Order Code RL32775
CRS Report for Congress
Received through the CRS Web
The Campus-Based Financial Aid Programs:
A Review and Analysis of the
Allocation of Funds to Institutions
and the Distribution of Aid to Students
February 18, 2005
David P. Smole
Analyst in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress
The Campus-Based Financial Aid Programs:
A Review and Analysis of the Allocation of Funds to
Institutions and the Distribution of Aid to Students
Summary
The Federal Supplemental Educational Opportunity Grant, Federal Work-Study,
and Federal Perkins Loan programs are collectively referred to as the campus-based
financial aid programs largely because participating institutions play a central role in
their operation, and because the aid they make available to students comprises federal
funds matched in part with institutional funds. In recent years, the programs have
been criticized because a large share of funding is allocated to institutions in
proportion to the amount received in prior award years as opposed to being allocated
exclusively according to aggregate student financial need. The programs also have
been criticized because the current funding procedures allow institutions that receive
proportionately greater funding on a per-student basis to provide larger awards to
students with higher incomes than can be provided to lower-income students at
institutions that receive less funding. Accordingly, proposals have been made to
modify the funding procedures for the campus-based programs by gradually phasing
out the practice of allocating funds on the basis of prior year allocations and requiring
all funding to be allocated to institutions according to existing need-based formulas.
This report describes and analyzes (a) the process through which federal funds
are allocated to institutions under the campus-based programs, (b) the potential for
allocating all campus-based funding according to the existing need-based formulas,
and (c) the current distribution of aid to students. It will be updated to track
legislative proposals addressing the campus-based allocation procedures. Major
findings presented in the report include:
! Under each program, the majority of funds are allocated to
institutions on the basis of amounts received in prior years, while
only a modest amount are allocated according to aggregate student
financial need as calculated according to “fair share” formulas.
! Under the need-based formulas, the cost of attendance at an
institution is the dominant factor in determining institutional need.
! Much greater amounts of institutional need are calculated on a per-
student basis at high-cost institutions than at low-cost institutions.
! At low-cost institutions, institutional need comprises limited
amounts of aggregate student need attributable to large numbers of
predominately low-income students, while at high-cost institutions,
it tends to comprise greater amounts of need attributable to a smaller
number of mostly middle- and upper-income students.
! It is estimated that if the allocation procedures were to be modified
so that funding was allocated entirely on the basis of institutions’
proportionate share of institutional need, more institutions would
receive allocation increases than would receive allocation decreases.
! Larger proportions of students at higher-cost institutions receive
campus-based aid, and receive larger awards, than do comparable
students at lower-cost institutions; however, average awards at
higher-cost institutions cover a smaller percentage of costs.

Contents
Overview of the Allocation Formulas for the Campus-Based Financial Aid
Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Base Guarantee Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Fair Share Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Cost of Attendance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Expected Family Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Institutional Need . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Fair Share Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Total Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Analysis of the Allocation of Funds to Institutions Under the
Campus-Based Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Institutional COA as a Unit of Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Base Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Fair Share Increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Average Student EFCs Used in Fair Share Formulas . . . . . . . . . . . . . 18
Average Need per Student . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Relationship Between Student Need and Maximum Award
Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Tabulation of Institutional Need . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
FWS Self-Help Need . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Perkins Loan Adjusted Self-Help Need . . . . . . . . . . . . . . . . . . . . . . . . 27
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Consideration of Proposals to Phase Out Funding of Institutional Base
Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
FSEOG Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
FWS Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Perkins Loan FCCs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Distribution of Campus-Based Aid to Students . . . . . . . . . . . . . . . . . . . . . . . . . . 35
FSEOG Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
FWS Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Perkins Loan Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Combinations of Campus-Based Awards . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Summary and Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
List of Figures
Figure 1. Summary of the Allocation Procedures for the Campus-Based
Financial Aid Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Figure 2. Estimated Distribution of Dependent Students Who Applied for
Federal Aid Across Income Categories in Table of EFCs: 2003-2004 . . . . 20
Figure 3. Estimated Distribution of Independent Students Who Applied for
Federal Aid Across Income Categories in Table of EFCs: 2003-2004 . . . . 21
Figure 4. Average Amount of Need Calculated per Eligible Student According
to the Fair Share Formulas, by COA Category:AY2004-2005 . . . . . . . . . . 22
Figure 5. Aggregate FSEOG Need Attributable to Eligible Students by Type
and Income, by COA Category: AY 2004-2005 . . . . . . . . . . . . . . . . . . . . . 24
Figure 6. Aggregate FWS Self-Help Need Attributable to Eligible Students
by Type and Income, by COA Category: AY2004-2005 . . . . . . . . . . . . . . . 27
Figure 7. Aggregate Perkins Loan Adjusted Self-Help Need Attributable to
Eligible Students by Type and Income, by COA Category:
AY2004-2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Figure 8. Comparison of FSEOG Allocations to IHEs Under Current
Procedures and Estimated Allocations with Elimination of Base
Guarantees, by Groups of Institutions, ranked by COA:AY2004-2005 . . . 30
Figure 9. Comparison of FWS Allocations to IHEs Under Current Procedures
and Estimated Allocations with Elimination of Base Guarantees, by
Groups of Institutions, ranked by COA:AY2004-2005 . . . . . . . . . . . . . . . . 32
Figure 10. Comparison of Perkins Loan FCC Allocations to IHEs Under
Current Procedures and Estimated Allocations with Elimination of
Base Guarantees, by Groups of IHEs, ranked by COA:AY2004-2005 . . . . 34
List of Tables
Table 1. Table of EFCs Used in the Campus-Based Allocation
Procedures: AY2004-AY2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Table 2. Institutions Participating in the Campus-Based Programs,
Categorized by COA and Sector: AY2004-2005 . . . . . . . . . . . . . . . . . . . . 12
Table 3. Institutions for Which the Base Guarantee Is Greater Than
Its Fair Share Versus Institutions Receiving a Fair Share Increase;
and Percent of Total Funding Allocated for Base Guarantees, by COA
Category and State, by Program: (AY2004-2005) . . . . . . . . . . . . . . . . . . . 15
Table 4. Maximum Award Amounts by Program . . . . . . . . . . . . . . . . . . . . . . . . 23
Table 5. Counts of Institutions by COA Category According to Estimated
Change in FSEOG Allocation With Elimination of Base Guarantee . . . . . 31
Table 6. Counts of Institutions by COA Category According to Estimated
Change in FWS Allocation with Elimination of Base Guarantee . . . . . . . . 33
Table 7. Counts of Institutions by COA Category According to Estimated
Change in Perkins Loan FCC Allocation with Elimination of
Base Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Table 8. Distribution of FSEOG Aid to Students Attending Institutions
Participating in the FSEOG Program, by Student Type and Income,
by COA Category: AY2002-2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Table 9. Comparison of Pell Grant Awards and FSEOG Awards for
Institutions Participating in the FSEOG program, by COA Category:
AY2002-2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Table 10. Distribution of FWS Aid to Students Attending Institutions
Participating in the FWS Program, by Student Type and Income,
by COA Category: AY2002-2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Table 11. Distribution of Perkins Loan Aid to Students Attending IHEs
Participating in the Perkins Loan Program, by Student Type and
Income, by COA Category: AY2002-2003 . . . . . . . . . . . . . . . . . . . . . . . . . 41
Table 12. Participation of Institutions in the Campus-Based Financial Aid
Programs (number and percent), by Institutional COA: AY2004-2005 . . . 43
Table 13. Distribution of Campus-Based Financial Aid to Students
Attending Institutions Participating in All Three Campus-Based
Programs, by Student Type and Income, by COA Category:
(AY2002-2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
The Campus-Based Financial Aid
Programs: A Review and Analysis of the
Allocation of Funds to Institutions and the
Distribution of Aid to Students
Three need-based Federal Student Aid (FSA) programs authorized under the
Higher Education Act of 1965, as amended (HEA)1 — the Federal Supplemental
Educational Opportunity Grant (FSEOG) program, the Federal Work-Study (FWS)
program, and the Federal Perkins Loan program — are collectively referred to as the
campus-based financial aid programs. The programs are called the campus-based
programs largely because participating institutions of higher education (IHEs) have
a significant role in administering the programs and because they must use
institutional funds to match the federal funds they receive for the operation of the
programs. In contrast to other need-based FSA programs in which aid is awarded to
students according to non-discretionary criteria, the financial aid administrators of
participating IHEs have discretion in determining the mix and amount of aid
individual students receive from funds made available under the programs. The
FSEOG program allows IHEs to provide grant aid to undergraduate students who
have not yet earned a first baccalaureate degree. The FWS program supports
undergraduate and graduate students through subsidized part-time employment.
Under the Perkins Loan program, IHEs use federal capital contributions (FCCs) to
help establish revolving loan funds from which they make low-interest loans to
undergraduate and graduate students. Over $3.2 billion in financial aid is awarded
annually to students under the three programs.
The programs are popular with many IHEs and financial aid administrators
because of the flexibility they provide to tailor aid to meet the specific needs of
students and for the ability to shift funds between programs. The programs have
come to be criticized, however, for the way in which the majority of funding
provided for the programs is allocated to institutions in proportion to the amount they
received in previous award years, as opposed to being allocated entirely according
to the aggregate financial need of the students attending each institution. The
programs have also been criticized because the current distribution of funds allows
institutions that receive proportionately more funding on a per-student basis to give
1 20 U.S.C.§§ 1001 et seq. Authorization to fund the programs expired at the end of fiscal
year (FY) 2003; however, funding was provided for FY2004 under the extension in
authorization to fund the programs provided under the General Education Provisions Act
(GEPA), and was provided for FY2005 under the Higher Education Extension Act of 2004
(P.L. 108-366). It is expected that the statute authorizing the campus-based programs will
be reviewed by the 109th Congress as part of an effort to reauthorize the HEA.
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larger campus-based awards to more students and to students with higher incomes
than can be awarded at other institutions.2
Some have proposed modifying the campus-based programs’ funding
procedures to gradually phase out the current practice of allocating the majority of
funds to institutions on the basis of the amounts they received in prior years and to
require that all funding eventually be provided in proportion to the aggregate
financial need of students at participating institutions.3 Others have expressed
concern that amending the allocation procedures without also providing increased
funding for the campus-based programs overall might result only in making more aid
available to needy students at some institutions at the expense of needy students at
those institutions that would experience funding decreases.4 Legislation has been
introduced in the 109th Congress to amend the campus-based allocation procedures
to gradually phase out the allocation of funds on the basis of the amounts institutions’
received in prior years and to eventually allocate all funds to institutions on the basis
of their aggregate student financial need.5 (Additional information on characteristics
of the campus-based programs, including a history of appropriations and basic
program data for each of the three programs, can be found in CRS Report RL31618,
Campus-Based Student Financial Aid Programs Under the Higher Education Act.)
