Lack of Aid Hobbles NH's Competitiveness

Editor’s Note: This is the first of a two-part story about student aid and affordability. Part two will appear next month.

Compared to the rest of the country, NH ranks at the bottom for state support of higher education, affordability at public institutions and students graduating with low debt levels. How these factors affect the state in developing the workforce of tomorrow has been much discussed.

What hasn’t been talked about is that NH is the only state nationwide that offers zero student aid and zero state-supported scholarships. And that’s another obstacle for NH schools when trying to persuade NH high school students to go to college in state.

In the 2014-15 academic year, undergraduate students nationwide received on average $14,210 in financial aid, according to the College Board, the nonprofit that manages SAT and Advanced Placement exams. State aid for full-time equivalent undergrads averages $710. South Carolina gives the most of any state, averaging $1,070 per undergrad. New Hampshire doesn’t even rank as it provides no state aid.

In most states, students have a financial aid chair with four legs: federal loans and grants, institutional aid, funds from the student and their family, and state scholarships and financial aid, says Tom Horgan, president and CEO of the NH College and University Council. Statistics from the College Board show most states have either increased or level funded their grants.

New Hampshire, on the other hand, offers a three-legged stool. “In New Hampshire, we are at a disadvantage, and there’s not much interest from public policy makers to create the fourth leg [state-funded student aid]. That creates more pressure on families and institutions,” Horgan says of the lack of state aid.

Discounts Matter
For many, price is a big factor, which is problematic for NH schools given that it can be cheaper to leave NH for college.

Horgan points out that all colleges discount tuitions to attract top talent. They do so by offering institutional aid as part of the financial package. “Hardly anyone pays the sticker price,” says Horgan. “Students and families are shopping more for financial packages and are more well informed consumers.

Even larger state institutions [in other states] that traditionally competed on their lower price tag and did not offer big student aid packages are beginning to do so now.”  

Well, all except the Granite State. And that’s a problem, says Ed McKay, director of the NH Division of Higher Education and former chancellor of the University System of NH. “Other states are recognizing the advantage of recruiting college-age students to come to their schools and retain them in state after graduation. It’s a sustaining economic vitality strategy. Other New England states are aware of this and putting attention, and, in some cases, funds, into these efforts,” McKay says.

Take the University of Maine in Orono, for example, which offers in-state tuition prices to any student in New England. The result? It’s now cheaper for a NH kid to head to Maine than pay in-state tuition at the University of NH.

“Take a deep breath and buckle up because it’s going to be a bumpy ride. The marketplace is becoming more and more aggressive,” Horgan says.

To remain competitive, New England College (NEC) recently expanded its Community College to New England College program, launched in 2015, to allow NH community college students with an associate degree to transfer credits to NEC. That program now is open to all community college students nationally. The program also includes deep tuition discounts and financial aid.  

Also seeking to bridge the gap is the NH Charitable Foundation in Concord. They are the largest public source of college scholarships in the state with 391 scholarship funds. “We give over $5 million to over 1,400 students each year,” says Katie Merrow, vice president of community impact at the NH Charitable Foundation, adding scholarships make up 16 percent of the Foundation’s total annual grants.

Student Aid Landscape
While demand for student aid is not as high as it was in 2009, students are still borrowing at historically high levels, according to a report “Trends in Student Aid 2015,” from the College Board.

Tuition costs grew slowly in the past two years, and student borrowing has declined slightly, both overall and on a per student basis, the report states. “The Pell Grant program, whose expenditures had skyrocketed during the recession, served fewer students and spent less overall as enrollment declined and fewer families were facing financial distress,” states the report.

The report goes on to say total education borrowing declined in 2014-15 for the fourth consecutive year, equaling an overall decline of 14 percent since the 2010-11 peak. “Undergraduates borrowed 16 percent less in 2014-15 than four years earlier; graduate students borrowed 11 percent less.”

So who gets what overall? “If you’re a low-income student, you’ll get a Pell grant,” says Horgan, adding that is almost enough to cover a year’s tuition at a community college. “If I’m high income, I probably won’t get financial aid and will pay for my children’s education. If I’m middle class, I’m in the difficult spot that I don’t qualify for a lot of financial aid, and my income has not kept up [with rising costs],” he says, adding families cannot rely on home equity as much as they have in the past. That translates into a steep spike in demand for aid, Horgan says. Colleges often offer merit-based rather than needs-based funding to compete for top talent. As a result, “Student need is exploding," Horgan says.

From the Charitable Foundation’s perspective, “We see increasing demand. We’ve seen our donors step up with increased giving to meet those needs.

Partnerships with business, education and government is critical,” Merrow says. “We have more strong, promising students than we can fund.”

States and institutions that invest more in student aid are closing the gap between the cost of private and public institutions. “We’ve seen many students receive very competitive offers from private institutions this year,” says Tori Berube, vice president of college planning and community engagement at the New Hampshire Higher Education Assistance Foundation (NHHEAF), which helps NH students and their families navigate the application and financing process. “The gap is shrinking in packages between a public and a private [schools]. When you look at the cost of attendance and what aid a school can offer, it’s a math game. A private college may have a higher cost of attendance but may offer more in merit or need-based aid.”

Rates being offered through federal loan programs are also making student aid packages more enticing. By filing a Free Application for Federal Student Aid (FAFSA), students can be eligible for federal loans with a fixed interest rate of 3.76 percent. Students may also be eligible for federal Pell grants, which are based on financial need, a Perkins loan and possible federal work-study programs, all by completing the FAFSA form, Berube says.  

Another option is the Federal Parent PLUS Loan available to parents of undergrads with a fixed rate of 6.31 percent that remains the parent’s obligation for the life of the loan (down from 6.84 percent last academic year), Berube says.

President Obama announced two changes in 2015 to make applying for aid in the fall of 2016 easier for low-income students. The date for completing the FAFSA moved from Jan. 1 to Oct. 1. The earlier deadline will enable high school seniors to complete the FAFSA and know whether they are eligible for a Pell grant before applying to colleges.

Another big change is FAFSA will begin accepting tax data from the most recently filed tax return, rather than the current requirement to submit tax forms from the calendar year of application, again allowing more families to complete the FAFSA earlier, Horgan says.