students’ choices in postsecondary institutions.

Michigan’s higher education system is underfunded and fixing that problem will be time and resource-intensive. However, reducing the paperwork and bureaucracy involved in accessing financial aid doesn’t have to be. Michigan’s lawmakers could act now to simplify and streamline the system, making all the programs run by the same rules. Doing so would make financial aid awards more predictable and dependable, and help more students enroll, complete their degree, and build a better Michigan.