This report describes and analyzes the process through which federal funds are
currently allocated to IHEs under the campus-based programs and also examines the
subsequent distribution of aid to recipients of awards provided under the programs.
The report begins with a brief overview of the procedures used to allocate funds to
IHEs under each of the three programs. This includes a discussion of the
development of the allocation procedures and significant changes to them over the
history of the programs. Next, the report analyzes the allocation of funds to IHEs
according to the current allocation procedures, focusing on key aspects of these
procedures that largely affect the distribution of funds to institutions. The report then
discusses issues related to the campus-based programs that may be considered as the
109th Congress debates reauthorization of the HEA.6 In particular, it examines how
2 See, for example, Stephen Burd, “Unfair Advantage? Elite Private Colleges Say They Will
Fight to Protect Federal Aid That Other Institutions Want for Needy Students,” The
Chronicle of Higher Education, Aug. 15, 2003; and Greg Winter, “Rich Colleges Receiving
Richest Share of U.S. Aid,” The New York Times, Nov. 9, 2003.
3 See for example, National Association of Student Financial Aid Administrators
(NASFAA), Higher Education Act Reauthorization Recommendations, May 22, 2003,
pp. 41-42, available at [http://www.nasfaa.org/Publications/2003/senaterecs052203.doc].
4 Letter from Association of American Universities to Honorable John Boehner, Chairman,
House Committee on Education and the Workforce, and Honorable Buck McKeon,
Chairman, House Subcommittee on 21st Century Competitiveness, May 26, 2004, available
at [http://www.aau.edu/education/HR4283ComLet.pdf].
5 See H.R. 609, The College Access and Opportunity Act of 2005; and the Administration’s
Department of Education FY2006 Budget Summary. A similar bill, H.R. 4283, The College
Access and Opportunity Act of 2004, was introduced in the 108th Congress.
6 For further information on reauthorization of the HEA, see CRS Issue Brief IB10097, The
Higher Education Act: Reauthorization Status and Issues.
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the distribution of funds to institutions might be affected should the current allocation
procedures for the programs be amended to phase out the allocation of funds on the
basis of prior year allocations in favor of providing institutions with funding entirely
on the basis of aggregate student need. The report concludes with a review and
analysis of the distribution of campus-based financial aid to different types of
students at participating IHEs and an examination of the role that the current
allocation procedures may have in affecting the distribution of aid.
Overview of the Allocation Formulas for the
Campus-Based Financial Aid Programs
Under each of the campus-based programs, the U.S. Department of Education
(ED) allocates funds to participating IHEs according to a complex two-stage
procedure. These allocation procedures are specified in the authorizing statute of
each program. While there are slight differences between programs, the allocation
procedures all share the same basic framework. In the first stage, an IHE that is a
continuing participant in a program receives funding based on what it received in
prior years. This is commonly referred to as the base guarantee. In general, an
IHE’s base guarantee is equal to some portion of the funds it received in FY1999;
however, there are also procedures for allocating a base guarantee to IHEs that began
participating in a campus-based program after FY1999.
In the second stage, any funds remaining after the allocation of base guarantees
are allocated to IHEs according to need-based formula allocation procedures. Under
the allocation formulas for the programs, each IHE receives funding in proportion to
its share of the national total of institutional need that is in excess of the amount it
received as its base guarantee. (Institutional need is a program-specific measure of
the total financial need of all eligible students at an IHE). Under each of the
formulas, ED determines the amount of funds each IHE would receive if the entire
appropriation for the program were to be allocated in proportion to its share of the
national total of institutional need (supposing that no funds were allocated for base
guarantees). This amount is referred to as an institution’s fair share. If an IHE’s fair
share is greater than its base guarantee, it has a shortfall in funding and is eligible to
receive additional funding — a fair share increase — to help reduce its shortfall.
An IHE’s total allocation is the sum of its base guarantee and its fair share increase.
Figure 1 summarizes the allocation procedures for the campus-based programs.
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Figure 1. Summary of the Allocation Procedures
for the Campus-Based Financial Aid Programs
1. Base guarantee allocation:
a) base guarantee = institution specific amount based on allocation in previous years
2. Fair share allocation:
a) fair share = [(institutional need) / (national total of institutional need)]
x
[funds appropriated]
b) shortfall = [(fair share) – (base guarantee)]
c) fair share increase = [(shortfall) / (national total of shortfalls)]
x
[(funds appropriated) – (national total of base guarantees)]
3. Total allocation:
a) total allocation = [(base guarantee) + (fair share increase)]
Sources: HEA §§413D, 442, and 462.
The basic structure for allocating campus-based program funding to institutions
— first for base guarantees, and then for fair share increases — can be traced back
to procedures developed in the late 1970’s and first put into place for the 1979-1980
award year.7 Funding for the campus-based programs previously was allocated
according to a different two-stage procedure in which funds first were apportioned
on a state-by-state basis according to the student population in each state, and then
sub-allocated to IHEs on the basis of the student need at institutions within each state
according to a procedure called the panel review process. Under the panel review
process, institutions would apply to receive a share of the funds allocated to their
state based on the projected financial need of their students. A regional panel would
then review the institutions’ applications and determine the amount of funding each
IHE would receive. In the mid-1970s, the panel review process became subject to
criticism for being too complex and time-consuming, and for leading to inequities in
the distribution of aid to students.8 In response, the U.S. Office of Education
convened a panel of experts to study and make recommendations on how to allocate
7 U.S. Department of Education, Office of Postsecondary Education, A Report on the State
and Institutional Funding Process for Campus-Based Student Financial Assistance
Programs, Dec. 12, 1983, pp. 4-5.
8 See, for example, General Accounting Office, Report to the Special Subcommittee on
Education, House Committee on Education and Labor, Administration fo the Office of
Education’s Student Financial Aid Program, Apr. 4, 1974, pp. 26-34. Available at
[http://161.203.16.4/f0302/095923.pdf]. (Hereafter cited as GAO, Administration of the
Office of Education’s Student Financial Aid Program.)
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funds to IHEs under the campus-based programs.9 The panel’s recommendations led
to the implementation of new allocation procedures. Over time, these procedures
have been modified slightly; however, the same basic structure remains.
At the time the new allocation procedures were adopted, it was decided that in
the first year of their implementation, IHEs would first be allocated funds in amounts
comparable to what they had received in the past. Called the conditional guarantee,
this was the precursor to the current base guarantee. Funds remaining after the
allocation of conditional guarantees would be allocated according to the fair share
formulas. In the first year of implementation, conditional guarantees were to be set
at the greater of the amount of funds IHEs had expended in either the 1977-1978 or
1978-1979 award years. The next year, they were to receive 90% of that amount. In
subsequent years, conditional guarantees were to be gradually reduced until
ultimately all funds were allocated according to the fair share allocation procedures.10
Ultimately, however, conditional guarantees — now called base guarantees — were
not phased out.11 The majority of the funds appropriated for each of the three
campus-based programs continues to be allocated for institutional base guarantees.
(It is important to note that as appropriations increase, a greater proportion of funding
becomes available for fair share increases, while a decrease in appropriations results
in proportionally more funding being allocated for base guarantees.)
The capacity of an IHE to award campus-based aid to eligible students is
directly related to the amount of funds is receives. The major factors determining
each IHE’s allocation are its base guarantee, its cost of attendance (COA), the
number of FSA applicants, and the expected family contributions (EFCs) of those
students. The remainder of this first part of the report describes the major
components of the campus-based allocation procedures.12
Base Guarantee Allocations
Under each of the campus-based programs, all participating institutions are
eligible to receive a base guarantee. Because most institutions’ base guarantees are
9 U.S. Office of Education, Final Report of the Panel of Experts to Design a New Funding
Process to Commissioner Ernest L. Boyer, June 1979. (Hereafter cited as ED, Final Report
of the Panel of Experts.)
10 Ibid., pp. 18, 22, and 78.
11 For a brief history of the campus-based allocation procedures, see Robert Purnell Huff,
“The Evolution of the Process of Allocating Federal Campus-based Student Financial Aid
to Postsecondary Education Institutions,” NASFAA Journal of Student Financial Aid, 34 no.
2, 2004, pp. 35-42. (Hereafter cited as Huff, The Evolution of the Process of Allocating
Federal Campus-Based Student Financial Aid to Postsecondary Education Institutions.)
Available at [http://www.nasfaa.org/Annualpubs/Journal/Vol34n2/Huff.pdf].
12 The allocation procedures are specified at HEA §§413D, 442, and 462 (42 U.S.C.
§§1070b-3, 2752, and 1087bb). Participating institutions are required to submit information
used in the allocation of funds and to report their use of funds on the Fiscal Operations
Report and Application to Participate (U.S. Department of Education, Office of
Postsecondary Education, Campus-Based Operations, ED Form 646-1, OMB no. 1845-
0030).
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equal to a portion of the amount of funds they received in prior award years, it is
often stated that the procedures for determining base guarantees favors long-term
participants over new entrants to the programs. More precisely, the base guarantee
component of the allocation procedures gives a funding advantage to an institution
with a base guarantee that is greater than its fair share. Base guarantees are
determined according to the following procedures:
! First, from the funds appropriated for any of the programs, each IHE
that participated in that particular program in FY1999 is allocated a
base guarantee equal to 100% of the sum of (a) its FY1999 base
guarantee and (b) its FY1999 pro rata, or proportional, share of the
funds that remained after the allocation of all base guarantees.13
! Next, those IHEs that began participation in the program after
FY1999, but which are not first- or second-time participants, are
allocated a base guarantee equal to the greater of $5,000, or 90% of
the amount they received in their second year of participation (100%
in the case of Perkins Loan FCCs).
! Finally, IHEs that are participating in the program for their first or
second year receive a base guarantee equal to the greatest of (a)
$5,000, (b) 90% of the per-pupil amount allocated to and used by
comparable institutions14 in the second preceding fiscal year,
multiplied by the number of students at the IHE, or (c) 90% of what
the IHE received in its first year of participation.
