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New Funding Formula for Student Financial Aid in Virginia

Virginia State University entrance
Virginia State University. (Photo: Kevin Coles/Flickr)

VPM education reporter Megan Pauly and News Director Craig Carper talked about some big changes to the way Virginia awards funding for student financial aid. The following is a lightly-edited transcript - with additional information cut from our on-air version - of their conversation.

Expanded Transcript:

Craig Carper: From VPM News at the state capitol in Richmond, I’m Craig Carper. I’m here with our education reporter Megan Pauly to talk about some big changes in how the state awards funding to Virginia colleges for student financial aid. Hey, Megan.

Megan Pauly: Hey, Craig.

CC: So, I understand the state council of higher education (known as SCHEV) has been looking at this funding formula for a while now. Can you refresh our memory about what’s changing?

MP: That’s right. In October the council approved a list of recommended changes to how these financial aid funds are allocated to universities, which have been incorporated into the Governor’s proposed budget. 

One of the biggest changes is shifting the focus away from the cost of tuition, and more towards individual student needs at different institutions. And they’re doing that by looking at the average amount of student need, not the aggregate, total need for all students combined. 

By focusing on the aggregate need in the past, colleges with higher tuition received more financial aid dollars, regardless of the number of low-income students on campus. So there’s really a shift here in directing more of these funds to reward universities that enroll a higher number of low-income students, who also have a higher amount of financial aid need.

CC: Got it, and remind us – what does that student need look like across some of Virginia’s college campuses?

MP: That’s a really important question, and definitely something that SCHEV has been looking at. There’s something called the EFC, which stands for expected family contribution. It’s the best predictor of how much money a student’s family can spend to help pay for their kid’s college education. Here’s Tom Allison with SCHEV explaining it:  

Allison: There are flaws in the calculation, it's very complicated. However, it is our best idea of the financial strength of a student's family.

And in Virginia, there are a lot of students who have a zero EFC, which means their parents can’t afford to contribute anything towards their college tuition. When students fill out their FAFSA, they automatically hit that zero EFC mark if their combined parents’ income is about $24,000.

CC: How many Virginia students have this zero EFC?

MP: Most public four-year Virginia universities have at least 15 or 20 percent -- if not more -- of students with a zero expected family contribution (EFC).

And at Virginia’s historically black colleges and universities that number is a lot higher. At Norfolk State University and Virginia State University, over half of students on campus in the 2017-2018 school year had a zero EFC, for example. And that’s just students who completed the FAFSA.

CC: So, how is the state directing more dollars to these students?

MP: One way is by removing an assumption in the old formula from the 80s that all students are able to contribute something.

Here’s Lee Andes with SCHEV explaining where that assumption came from:

Andes: So all students would be able to work over the summer and use that for their education. But that assumes that everyone can get a job, and everyone can save all those funds for college.

Andes says while getting rid of this false assumption is just a small tweak, it will help make the formula fairer overall.  

And, setting the funding formula aside for a minute, there’s a new line item to the tune of 17 million in the Governor’s proposed budget to create a new program that would target low-income high school students from the Richmond and Norfolk areas and give them a full ride (free tuition and a portion of room and board, when applicable) to Virginia State and Norfolk State. 

CC: Got it. And as part of the funding formula review, I understand SCHEV identified that about $12 million was awarded to families deemed as high income in 2018. Can you explain that?

MP: That’s right. These are families of four or more making around $100,000 a year, or more. Here’s Tom Allison again:

Allison: It raises a lot of eyebrows when you hear about that statistic, so it's one we're going to continue to monitor. But it's not the flashing red light for us. More of a yellow light.

Lawmakers have actually directed SCHEV to keep an eye on this and release another report by July 2021. But no changes to this for now. And it’s important to remember that right now the state doesn’t have the authority to decide who exactly will ultimately receive these financial aid dollars, just how the funds are distributed across Virginia universities.

CC: Great, thanks for the update, Megan.

MP, Thanks, Craig.

CC: And you’re listening to 88.9, VPM News.

 

 

 

Megan Pauly reports on early childhood and higher education news in Virginia
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