KATHLEEN VINEHOUT
PEOPLE FIRST

Does Financial Aid Help Students Graduate?

“Perhaps we should eliminate financial aid,” my Senate colleague suggested. “And just lower tuition for everyone.”

Recently a Senate Committee considered a bill to look at combining all financial aid programs into one. During the public hearing the Senators grappled with the question: does financial aid help students graduate?

I was a student who would not have graduated or even attended college without financial aid. For me the answer seemed painfully obvious. Dr. Rolf Wegenke seemed to agree.

Dr. Wegenke represents Wisconsin’s Independent Colleges and Universities. He testified at the recent Senate hearing and last year at a similar hearing. He shared research 1 showing “inadequate financial aid is the major factor” stopping low-income students from graduating on-time.  He related, in that last decade, three million academically qualified students could not get a bachelor’s degree because they could not afford tuition 2 .

My Senate colleague argued if no one received need-based financial aid, tuition would be less and students would have less debt.

It is true much financial aid comes in the form of loans. Press reports show Americans owe more in student loans than credit card debt. Students that graduate with more loans are postponing marriage, living at home and avoiding lower paying jobs like working for a non-profit or the Peace Corps 3 . Wisconsin students are more likely to graduate with debt and have a larger a student loan than the national average 4 .

Wisconsin does provide aid to some students in need. Is the solution to eliminate this aid and lower tuition for all students?

A counter argument was made by Sara Goldrick-Rab 5 . She works with WISCAID - a nonprofit group studying problems related to student financial aid. Some students would not make it through college without aid. Smart low-income students are less likely to even go to college than their more well-off smart classmates.

Recent data show the problem of smart students without adequate financial resources is growing. The number of students whose family cannot afford to contribute to tuition has increased over 50% just in the past school year. This calculation is made by the independent analysis of Wisconsin students’ financial aid forms 6 .

Wisconsin’s student body has grown poorer 7 and includes more minority students than a decade ago. This trend is only expected to continue. As student needs increased, state support for higher education dropped. When financial aid support does not keep up with student needs, academically qualified students of modest means do not pursue a college degree. Some students who get started in college find they cannot continue for financial reasons.

Students who drop college for financial reasons hurt their own future earnings. Their loss is also loss for all of us.

The work of WISAID shows “a child born in poverty is five times more likely to move out of poverty if she earns a bachelors degree... A college degree substantially reduces the use of welfare... corrections and public healthcare - and increases tax payments” 8 .

While poverty and tuition costs are rising in Wisconsin, state need-based financial aid is falling 9 . Compared to other states Wisconsin ranks below the national average in state-support for financial aid. Wisconsin lags the nation and most Midwestern states (including Minnesota) in grant aid per student, per population and total aid as a percent of the state higher education budget 10 .

So what would happen if Wisconsin eliminated all needs-based financial aid and used the money to lower tuition for all students?

If all state need-based money was put toward tuition, students would see a tuition drop of only $168 dollars a year. Students whose families could pay nothing would not be able to attend college. That would mean 18,000 students might never have a chance.

As Dr.Wegenke reminded our committee, “Not all the smart students are wealthy students.”


1 Rolf Wegenke. Testimony before the Legislative Council Special Committee on Review of Higher Education Financial Aid Programs. August 17, 2010 quoting National Bureau of Economic Research Working Paper 15892 April 2010.

2 Rolf Wegenke. Testimony before the Legislative Council Special Committee on Review of Higher Education Financial Aid Programs. August 17, 2010 quoting the US Congressional Advisory Committee on Student Financial Assistance, June 2010.

3 Tamar Lewin. Burden of College Loans on Graduates Grows. The New York Times . April 11, 2011.

4 Karen Herzog. Debt a load on college students. Milwaukee Journal Sentinel . November 6, 2011.

5 Sara Goldrick-Rab. Making Financial Aid Count. Presentation to the Special Committee on Review of Higher Education Financial Aid Programs. August 17, 2010.

6 Rolf Wegenke Letter to Senator Vinehout. December 2, 2011. Using HEAB data.

7 In the last nine school years the number of students in poverty (as defined by those eligible for free and reduced lunch) has doubled. Kevin Reilly and Kristofer Frederick. Financial Aid and UW Students. Power point presentation to Legislative Council Study Committee Review of Higher Education Financial Aid Programs; August 17, 2010.

8 Sara Goldrick-Rab. Making Financial Aid Count. Presentation to the Special Committee on Review of Higher Education Financial Aid Programs. August 17, 2010. Page 2.

9 National Association of State Grant and Aid Programs (NASSGAP) 2009-2010 Academic Year. 41st Annual Survey Report on State-Sponsored Student Financial Aid. August 2011. Table 7.

10 Opcite. Wegenke testimony quoting NASSGAP study of 2010. The 2011 study showed similar results.


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