However, notwithstanding the second and third of these steps, if an institution
began participating in the program after FY1999 and received a larger allocation in
its second year of participation than in its first, its base guarantee is equal to 90% of
the allocation it received in its second year of participation. In cases where the annual
appropriation is insufficient to award IHEs their full base guarantee according to any
one of the abovementioned steps, base guarantees that are to be allocated according
to that step are proportionally reduced and no funds are to be allocated to institutions
under any subsequent stages of the allocation procedures.
Fair Share Allocations
Under each of the programs, after the allocation of base guarantees, any funds
remaining from the annual appropriation are allocated to IHEs for fair share increases
13 Prior to the enactment of the Higher Education Amendments of 1998 (P.L. 105-244), IHEs
received base guarantees in each program equal to 100% of the total amount they were
allocated for FY1985. They also received a pro rata share, which was an amount
proportional to their base guarantee, allocated from one quarter of the funds that remained
from the annual appropriation after the allocation of all base guarantees. A history of base
guarantee funding can be found in Huff, The Evolution of the Process of Allocating Federal
Campus-based Student Financial Aid to Postsecondary Education Institutions, pp. 40-41.
14 Each year, ED determines the amount allocated to comparable institutions by calculating
the average federal program expenditures per enrolled student for each of the three programs
for six types of institutions: cosmetology, business, trade and technical, art schools, other
proprietary, and non-proprietary.
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according to formula-based procedures. The first step in the fair share allocation
procedures involves determining each IHE’s institutional need. This is referred to
as FSEOG need for the FSEOG program, self-help need for the FWS program, and
adjusted self-help need for Perkins Loan FCCs. While the calculation of
institutional need differs slightly across programs, in general it is an expression of the
relationship between the average cost of attendance (COA) at an institution and the
average expected family contributions (EFCs) of the students who are FSA applicants
in attendance at that institution. The primary components of the formulas and how
they enter into the calculation of institutional need are described below.
Cost of Attendance. Under the formulas for each of the programs, an IHE’s
COA is calculated by first dividing the total tuition and fees received by that
institution over the course of the award year two years prior to the one for which
funds are being allocated, by the total number of students in attendance at the
institution at any time during that same year;15 and then adding to that amount a
living cost allowance and an allowance for books and supplies. COA is calculated
on the basis of a nine-month academic calendar. For award year (AY) 2004-2005,
the living cost allowance is $6,105 and the allowance for books and supplies is $450.
Adjustments are made to account for average time in attendance for IHEs with non-
traditional calendars, although this adjustment does not take into account whether
students attend on a full-time or part-time basis. COA also is calculated separately
for undergraduate students and for graduate and professional students.16
Expected Family Contribution. Under the fair share formulas, composite
EFCs are assigned to students according to their status as either undergraduate or
graduate and professional students, their status as dependent or independent students
(although no distinction is made between independent students with dependents other
than a spouse, and those without), and where they fit within a series of income bands
established by ED. These composite EFCs are used in lieu of the actual EFCs that
are calculated for individual students on the basis of their completion of the Free
Application for Federal Student Assistance (FAFSA).17 As part of the allocation
procedures, each year ED calculates average EFCs for undergraduate dependent and
independent students, and graduate and professional students in each income band
using the FAFSA full applicant database. The Table of EFCs is shown in Table 1.
15 A simple headcount of students is used in calculating COA, as opposed to full-time
equivalent (FTE) students. It thus represents the cost of attendance of the average student.
In IHEs where there is a sizable part-time student population, this can result in the calculated
COA being substantially less than the COA of a full-time student.
16 While the cost of tuition and fees is institution specific, the allowances for living costs and
books and supplies are determined according to statutory provisions and are common for all
participating IHEs The living cost allowance is determined according to HEA
§413D(b)(3)(C), and adjusts from year to year. The allowance for books and supplies is
statutorily set at $450. Each of these amounts is based on a nine-month academic year.
17 For a discussion of need analysis and EFCs, see CRS Report RL32083, Federal Student
Aid Need Analysis: Background and Selected Simplification Issues, by Adam Stoll and
James B. Stedman.
CRS-8
Table 1. Table of EFCs Used in the Campus-Based Allocation
Procedures: AY2004-AY2005
Undergraduate
Graduate & Professional
Dependent
Independent
(Independent)
Income category
EFC
Income category
EFC
Income category
EFC
Automatic zero
$0
Automatic zero
$0
Automatic zero
$0
$0 to $2,999
$537
$0 to $999
$46
$0 to $999
$317
$3,000 to $5,999
$177
$1,000 to $1,999
$27
$1,000 to $1,999
$382
$6,000 to $8,999
$168
$2,000 to $2,999
$30
$2,000 to $2,999
$384
$9,000 to $11,999
$241
$3,000 to $3,999
$29
$3,000 to $3,999
$407
$12,000 to $14,999
$312
$4,000 to $4,999
$30
$4,000 to $4,999
$498
$15,000 to $17,999
$530
$5,000 to $5,999
$41
$5,000 to $5,999
$519
$18,000 to $23,999
$993
$6,000 to $7,999
$264
$6,000 to $7,999
$826
$24,000 to $29,999
$1,764
$8,000 to $9,999
$633
$8,000 to $9,999
$1,456
$30,000 to $35,999
$2,727
$10,000 to $11,999
$925
$10,000 to $11,999
$2,072
$36,000 to $41,999
$3,699
$12,000 to $13,999 $1,193
$12,000 to $13,999
$2,686
$42,000 to $47,999
$4,733
$14,000 to $15,999 $1,374
$14,000 to $15,999
$3,221
$48,000 to $53,999
$5,984
$16,000 to $17,999 $1,529
$16,000 to $17,999
$3,640
$54,000 to $59,999
$7,435
$18,000 to $19,999 $1,690
$18,000 to $19,999
$4,083
$60,000 and above
$19,579
$20,000 and above $5,501
$20,000 and above $11,835
Source: U.S. Department of Education, Office of Postsecondary Education, Campus-Based Programs
Branch, Campus-Based Tentative Funding Levels. Attachment C: Expected Family Contribution
Averages, CB-04-01, Jan. 23, 2004.
Institutional Need. In general, institutional need is an expression of the
relationship between an institution’s COA and the calculated EFCs of the students
at that institution who have applied for FSA aid. It represents the aggregate financial
need of students at the institution. Institutional need is obtained by performing a
series of calculations involving the relationship between COA and EFC for each of
the various categories of students, and then summing the results of these calculations
to arrive at a figure representative of the aggregate financial need of all students at
the IHE. The procedures used in calculating institutional need for each of the three
programs are summarized below.18
FSEOG Need. The calculation of FSEOG need is based only on information
reported about students eligible to participate in the program — undergraduate
students who have not yet earned a first baccalaureate degree. For each participating
IHE, institutional FSEOG need is calculated as follows:
! Step 1: For each undergraduate student income category in the
Table of EFCs (see Table 1), subtract EFC from 75% of the average
18 The procedures used in allocating funds to institutions under the campus-based programs
are specified in U.S. Department of Education, Office of Postsecondary Education, Campus-
Based Operations Branch, Dear Partner Letter CB-04-01, Campus-Based Tentative Funding
Levels. Attachment A: Explanation of Worksheets, Jan. 23, 2004. Available at
[http://www.ifap.ed.gov/dpcletters/CB0401.html].
CRS-9
undergraduate COA.19 Then take the greater of this amount, or $0.
(The results are approximations of the financial need of students in
each income category.)
! Step 2: For each undergraduate student income category, multiply
the number of students in that income category by the corresponding
results obtained in Step 1.
! Step 3: Sum the results of Step 2 across all undergraduate income
categories.
! Step 4: Subtract the total amount of Pell Grant aid and Leveraging
Education Assistance Partnership/Special Leveraging Education
Assistance Partnership (LEAP/SLEAP) program aid received by
students at the institution from the result obtained in Step 3. The
resulting amount is FSEOG Need.
FSEOG Need represents the aggregate financial need of the undergraduate FSA
applicants at an institution who are eligible to participate in the FSEOG program.
FSEOG Need is specific to the FSEOG program and is the difference between
students’ estimated EFCs and 75% of their institution’s average undergraduate COA,
summed across all students, minus the Pell Grant and LEAP/SLEAP aid available to
students at the IHE. FSEOG Need thus shows the amount of aid that would need to
be provided to students at an institution so that 75% of their cost of attendance, in the
aggregate, could be met by the combination of their expected family contribution and
federal grant aid (i.e, Pell Grants, LEAP/SLEAP, and FSEOG). The formula is based
on the assumption that 25% of need would be met by other sources.
Self-Help Need. Self-Help Need is used in the fair-share allocation formula
for the FWS program. Its calculation is based on information reported for all
students eligible to participate in the program. For each participating IHE, Self-Help
Need is calculated as follows:
! Step 1: Calculate 25% of the average undergraduate COA.
! Step 2: For each undergraduate student income category in the
Table of EFCs (see Table 1), subtract EFC from the average
undergraduate COA. Take the greater of this amount, or $0.
! Step 3: For each undergraduate student income category, multiply
the number of students in that income category by the lesser of the
results obtained in either Step 1 or Step 2 for the corresponding
income category.
! Step 4: Sum the results obtained in Step 3 across all undergraduate
student income categories.
19 At the time the fair share allocation formulas were developed, data from a nationwide
study showed that for undergraduates, approximately 70% of college costs were being met
by a combination of EFC, scholarships, and grants, while approximately 30% of costs were
being met by self-help aid (loans and employment). The panel of experts responsible for
developing the formulas decided that to maintain consistency with these ratios,
Supplemental Educational Opportunity Grants would provide grant aid up to the point of
meeting 70% of college costs, while funding for the other two programs would provide aid
to meet up to 30% of college costs. When the formulas were implemented, these
percentages were revised to 75% and 25%, respectively.
CRS-10
! Step 5: For each graduate and professional student income category
in the Table of EFCs (see Table 1), subtract EFC from the average
graduate and professional COA. Take the greater of this amount, or
$0.
! Step 6: For each graduate and professional student income
category, multiply the number of students in that category by the
corresponding results obtained in Step 5.
! Step 7: Sum the results obtained in Step 6 across all graduate and
professional student income categories.
! Step 8: Sum the results obtained in Step 3 and Step 6. This amount
is an institution’s Self-Help Need.
