State Grant Aid: An Overview of Programs and Recent Research. Policy Report

Grant aid -- whether based on financial need, merit, or a combination therein -- is the primary form of financial aid awarded by states. States use grant aid to encourage academic preparation, enhance access to postsecondary education, affect students' choice of college, support persistence, and reduce out-of-state migration. State grant aid programs can be distinguished from other sources of grant aid, such as institutional scholarships or tuition discounts as well as the Pell Grant, the federal government's principal need-based program. The purpose of this report is to help policymakers compare their state's grant programs to others and also understand how policy design features relate to student outcomes. First, the report provides context for understanding state grant programs that serve undergraduate students, and then it describes common and distinguishing features of state grant programs by focusing on eligibility requirements, funding sources, and program magnitude, including award amounts and number of recipients. In addition, the characteristics of recipients are considered, including the type of institution attended, family income, race/ethnicity, and enrollment intensity. An overview is then provided of the research findings on the effects of state grants on educational attainment. Finally, implications and recommendations are identified. [This brief examines a critical state policy issue identified through the College Affordability Research Initiative, a collaboration between the Midwestern Higher Education Compact and the National Forum on Higher Education for the Public Good at the University of Michigan.]