The current federal financial aid system could be modified to better meet the needs of two-year college students by extending eligibility (and therefore increasing participation) for federal aid to more students as well as by redefining the metrics used to determine student need. Among the “low-hanging” fruit that would entail a relatively easy and low-cost implementation would be a campaign to increase knowledge about the sources of aid available to low-income students through marketing and counseling services. Another step would be to simplify the FAFSA, a policy direction that has recently garnered a lot of attention in the higher education literature.
Larger, more fundamental efforts to restructure the financial aid system would need to be approached more cautiously. Attempts could be made to better level the playing field for part-time students, those requiring more remedial credits, and/or those choosing to enroll for the summer term. Further, a system that better acknowledged that low-income students (who disproportionately attend two-year colleges) may be risk averse in their assessments of the economic benefits of their college education, or that they simply may be debt averse, may improve two-year college students’ educational attainment.
A full-scale restructuring of the financial aid system along these lines is unlikely and possibly misguided given the state of our knowledge about the ability of various financial aid interventions to improve student outcomes. However, a major effort to aggressively advance the state of research and better inform policy would be immensely beneficial for the next reauthorization of the Higher Education Act. Federal funding of a series of well-designed experiments in which financial aid eligibility and generosity were systematically varied would help to advance the higher education policy discussion.
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