Self-Help Need represents the aggregate financial need of all FSA applicants at
an institution who are enrolled in programs eligible for campus-based aid. Self-Help
Need is the lesser of either 25% of an institution’s average undergraduate COA, or
the difference between undergraduate students’ estimated EFCs and their institution’s
average undergraduate COA, summed across all undergraduate students; plus the
difference between graduate and professional students’ estimated EFCs and their
institution’s average graduate and professional student COA, summed across all
graduate and professional students. Self-Help Need is a composite figure that
expresses different characterizations of need for undergraduate students than it does
for graduate and professional students. For undergraduate students, it shows the
amount of aid that would need to be provided so that an amount up to 25% of
undergraduate students’ cost of attendance, in the aggregate, could be met by the
combination of their EFC and FWS aid. For graduate and professional students, it
shows the amount of aid that would need to be provided so that the entire difference
between students’ EFCs and their institution’s COA could be met by FWS aid.
Adjusted Self-Help Need. Adjusted Self-Help Need is used in the formula
for allocating FCCs to institutions under the Perkins Loan program. It is calculated
similarly to Self-Help Need, except for being adjusted as indicated below.
! Step 1 through Step 8: Same as for Self-Help Need.
! Step 9: Multiply the IHE’s collections on previously awarded
Perkins Loans in the second year prior to the year in which funds are
to be allocated by 1.21.
! Step 10: Subtract the result obtained in Step 9 from the result
obtained in Step 8.
! Step 11: If the IHE has a cohort default rate20 that equals or exceeds
25%, then multiply the result obtained in Step 10 by 0; otherwise,
20 The cohort default rate for an institution is defined as the percentage of current and former
students entering repayment on Perkins Loans received for attendance at that institution who
default on their loans before the end of the following award year. For institutions with less
than 30 students entering repayment in any year, the cohort default rate is calculated over
a three-year period. In general, a Perkins Loan is considered to be in default if the borrower
has failed to comply with the terms of the promissory note or failed to make payments on
a loan for 240 days (for a loan repayable monthly) or 270 days (for a loan repayable
quarterly).
CRS-11
multiply it by 1. This amount is an institution’s Adjusted Self-Help
Need.
Adjusted Self-Help Need expresses aggregate student need for IHEs that are
participating in the Perkins Loan program and which are requesting FCCs in a similar
manner as does Self-Help Need for the FWS program, except that it adjusts an
institution’s need by accounting for collections that are expected to be made on
outstanding Perkins Loans. It is noteworthy that for IHEs participating in both the
FWS and Perkins Loan programs, Self-Help Need and Adjusted Self-Help Need,
respectively, each measure what is essentially the ‘same’ student need.
Fair Share Procedures. The calculations to determine an institution’s fair
share of funding, its fair share shortfall, and its fair share increase are relatively
straightforward compared with the calculation of institutional need. As was shown
in Figure 1, for any of the campus-based programs, an institution’s fair share is the
amount of the annual appropriation an institution would receive if all funds were
allocated in the same proportion as the ratio of institutional need relative to the
national total of the institutional need of all participating IHEs. An institution’s fair
share shortfall is the difference between its fair share amount and the amount it
received as a base guarantee. Funds remaining after the allocation of base guarantees
are allocated as fair share increases. IHEs receive fair share increases in proportion
to their share of the national total of shortfalls.21
Total Allocation. In general, an institution’s total allocation is the sum of its
base guarantee and its fair share increase. However, subsequent to the allocation of
base guarantees and fair share increases, small adjustments may be made to IHEs’
allocations. These include allocation reductions as a penalty for the underutilization
of funds in prior award years and the reallocation of such funds to other IHEs with
remaining funding shortfalls.
Analysis of the Allocation of Funds to Institutions
Under the Campus-Based Programs
This part of the report analyzes the allocation of funds to IHEs according to the
current campus-based allocation procedures. This analysis draws upon information
from both the Fiscal Operations Report and Application to Participate (FISAP) and
from 2004-2005 award year (FY2004) allocations data.22 The two major components
of the allocation procedures are analyzed: the base guarantee and the fair share
increase. The primary unit of analysis used throughout the remainder of the report
is categories of institutions grouped by average COA. Cost of attendance is used as
21 Since some IHEs may request less than their fair share, funds may remain after the
allocation of fair share increases. Any remaining funds are allocated to IHEs that continue
to have a shortfall through a second iteration of the fair share procedures. Funds received
through this second iteration are called additional fair share increases.
22 Allocations for AY2004-2005 are based on data from AY2002-2003 that were reported
by IHEs on the FISAP.
CRS-12
the primary unit of analysis because, as a variable in the fair share allocation
formulas, COA has an important impact in affecting the allocation of funds to
institutions. Later, it will be shown that there are also large differences among
categories of institutions, grouped by COA, in the percentage of students awarded
campus-based aid and in average award amounts.
Institutional COA as a Unit of Analysis
Categories of institutions grouped by COA are the primary unit of analysis used
in this report. These categories were created by simply ranking all the IHEs that
participate in one or more of the campus-based programs in descending order
according to their average COA, and then grouping them into quintiles containing
approximately equal numbers of institutions.23 The top quintile of IHEs was further
subdivided into two subgroups, with the top subgroup containing the top 5% of IHEs
ranked according to COA, and the other subgroup containing the next 15%. Table
2 shows the number and percent of IHEs in each COA category. It also shows the
distribution of institutions within each category by sector.
Table 2. Institutions Participating in the Campus-Based
Programs, Categorized by COA and Sector: AY2004-2005
1. Low
2. Lower- 3. Middle 4 .Upper-
5. High
6. Very
Category
cost
mid cost
cost
mid cost
cost
high cost
Total
Less than $7,500 to $9,000 to $11,500 to $16,500 to
$26,000
COA
$7,500
$8,999
$11,499
$16,499
$25,999
and above
Institutions
798
805
775
792
605
194
3,969
(% of total)
20.1%
20.3%
19.5%
20.0%
15.2%
4.9%
100%
Distribution by sector
Public 2-yr.
576
375
15
4
3
0
973
Public 4-yr.
9
148
272
102
18
1
550
Private 2-yr.
17
23
45
58
21
2
166
Private 4-yr.
8
18
138
397
513
187
1,261
Proprietary
188
241
305
231
50
4
1,019
Sources: CRS calculations; U.S. Department of Education, Office of Postsecondary Education,
FISAP data, Feb. 27, 2004.
The relationship between institutional sector and COA is noteworthy. As might
be expected, most public two-year IHEs are in the two lowest cost categories and the
majority of private four-year IHEs are in the high-cost and very high-cost categories.
23 Each quintile contains approximately, but not exactly, the same number of institutions,
because cut points between categories were rounded to the nearest hundred dollars for ease
of presentation. Thus, each grouping consists of institutions with COAs falling within
specified ranges. The number of IHEs within each COA category varies from program to
program, because the various institutions have elected to participate in different
combinations of programs (program participation by institutional COA category is shown
in Table 12). Finally, since COA is calculated separately for undergraduate students and
graduate and professional students, a weighted average of the two is used in this analysis.
CRS-13
However, some private four-year IHEs are middle cost, and a few are low cost.
Public four-year and proprietary institutions are distributed somewhat evenly across
the lower-middle to upper-middle cost categories. Since the allocation formulas are
based in large part on an institution’s COA, yet do not take into account its sector,
it is expected that the use of COA as a unit of analysis will lead to more telling
observations about how the allocation formulas affect the amount of funds IHEs
receive and ultimately, the distribution of aid to students attending those institutions.
Base Guarantee
As explained earlier, under current law, IHEs participating in the campus-based
programs receive a base guarantee that bears a direct relationship to the amount of
funding they received in prior years. At the time the fair share allocation formulas
were introduced, it was anticipated that base guarantees would eventually be phased
out, and that this would be done gradually in a manner that would not result in wild
fluctuations in the amount of funds institutions received. For the FSEOG program,
provisions to phase out the base guarantee were even included as part of the
authorizing statute for a period of time. Under the Higher Education Amendments
of 1980 (P.L. 96-374), the allocation procedures were amended to call for a 20%
decrease in each institution’s base guarantee for every $20 million appropriated for
the program in excess of $400 million. However, the Higher Education Act
Technical Amendments of 1982 (P.L. 97-301) prevented this provision from being
implemented. Since then, base guarantees have remained a part of the allocation
procedures for each of the campus-based programs.24
Under the Higher Education Amendments of 1986 (P.L. 99-498) the campus-
based allocation procedures were amended to provide IHEs with base guarantees
equal to 100% of their 1985 allocation. The revised allocation procedures also
provided that after base guarantees were awarded, 25% of the funds remaining from
each program’s appropriation were then allocated (as pro rata shares) to IHEs in
amounts proportional to their base guarantees. Only 75% of the funds remaining
after the allocation of base guarantees were allocated according to the fair share
formulas. Under the Higher Education Amendments of 1998 (P.L. 105-244), the
procedures for determining base guarantees were revised again. These procedures
(described earlier in this report) remain in effect.
Prior to the Higher Education Amendments of 1986, the campus-based
allocation procedures had specified that funds would first be apportioned to states,
primarily on the basis of the population in each state, prior to being allocated to IHEs.
Thus, an IHE’s allocation depended in part on the state in which it was located.
Since the 1986 Amendments, ED has allocated funds directly to IHEs and the state
in which an institution is located has not played a direct role in funding allocations.
However, the legacy of the base guarantee allocation procedures has had the effect
of perpetuating the distribution of funds to IHEs in a manner that to an extent reflects
the distribution of the student age population across states and IHE’s institutional
24 P.L. 97-301 effectively established base guarantees (at the time, referred to as conditional
guarantees) set at the FY1981 funding level, for each of the three programs, for FY1983
through FY1985.
CRS-14
need as they existed years ago. Given that institutions have grown at different rates,
and so has the aggregate financial need of their students, some institutions’ base
guarantees may be close to or even exceed their fair share of funds, while other’s
base guarantees may represent only a fraction of their fair share. Often, IHEs have
grown faster in some parts of the country than in others.
Table 3 shows (a) the total number of IHEs participating in each of the campus-
based programs, (b) the number of IHEs with base guarantees that are greater than
their fair share, and (c) the number that are eligible to receive a fair share increase
above their base guarantee allocation. The table also shows (d) the percentage of
total program funding that is allocated for base guarantees. Totals are provided for
each program, as well as by COA categories, and by state.
