Need-Based Student Aid Rising.

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Author: Fields, Cheryl

Some policy experts and college leaders have fretted over the past few years that the growth of states' merit (non-need-based) student aid â€" including the popular HOPE (Helping Outstanding Pupils Educationally) scholarships in Georgia and similar programs in some other states â€" could hurt need-based assistance. They feared the merit aid was displacing funds that should have been devoted to need-based aid focused on lower-income students.

But the latest figures on state financial aid, from the National Association of State Student Grant and Aid Programs (NASSGAP), show that in 2003-2004, need-based aid accounted for 74 percent of all state grants, while non-need grants or merit aid accounted for 26 percent.

Grants account for the lion's share â€" 84 percent â€" of state student aid, or about $6.2 billion, said NASSGAR Grants based on a student's financial need totaled about $4.5 billion, an increase of 7.6 percent over the previous year. Grants not based on need, in contrast, amounted to only about a third as much, $1.6 billion, up 4.1 percent over the previous year.

That reversed the trend of the past several years when merit aid grew much taster than need-based assistance. Prior to programs such as the HOPE scholarships, though, merit aid was a relatively insignificant amount of student assistance in many states.

In 2003-2004, states also spent about $1.2 billion on aid other than grants, including loans, work-study, and tuition waivers, according to NASSGAP.

The organization calculated that the total of about $7.3 billion in grants and other forms of aid distributed in 2003-2004 represented a 6 percent increase in spending in current dollars or 4 percent in constant dollars. NASSGAP's report also noted that that was the lowest increase since 1997-1998. For an electronic copy of the 35th annual report, see http://www.nassgap.org

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By Cheryl Fields