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Press Releases

SCHEV Insights: Different students, different needs: Why SCHEV redesigned Virginia’s financial aid funding formula

by Elizabeth Liverman | Dec 14, 2020

Contact: Laura Osberger
lauraosberger@schev.edu
(804) 387-5191 (mobile)

December 14, 2020

immediate release

RICHMOND —The State Council of Higher Education for Virginia (SCHEV) today released a new analysis on the redesign of Virginia’s financial aid funding formula.  Last year, SCHEV staff reviewed the formula for allocating need-based financial aid for Virginia students attending public undergraduate institutions. As a result of the review, the General Assembly approved $60 million in state financial aid in the 2020-22 budget, representing a 14% annual increase statewide (These funds were unallotted in April due to COVID-19.) Increases to individual institutions, however, ranged from less than 3% to nearly 24%. The analysis aims to explain the rationale for recommending that range in increases and why providing across the board percentage increases would fall short of achieving Virginia's equity goals. 

Key Takeaways:

  • A strong relationship exists between unmet need and earning a degree. For every $2,000 in unmet need, graduation rates decline three percentage points.
  • students face a higher unmet need than middle- and high-income students, even after accounting for federal, state and institutional financial aid.
  • The funding formula was changed from focusing on the aggregate unmet need at each institution to focusing on those with the higher average unmet need.
  • This strategy targets those institutions enrolling larger numbers of low-income students, supports increased investments in financial aid and assists in meeting the Commonwealth’s completion goals.
  • Even though the General Assembly adopted SCHEV’s funding recommendations, Governor Northam was forced to freeze it in April. (See previous Insights’ post, Unallotted.)
  • In October, the Council recommended those financial aid investments be reinstated, and the General Assembly will have an opportunity to restore those investments in January.

“The formula review was a team effort between institutional financial aid officers, the General Assembly finance committees, SCHEV and the Governor’s office,” said the report’s author, Tom Allison, SCHEV’s senior associate for finance policy and innovation. “The ultimate goal was transparency and directing more funding to institutions that serve students with greater need, and we feel confident that we have done so.”

Read the full analysis as well as other SCHEV Insights at https://schev.edu/index/reports/insights.

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The State Council of Higher Education for Virginia is the state’s coordinating agency for higher education. With The Virginia Plan for Higher Education, SCHEV is dedicated to making Virginia the best-educated state by 2030.

 

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