The table shows that the majority of the funding provided for each of the
campus-based programs is allocated to meet institutions’ base guarantees. In the
FWS program, two-thirds of funding goes to base guarantees and for the Perkins
Loan program, over 92% of funding is provided to meet base guarantees. There does
not appear to be a strong relationship between institutional COA and whether IHEs
receive funding only according to base guarantee procedures, or if they also receive
a fair share increase. However, in each of the programs, middle-cost IHEs receive
a somewhat greater proportion of their funding for base guarantees than do IHEs on
average. Also, under the FSEOG program, very high-cost IHEs are allocated a much
greater proportion of their funding for base guarantees than are IHEs on average.
When examining the proportion of funds allocated for base guarantees by state,
Table 3 shows wide variation in the FSEOG and FWS programs. In some states,
more than 90% of funding goes toward meeting base guarantees, while in others base
guarantees comprise less than half of total allocations. This degree of variation may
have resulted in part because in some states, IHEs may have seen considerable
growth in institutional need since the base guarantee procedures were implemented,
whereas in others, base guarantee funding meets or exceeds total institutional need
for most institutions.
In the Perkins Loan program, more than 90% of funds are allocated for base
guarantees in all but a few states. This is likely because, in contrast to the other two
campus-based programs, appropriations for Perkins Loan FCCs have decreased
substantially since the early 1980s. When appropriations decrease, base guarantees
comprise a greater proportion of total funding. Through FY2004, funds remained
available for Perkins Loan FCC base guarantees and fair share increases, despite
declining appropriations, largely because a considerable number of institutions have
ceased participation in the program. Had this not occurred, it is likely that funds
would have been available only for the allocation of base guarantees. (No funds were
appropriated for Perkins Loan FCCs for FY2005.)
Given that more than half of funds appropriated for the campus-based programs
are allocated for base guarantees, if base guarantees were to be reduced or phased out
so that all funds were allocated according to the fair share formulas, there could be
a noticeable shift in the distribution of funds allocated to IHEs. Any change in the
distribution of funds to IHEs would be due to the application of the fair share
formulas. The fair share formulas are analyzed in the next section.
CRS-15
Table 3. Institutions for Which the Base Guarantee Is Greater Than Its Fair Share Versus Institutions Receiving a
Fair Share Increase; and Percent of Total Funding Allocated for Base Guarantees, by COA Category and State,
by Program: (AY2004-2005)
FSEOG
FWS
Perkins Loans (FCC)
Institutionsa
Pct. of total
Institutionsa
Pct. of total
Institutionsa
Pct. of total
Category
funding
funding
funding
Base
allocated
Base
allocated
Base
allocated
Eligible for
Eligible for
Eligible for
guarantee
for base
guarantee
for base
guarantee
for base
Total
fair share
Total
fair share
Total
fair share
>= fair
guaranteesb
>= fair
guaranteesb
>= fair
guaranteesb
increase
increase
increase
share
share
share
Total
3,804
1,025
2,779
59.2%
3,359
983
2,376
66.2%
1,392
607
785
92.6%
COA Category
1. Low cost
784
282
502
52.5%
640
159
481
61.1%
42
24
18
96.0%
2. Lower-mid cost
798
204
594
56.6%
623
164
459
70.0%
137
55
82
91.6%
3. Middle cost
755
199
556
60.4%
614
225
389
76.9%
270
123
147
94.6%
4. Upper-mid cost
735
181
554
56.6%
703
224
479
68.2%
344
153
191
91.9%
5. High cost
562
123
439
59.8%
592
180
412
60.3%
436
179
257
92.3%
6. Very high cost
170
36
134
71.0%
187
31
156
57.4%
163
73
90
91.6%
State
Alabama
63
11
52
53.7%
61
20
41
75.7%
14
5
9
87.9%
Alaska
7
4
3
90.1%
6
4
2
94.7%
0
N/A
N/A
N/A
Arizona
59
17
42
48.0%
45
10
35
69.8%
14
3
11
85.3%
Arkansas
45
15
30
60.3%
40
22
18
87.0%
12
7
5
97.5%
California
401
97
304
53.0%
343
64
279
55.9%
125
52
73
92.5%
Colorado
62
15
47
54.9%
54
11
43
64.5%
29
14
15
95.8%
Connecticut
54
16
38
70.4%
44
10
34
65.3%
14
6
8
91.2%
Delaware
9
1
8
70.6%
8
1
7
83.9%
1
1
0
100.0%
District of Columbia
13
4
9
55.3%
12
0
12
36.1%
7
2
5
81.4%
Florida
157
34
123
44.7%
130
25
105
49.7%
34
8
26
73.2%
Georgia
109
12
97
41.8%
109
25
84
56.6%
21
5
16
92.3%
CRS-16
FSEOG
FWS
Perkins Loans (FCC)
Institutionsa
Pct. of total
Institutionsa
Pct. of total
Institutionsa
Pct. of total
Category
funding
funding
funding
Base
allocated
Base
allocated
Base
allocated
Eligible for
Eligible for
Eligible for
guarantee
for base
guarantee
for base
guarantee
for base
Total
fair share
Total
fair share
Total
fair share
>= fair
guaranteesb
>= fair
guaranteesb
>= fair
guaranteesb
increase
increase
increase
share
share
share
Hawaii
17
8
9
90.6%
13
4
9
94.7%
3
3
0
100.0%
Idaho
11
7
4
74.6%
11
2
9
75.0%
6
5
1
99.4%
Illinois
152
42
110
52.4%
135
29
106
52.1%
57
21
36
90.8%
Indiana
62
10
52
58.3%
56
12
44
59.4%
37
21
16
93.2%
Iowa
72
20
52
60.2%
58
20
38
64.7%
33
20
13
95.6%
Kansas
60
27
33
83.4%
53
29
24
85.0%
26
21
5
96.9%
Kentucky
51
11
40
45.6%
37
23
14
76.8%
32
14
18
93.8%
Louisiana
59
18
41
51.2%
39
14
25
78.8%
16
7
9
96.2%
Maine
32
19
13
95.3%
27
16
11
95.8%
16
8
8
98.5%
Maryland
62
16
46
66.1%
59
19
40
68.5%
22
9
13
91.1%
Massachusetts
124
51
73
85.0%
103
42
61
83.1%
56
22
34
93.3%
Michigan
92
33
59
69.3%
86
29
57
67.8%
26
16
10
98.0%
Minnesota
90
30
60
77.7%
82
37
45
77.3%
41
25
16
93.4%
Mississippi
34
9
25
65.6%
33
13
20
85.7%
10
3
7
98.4%
Missouri
85
16
69
55.7%
81
19
62
62.3%
40
16
24
91.0%
Montana
21
5
16
58.1%
21
11
10
93.0%
7
3
4
98.5%
Nebraska
36
10
26
71.2%
30
9
21
73.6%
16
8
8
98.9%
Nevada
13
1
12
40.9%
11
0
11
54.0%
4
0
4
90.8%
New Hampshire
24
7
17
80.2%
22
9
13
82.2%
15
5
10
95.8%
New Jersey
87
24
63
57.9%
57
19
38
68.4%
16
7
9
91.7%
New Mexico
22
13
9
76.6%
21
12
9
88.1%
10
6
4
93.8%
New York
263
64
199
49.4%
245
70
175
55.0%
115
35
80
88.8%
North Carolina
120
26
94
66.8%
119
28
91
68.4%
42
20
22
94.7%
North Dakota
21
11
10
93.5%
21
11
10
95.4%
14
6
8
95.4%
CRS-17
FSEOG
FWS
Perkins Loans (FCC)
Institutionsa
Pct. of total
Institutionsa
Pct. of total
Institutionsa
Pct. of total
Category
funding
funding
funding
Base
allocated
Base
allocated
Base
allocated
Eligible for
Eligible for
Eligible for
guarantee
for base
guarantee
for base
guarantee
for base
Total
fair share
Total
fair share
Total
fair share
>= fair
guaranteesb
>= fair
guaranteesb
>= fair
guaranteesb
increase
increase
increase
share
share
share
Ohio
137
25
112
54.7%
117
21
96
65.2%
68
28
40
89.7%
Oklahoma
61
23
38
66.4%
53
22
31
75.7%
15
5
10
97.2%
Oregon
49
26
23
87.9%
44
18
26
82.7%
29
15
14
93.5%
Pennsylvania
191
30
161
55.6%
168
30
138
62.1%
87
25
62
90.9%
Puerto Rico
60
8
52
48.3%
56
15
41
82.1%
6
4
2
98.3%
Rhode Island
17
5
12
58.0%
13
4
9
68.0%
9
3
6
87.8%
South Carolina
58
7
51
49.8%
54
15
39
73.9%
22
10
12
95.4%
South Dakota
21
11
10
87.6%
22
14
8
95.2%
11
8
3
99.0%
Tennessee
99
30
69
50.4%
95
26
69
62.4%
33
19
14
91.5%
Texas
205
47
158
50.1%
168
44
124
67.8%
49
22
27
95.4%
Utah
19
11
8
66.4%
17
7
10
71.1%
11
9
2
97.9%
Vermont
22
16
6
93.7%
22
12
10
88.0%
10
4
6
95.2%
Virginia
95
18
77
57.7%
87
31
56
68.5%
36
14
22
91.0%
Washington
69
19
50
84.5%
67
17
50
77.7%
26
9
17
93.9%
West Virginia
33
13
20
69.3%
30
13
17
86.6%
17
4
13
96.7%
Wisconsin
61
30
31
88.4%
56
20
36
80.8%
30
23
7
96.9%
Wyoming
9
2
7
55.4%
9
2
7
66.9%
2
1
1
95.4%
Outlying Areas
9
0
9
22.4%
9
3
6
89.3%
0
N/A
N/A
N/A
Source: CRS calculations; U.S. Department of Education, Office of Postsecondary Education, Campus-Based Programs Allocation Data, Apr. 2, 2004.
Note: N/A. Not applicable.
a. Includes only those institutions for which information necessary for the calculation of COA has been reported. Institutions for which this information is not available are generally
first or second year program participants.
b. Institutional base guarantee as a percentage of total institutional funding allocations prior to allocation reductions for the underutilization of funds and the reallocation of underutilized
funds from prior award years.
CRS-18
Fair Share Increases
Under the fair share formulas, IHEs are eligible to receive fair share increases
to help reduce the shortfall between their base guarantee and their fair share of funds.
Earlier in this report, it was shown that an institution’s fair share is the amount of
funds it would receive if the total appropriation were allocated entirely on the basis
of institutional need. It was also explained that institutional need is an expression of
the relationship between the average cost of attendance (COA) at an institution and
the average expected family contributions (EFCs) of the FSA applicants who are
students at that institution. This section examines the relationship between COA and
EFC in detail and shows how this affects the amount of funds IHEs receive for fair
share increases.
Average Student EFCs Used in Fair Share Formulas. When the fair
share formulas were developed, a uniform methodology was adopted in which
average EFCs are calculated for categories of students grouped by income bands and
dependency status, in lieu of using actual EFCs of the students at each institution.25
This procedure was adopted, in part, because it could be administratively burdensome
for institutions to collect and report EFCs for each student in attendance and because
it is presumed that students with the same dependency status and with comparable
incomes will have similar EFCs.26 In implementing the fair-share formulas, ED
calculates average EFCs for students categorized into 14 income bands. Students
who have received an automatic zero EFC based on the information reported in their
FAFSA, are assigned an EFC of $0.27 (The Table of EFCs is shown in Table 1). The
income bands used in the Table of EFCs are determined administratively by ED and
have been adjusted only a few times since the formulas were first implemented. The
last revision to the income bands occurred in 1994 for the 1995-1996 award year,
when the highest income bands were raised to $60,000 and above for dependent
students, and to $20,000 and above for independent students; and some lower income
bands were consolidated.28
25 U.S. Office of Education, Final Report of the Panel of Experts, pp. 72-74.
26 Presumably it might now be feasible for IHEs to collect and report information on
students’ actual EFCs. However, the current practice of determining campus-based funding
allocation prior to the start of each award year still necessitates that fair share allocations
be based on the characteristics of the students that attended participating IHEs in prior
award years.
27 At present, a dependent student receives an automatic zero EFC if neither the student nor
his or her parents were required to file an IRS Form 1040 and the parents’ combined
adjusted gross income or earned income is less than $15,000. An independent student with
dependents other than a spouse receives an automatic zero EFC if the student (and his or her
spouse, if applicable) was not required to file an IRS Form 1040 and the student’s (and
spouse’s) combined adjusted gross income or earned income is $15,000 or less. The FISAP
data analyzed in this report includes eligible students attending participating institutions in
AY2002-2003, in which the income cut-off to receive an automatic zero was $13,000.
28 U.S. Department of Education. Dear Financial Aid Administrator Letter. CB-94-9. May
1994. Previously, the highest income band was $45,000 and above for undergraduate
dependent students, and $15,000 and above for undergraduate independent students, and for
(continued...)
CRS-19
Since the relationship between an institution’s COA and students’ average EFCs
determines its institutional need, it is important that the average EFCs for each income
band reflect as closely as possible the actual EFCs of students at participating
institutions. It appears, however, that with the growth in incomes that has occurred over
the years, the current income bands used in the fair share formulas may no longer be as
reliable a proxy of actual student EFCs for upper-income students as they once were
because so many students are in the highest income category. At many institutions —
particularly high-cost institutions — students in the highest income category often
comprise the largest group of students. At low-cost IHEs, students in the higher-income
categories do not contribute to the tabulation of institutional need because their
composite EFC is typically greater than the IHE’s COA. However, at high-cost
institutions, the need calculated for students in the upper income bands often constitutes
the majority of institutional need.
The table of EFCs also does not take into account whether independent students
have their own dependents. (In general for FSA purposes, independent students with
dependents and those without are categorized separately.) Since slightly more than half
of undergraduate students are classified as independent for FSA purposes, and with the
significant effect that having dependents typically has on lowering students’ EFCs,
calculating average EFCs for independent students without taking into account whether
they have their own dependents may result in average EFCs that mask or cancel out the
differences in EFCs that exist for independent students with dependents and those
without dependents. This could affect the calculation of institutional need if independent
students with dependents and those without dependents are unevenly distributed across
institutions. For example, if independent students with dependents attend certain
institutions in greater (or lower) proportions than do independent students without
dependents, then the practice of combining all independent students as a single group
could result in lower (or higher) amounts of institutional need being calculated for them
than otherwise might occur if independent students were treated separately.29
Figure 2 shows estimates based on data from the 2004 National Postsecondary
Student Aid Survey (NPSAS) of the number of undergraduate dependent students in
each of the income bands of the Table of EFCs used in the campus-based formulas.30
The distribution of students is concentrated at the middle- and upper-income
categories, with the most students in the highest income band. This distribution
28 (...continued)
graduate and professional students
29 Analysis of NPSAS 2004 data shows that within some of the income categories used in
the Table of EFCs, the proportion of undergraduate independent students with dependents
versus the proportion of undergraduate independent students without dependents differs
across institutional sectors.
30 NPSAS 2004 data presented in Figure 2 and Figure 3 are filtered to include only students
who applied for federal aid. This represents an approximation of the population that
completed a FASFA, which is the population used by ED in preparing the Table of EFCs.
This is a larger population than that of students who attend institutions participating in the
campus-based programs. Since not all FAFSA filers ultimately attend a postsecondary
institution, there may be differences between the NPSAS sample and the complete FAFSA
database.
CRS-20
suggests that a more accurate reflection of upper-income students EFCs could be
obtained if additional income bands were added for dependent students from families
with incomes above $60,000.
Figure 2. Estimated Distribution of Dependent Students Who
Applied for Federal Aid Across Income Categories in Table of EFCs:
2003-2004
$0 to $2,999
$3,000 to $5,999
$6,000 to $8,999
$9,000 to $11,999
$12,000 to $14,999
ry
$15,000 to $17,999
o
g
te
$18,000 to $23,999
a
C
$24,000 to $29,999
me
o
c
$30,000 to $35,999
In
$36,000 to $41,999
$42,000 to $47,999
$48,000 to $53,999
$54,000 to $59,999
$60,000 and above
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Students
Source: U.S. Department of Education. National Center for Education Statistics. NPSAS 2004. Undergraduate Students.
Figure 3 shows estimates of the number of independent undergraduate students,
and graduate and professional students in each of the income bands used in the Table
of EFCs (Table 1). However, unlike the Table of EFCs, it also distinguishes
between independent students with dependents (both undergraduate, and graduate
and professional) and those without. Figure 3 shows that independent students are
concentrated in the highest income band. It also shows that independent students
with dependents and those without dependents are distributed unevenly across
income bands. Similar to the case with dependent students, it appears that more
accurate calculations of average EFCs might be obtained for independent students if
the top income band were broken up into multiple categories. In addition, given the
uneven distribution of independent students with and without dependents across the
various income bands, it appears that better approximations of students’ actual EFCs
could be made if average EFCs were calculated separately for independent students
with and without dependents.
























































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































CRS-21
Figure 3. Estimated Distribution of Independent Students Who
Applied for Federal Aid Across Income Categories in Table of EFCs:
2003-2004
$0 to $999
Undergrad. Indep. w/o Dependent
Undergrad. Indep. with Dependent
$1,000 to $1,999
Grad./Prof. w/o Dependent
$2,000 to $2,999
Grad./Prof. with Dependent*
$3,000 to $3,999
$4,000 to $4,999
gory
$5,000 to $5,999
te
a
$6,000 to $7,999
me C
o
$8,000 to $9,999
Inc
$10,000 to $11,999
$12,000 to $13,999
$14,000 to $15,999
$16,000 to $17,999
$18,000 to $19,999
$20,000 and above
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Students
Source: U.S. Department of Education. National Center for Education Statistics. NPSAS 2004.
Undergraduate Students; and Graduate and First Professional Students.
Note: *Too small to be reported for all categories except $12,000 to $13,999, and $20,000 and above.
Average Need per Student. While at any particular institution, students with the
lowest incomes may be the primary recipients of campus-based aid, the amount of
institutions’ allocations as determined under the campus-based fair share formulas,
by design, is based on the aggregate need of all students eligible for FSA aid at the
institution. In the current postsecondary education environment in which college
costs have been rising rapidly in recent years, it is not uncommon under the fair share
formulas for institutional need at higher-cost IHEs to be comprised largely of the
financial need of middle- and upper-income students, whereas at lower-cost IHEs,
institutional need is comprised primarily of the financial need of lower- and middle-
income students. In many instances, students attending high-cost institutions who
are from upper-income families have more financial need than students attending
lower-cost institutions who are from lower-income families.
Institutional need is the sum of the financial need of the students attending any
particular IHE. The critical factor in the calculation of institutional need is the
relationship between institutional COA and students’ composite EFCs. At lower-cost
IHEs, upper-income students’ composite EFCs are often so high relative to COA that
under the formulas, they do not contribute to institutional need. However at higher-
cost IHEs, the relationship between the EFC assigned to students in the highest-























































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































CRS-22
income band and COA often still results in financial need being calculated for those
students. Combined with the even greater need calculated for lower-income students,
this can result in very high amounts of institutional need being calculated for high-
cost IHEs. Figure 4 shows the average amount of need calculated under the fair
share formulas for each program, by category of institution, on a per-student basis.
Figure 4. Average Amount of Need Calculated per Eligible Student
According to the Fair Share Formulas, by COA Category:
AY2004-2005
$12,000
$10,000
t
en
d
$8,000
Stu
le
ib
$6,000
r Elig
e
p
$4,000
ed
Ne
$2,000
$0
1. Low cost
2. Lower-mid
3. Middle cost
4. Upper-mid
5. High cost
6. Very high
cost
cost
cost
FSEOG*
FWS**
Perkins Loans***
COA Category
Sources: CRS calculations; U.S. Department of Education. Office of Postsecondary Education. FISAP data (Feb. 27, 2004).
Notes: *FSEOG need; **Self-help need; ***Adjusted self-help need.

Figure 4 demonstrates that on a per-student basis, the largest amounts of need
are calculated for IHEs with the highest COAs. While it is not surprising that
students with any given EFC will have more need if they attend institutions with high
COAs than if they attend lower-cost institutions, the effect that this has on the
distribution of aid to institutions and the subsequent availability of aid to students
attending these institutions is striking. This is especially so, because as will be
shown later in this report, low- and middle-income students constitute the greatest
proportion of students at low-cost institutions, and upper-income students make up
the greatest proportion of those attending high-cost institutions. The design of the
fair share formulas, however, results in significantly greater amounts of need being
calculated for students at high-cost institutions than for students at low-cost
institutions. In many instances, significantly more need is calculated for upper-
income students at high-cost institutions than for students with very low EFCs who
attend low-cost institutions. This highlights a very important point about need-based
financial aid — need is relative to the COA at the institution a student attends.
Relationship Between Student Need and Maximum Award
Amounts. The fair share allocation procedures were developed to ensure that
CRS-23
campus-based funding would be allocated to IHEs objectively on the basis of need.
However, since COAs are so high at some institutions, the amount of need calculated
on a per-student basis at higher-cost institutions often far exceeds the maximum
amount authorized to be awarded to students under the FSEOG and Perkins Loan
programs (see Table 4). (There is no specific maximum award amount in the FWS
program.) Thus, if sufficient federal funding were to be made available to provide
institutions with allocations equal to their institutional need, some conceivably would
be unable to distribute it all as campus-based aid to students because of statutory
limitations on maximum award amounts and because of the requirement that federal
funds must be matched with institutional funds (generally according to a 3:1 ratio).
Table 4. Maximum Award Amounts by Program
Perkins Loansb
Program
FSEOGa
FWS
Undergraduate
Grad./Prof.
Maximum
student’s
$4,000
$4,000
$6,000
Award
unmet need
Sources: HEA, §§413B, 413C, 443,463, 464.
a. Maximum award may be increased to $4,400 for students studying abroad.
b. Maximum award may be increased by 20% for students studying abroad.
Tabulation of Institutional Need. It was just shown that there are stark
differences between institutions with high and low COAs in the amount of need
calculated on a per-student basis. This section shows that there are also significant
differences between categories of IHEs in how the aggregate financial need of
different types of students contributes to the tabulation of institutional need. The
tabulation of institutional need is examined for each of the three campus-based
programs below.
FSEOG Need. Figure 5 shows for each of the categories of IHEs grouped by
COA how FSEOG Need is the aggregate financial need attributable to different types
of students. It also shows the effect that subtracting total Pell Grant and
LEAP/SLEAP aid awarded to students has in the determination of FSEOG need.
Each column represents the aggregate financial need of students attending IHEs in
each category. Shaded areas within each column represent the portion of aggregate
financial need attributable to different types of students. The checkered area in the
negative portion of the graph represents Pell Grant and LEAP/SLEAP aid awarded
to students at IHEs in each category. Total aggregate FSEOG need per category is
indicated by the black bars. (This shows the result of subtracting Pell Grant and
LEAP/SLEAP aid from aggregate student financial need.) The table at the bottom
of the figure shows dollar amounts of aggregate financial need attributable to
different types of students, as well as total Pell Grant and LEAP/SLEAP aid.
Upon examination, it is evident that undergraduate independent students,
particularly those with incomes of less than $16,000, have the greatest amount of
need in the aggregate and that the need calculated for these students represents the
greatest portion of total need at the lowest-cost institutions. It is also apparent that













































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































CRS-24
significant amounts FSEOG need are calculated for undergraduate dependent
students in the highest income band only at institutions with the highest COAs. In
each successively higher-cost group of institutions, greater amounts of need are
calculated for students in the higher income bands, while lesser amounts are
calculated for students in the lower income bands.
Figure 5. Aggregate FSEOG Need Attributable to Eligible Students
by Type and Income, by COA Category: AY 2004-2005
$10,000,000,000
$8,000,000,000
$6,000,000,000
Need
$4,000,000,000
e FSEOG
at
g
$2,000,000,000
gre
g
A
$0
-$2,000,000,000
-$4,000,000,000
2. Lower-mid
4. Upper-mid
6. Very high
1. Low cost
3. Middle cost
5. High cost
cost
cost
cost
Dependent: $60,000 and above
$1,000
$0
$12,000
$0
$688,000
$492,974,000
Dependent: $42,000 to $59,999
$30,361,000
$112,463,000
$403,001,000
$690,803,000
$1,065,276,000
$647,746,000
Dependent: $24,000 to $41,999
$567,870,000
$859,644,000
$1,307,349,000 $1,312,269,000 $1,326,693,000
$699,869,000
Dependent: $0 to $24,000
$1,396,792,000 $1,565,210,000 $1,976,237,000 $1,495,904,000 $1,128,341,000
$577,506,000
Independent: $16,000 and above
$424,657,000
$967,098,000
$1,188,269,000 $1,531,803,000
$958,191,000
$137,128,000
Independent: $0 to $15,999
$3,028,352,000 $3,282,656,000 $3,293,847,000 $2,358,378,000 $1,113,979,000
$236,192,000
Pell Grant & LEAP/SLEAP aid
-$2,570,180,000 -$3,144,642,000 -$2,942,074,000 -$1,733,552,000 -$787,798,000
-$224,527,000
Aggregate FSEOG need
COA Category
Sources: CRS calculations; U.S. Department of Education. Office of Postsecondary Education. FISAP data
(Feb. 27, 2004); U.S. Department of Education. Office of Postsecondary Education. Campus-Based
Programs Allocation Data (Apr. 2, 2004).
Figure 5 also shows how the amount of need calculated for students is offset
by the amount of the Pell Grant and LEAP/SLEAP aid students receive. (Nearly all
CRS-25
of the aid shown in the Pell Grant and LEAP/SLEAP category is Pell Grant aid).
With Pell Grants serving as the foundation of need-based aid for low-income
students, it is not surprising that Pell Grants are received in the greatest amounts by
students attending the lowest-cost IHEs, which are attended by low-income students
in the greatest proportions.31 With few students at high-cost schools receiving Pell
Grants, FSEOG need at these IHEs is affected only slightly by the subtraction of Pell
Grant aid. The comparatively small amount of LEAP/SLEAP aid is distributed
relatively evenly across categories of IHEs and FSEOG need is not disproportionately
affected by its subtraction in any category of institutions.
As previously mentioned, the formula for calculating FSEOG need was
designed with the presumption that 75% of college costs would be met through the
combination of students’ EFC, scholarships, and grants (in the current formula, EFC
and federal grants). Pell Grant and LEAP/SLEAP aid are subtracted from the amount
of aggregate student need calculated in the formula to ensure that FSEOG funding
is provided to supplement Pell Grant and other gift aid, but not duplicate it. Since
the time when the formulas were last amended, higher education tax benefits (e.g.,
the Hope and Lifetime Learning Tax Credits, and the Higher Education Deduction)
have evolved as a new type of federal financial assistance that shares an essential
characteristic with gift aid — namely, that students’ (or their parents’) receipt of the
credits is not conditioned on any non-academic obligation (e.g., repayment of funds,
or a service requirement). Gift aid and tax benefits may be referred to as obligation-
free aid.32 The FSEOG need formula, however, does not contain any provision that
would account for the receipt of higher education tax benefits by eligible students.
The different treatment of the various types of obligation-free aid could be of
concern when considering their effect on the calculation of FSEOG need. Pell Grants
are targeted to low-income students who disproportionately attend low-cost
institutions, while the Hope and Lifelong Learning higher education tax credits are
primarily beneficial to middle- and upper-income students. Since Pell Grants (and
LEAP/SLEAP aid) are subtracted from the student need computed under the FSEOG
need formula and Hope and Lifelong Learning tax credits are not, this may affect
how closely FSEOG need, as calculated, represents actual aggregate student need.
While it appears that subtracting out tax credit aid might make the FSEOG need
formula more equitable than it currently is in determining aggregate student need —
especially when distinguishing between institutions attended by students with
different incomes — there does not appear to be any easy way for IHEs to gather and
report the value of tax credits on the FISAP for use in the allocation of funds.
31 The actual number of eligible applicants by income and dependency status is shown for
each category of IHEs in Table 8, which appears later in this report.
32 For a more thorough discussion of obligation-free aid, especially the Hope and Lifelong
Learning higher-education tax credits, see CRS Report RL31484, Higher Education Tax
Credits: Targeting, Value, and Interaction with Other Federal Student Aid, by Adam Stoll
and James B. Stedman; and CRS Report RL31129, Higher Education Tax Credits and
Deduction: An Overview of the Benefits and Their Relationship to Traditional Student Aid,
by Adam Stoll, James B. Stedman, and Linda Levine.
CRS-26
FWS Self-Help Need. In the FWS program, the aggregate amount of
institutional self-help need tabulated for different types of students differs noticeably
between categories of IHEs. Figure 6 shows that in the category of institutions with
the lowest COAs, more than 80% of all self-help need is attributable to either
undergraduate independent students or to undergraduate dependent students who are
from families with incomes below $24,000. Conversely, in the category of IHEs with
the highest COAs, less than 8% of self-help need is attributable to these types of
students, while more than 80% is attributable to either dependent undergraduate
students from families with incomes above $60,000 or to graduate and professional
students. (For purposes of comparison, it is important to note that the two highest
cost categories of IHEs account for the top 5% and 15% of IHEs, respectively, based
on COA, while the other four categories each account for 20% of IHEs.) Figure 6
clearly shows that at high-cost IHEs very little self-help need is attributable to
undergraduate independent students and lower-income dependent students, while the
vast majority of self-help need is attributable to upper-income dependent and
graduate and professional students.
A major reason why such large amounts of self-help need are calculated for the
highest-cost IHEs has to do with the treatment of graduate and professional students
in the formula for calculating self-help need. For undergraduate students, self-help
need is calculated by multiplying the number of students in each income band by the
minimum of either (a) 25% of the IHE’s average undergraduate COA or (b) the
difference between undergraduate COA and the EFC taken from the Table of EFCs
for students in that income band. However, for graduate and professional students,
self-help need is calculated exclusively by multiplying the number of students in each
income band by the difference between graduate and professional student COA and
the EFC taken from the Table of EFCs for students in each respective income band.
For undergraduate students, 25% of COA is often the lesser of the two amounts and
thus serves to limit the amount of self-help need calculated for undergraduate
students. For graduate and professional students, the difference between COA and
EFC is often quite large — especially at higher-cost IHEs. With higher-cost IHEs
often having large graduate programs, this characteristic of the self-help need formula
contributes to high-cost institutions having large amounts of institutional need. This
in turn provides them with higher funding allocations.

































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































CRS-27
Figure 6. Aggregate FWS Self-Help Need Attributable to Eligible
Students by Type and Income, by COA Category: AY2004-2005
$6,000,000,000
$5,000,000,000
$4,000,000,000
ed
e
lp N
e
lf-H
e
$3,000,000,000
e S
at
g
e
gr
g
A
$2,000,000,000
$1,000,000,000
$0
2. Lower-mid
4. Upper-mid
6. Very high
1. Low cost
3. Middle cost
5. High cost
cost
cost
cost
Graduate & Professional
$14,860,000
$219,336,000
$1,243,370,000 $1,615,625,000 $2,454,459,000 $2,621,633,000
Dependent: $60,000 and above
$1,000
$0
$6,000
$2,164,000
$733,978,000
$1,359,643,000
Dependent: $42,000 to $59,999
$129,992,000
$286,524,000
$587,040,000
$576,741,000
$588,864,000
$298,772,000
Dependent: $24,000 to $41,999
$371,362,000
$500,474,000
$666,352,000
$599,161,000
$543,180,000
$267,951,000
Dependent : $0 to $24,000
$494,980,000
$549,338,000
$680,729,000
$516,458,000
$390,230,000
$196,715,000
Independent: $16,000 and above
$900,099,000
$1,195,242,000 $1,004,470,000 $1,041,760,000
$545,364,000
$70,260,000
Independent: $0 to $15,999
$1,065,246,000 $1,127,628,000 $1,126,203,000
$846,602,000
$412,642,000
$86,922,000
COA Category
Sources: CRS calculations; U.S. Department of Education. Office of Postsecondary Education. FISAP data
(Feb. 27, 2004); U.S. Department of Education. Office of Postsecondary Education. Campus-Based
Programs Allocation Data (Apr. 2, 2004).
Perkins Loan Adjusted Self-Help Need. In the tabulation of institutional
need for the Perkins Loan program, Figure 7 shows that similar to the FWS program,
there is also wide variation across categories of IHEs in the amount of institutional
need attributable to different categories of students. However, in the Perkins Loan
program, an even greater proportion of adjusted self-help need is accounted for by
students attending higher-cost IHEs than is in the FWS program. (This occurs in part
because, as was shown in Table 1, relatively few low-cost IHEs participate in the

























































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































CRS-28
Figure 7. Aggregate Perkins Loan Adjusted Self-Help Need
Attributable to Eligible Students by Type and Income,
by COA Category: AY2004-2005
5,000,000,000
4,000,000,000
3,000,000,000
p Need
el
f-H
ed Sel
2,000,000,000
st
ju
d
e A
at
reg
1,000,000,000
Agg
0
-1,000,000,000
2. Lower-mid
4. Upper-mid
6. Very high
1. Low cost
3. Middle cost
5. High cost
cost
cost
cost
Graduate & Professional
4,060,000
167,735,000
1,043,433,000
1,449,347,000
2,153,209,000
2,464,611,000
Dependent: $60,000 and above
0
0
1,000
376,000
666,250,000
1,250,956,000
Dependent: $42,000 to $59,999
12,692,000
121,220,000
478,729,000
468,934,000
507,457,000
274,378,000
Dependent: $24,000 to $41,999
33,536,000
204,252,000
519,568,000
457,763,000
457,046,000
246,772,000
Dependent: $0 to $23,999
42,920,000
224,717,000
474,995,000
359,644,000
316,951,000
181,138,000
Independent: $16,000 and above
83,445,000
582,835,000
591,738,000
645,650,000
447,350,000
65,383,000
Independent: $0 to $15,999
100,626,000
414,279,000
700,356,000
516,678,000
324,038,000
79,646,000
Projected collections
-8,436,000
-81,613,000
-369,182,000
-385,257,000
-441,700,000
-382,276,000
Aggregate adjusted self-help need
COA Category
Sources: CRS calculations; U.S. Department of Education. Office of Postsecondary Education. FISAP data
(Feb. 27, 2004); U.S. Department of Education. Office of Postsecondary Education. Campus-Based
Programs Allocation Data (Apr. 2, 2004).
^Estimated. (Does not include allocation reductions and the reallocation of underutilized funds).
Perkins Loan program.) Mirroring the FWS program, the majority of institutional
need tabulated at high-cost IHEs is attributable to upper-income undergraduate
students and graduate and professional students. The provision for adjusting self-
help need by subtracting projected collections has a somewhat greater impact on
middle- and higher-cost IHEs than on low-cost IHEs, largely because middle- and
higher-cost institutions have larger loan portfolios.
CRS-29
Summary
In this second part of the report, it was shown that the majority of the funding
provided for the campus-based programs currently is allocated to institutions on the
basis of their base guarantees, while a comparatively smaller, but still significant,
portion of funding is allocated for fair share increases. Depending on the degree to
which the number of students attending any particular institution and the COA at that
institution have changed since the current base guarantees were established, base
guarantee funding may be greater than, less than, or equal to that IHE’s fair share of
the nationwide total of funds available for allocation. Since proposals have been
made to phase out base guarantees and require all campus-based funding to be
allocated to IHEs on the basis of institutional need, the tabulation of institutional
need was analyzed. This analysis has shown that the per-student amount of
institutional need calculated for IHEs depends to a large extent on their COA.
Significantly, on a per-student basis, greater amounts of institutional need are
calculated for high-cost institutions than for low-cost institutions. This occurs
despite higher-cost IHEs also generally having student bodies with higher EFCs.
Consideration of Proposals to Phase Out Funding
of Institutional Base Guarantees
It has just been shown that at present, the majority of funding provided for the
campus-based programs is allocated for base guarantees. Slightly more than 40% of
funding is available for allocation according to fair share criteria for the FSEOG
program, one-third for the FWS program, and less than 8% for Perkins Loan FCCs.
With most funding being devoted to meeting institutional base guarantees, it might
be expected that should the funding of base guarantees be phased out so that all funds
would be allocated through the fair share formulas, shifts in the distribution of funds
across institutions would occur. This part of the report estimates and analyzes the
prospect of eliminating base guarantees in favor of allocating all campus-based
funding according to the existing fair share formulas. This is done for each of the
three campus-based programs following the framework used throughout this report
— categories of institutions grouped by COA.33
33 The following assumptions are made in this analysis: (a) only IHEs that requested funds
for the 2004-2005 award year and that reported information on the FISAP necessary for the
calculation of fair share increases are included; (b) estimates are based on each institution’s
request for funds for the 2004-2005 award year, even if it would have been eligible for a fair
share increase that would bring its total allocation above the amount it requested; (c) the
estimation of allocations to institutions also does not take into account any allocation
reductions for an IHE’s underutilization of funds, nor allocation increases due to the
reallocation of such funds; and (d) no attempt has been made to adjust for any changes that
might occur in future award years in COAs, EFCs, the mix of students attending institutions,
changes in aggregate Pell Grants and LEAP/SLEAP aid (for the FSEOG program), or
changes in projected collections or default rates (for the Perkins Loan program).





















































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































CRS-30
FSEOG Allocations
Figure 8 shows a comparison of current FSEOG allocations and estimates of
what IHEs might receive under the FSEOG program if all FSEOG funding were to
be allocated according to fair share procedures. A comparison with the information
presented in Figure 5 on institutional need by COA category shows that, in the
aggregate, current allocations and estimated allocations based entirely on fair share
procedures both roughly follow the distribution of aggregate institutional need across
categories of IHEs. However, Figure 8 shows that there would be some
redistribution of funds across categories of IHEs. Most notably, if funding for base
guarantees were to be eliminated, middle-cost institutions (category 3) as a group
would receive almost $5 million less in funding, while upper middle-cost institutions
(category 4) would receive almost $3 million in additional funding. It is estimated
that smaller changes in funding levels would occur for other categories of IHEs.
Since approximately 40% of FSEOG funding is currently provided for fair share
increases and because these fair share increases are designed to close any gaps that
exist between the amount of funding an IHE receives for its base guarantee and the
amount it would be entitled to receive if all funding were allocated according to fair
share procedures, it may not be surprising that the elimination of base guarantees
would result in only a modest redistribution of funds across categories of institutions.
Figure 8. Comparison of FSEOG Allocations to IHEs Under Current
Procedures and Estimated Allocations with Elimination of Base
Guarantees, by Groups of Institutions, ranked by COA:
AY2004-2005
$200,000,000
$35,000
s
$30,000
$150,000,000
titution
$25,000
oup)
A
to Ins
gr
O
y
$20,000
$100,000,000
te b
an C
tions
a
a
$15,000
reg
Medi
lloc
(agg
$10,000
OG A
$50,000,000
E
FS
$5,000
$0
$0
2. Lower-mid
4. Upper-mid
6. Very high
1. Low cost
3. Middle cost
5. High cost
cost
cost
cost
FSEOG: current procedures^
$88,439,000 $110,758,000 $165,064,000 $170,765,000 $151,239,000 $83,438,000
FSEOG: no base guarantee*
$88,751,000 $111,887,000 $160,232,000 $173,510,000 $152,454,000 $83,621,000
Median COA
$7,068 $8,078 $10,134 $13,413 $19,893 $29,523
Institutions
784
798
755
735
562
170
Institutions Grouped by COA Category
Sources: CRS calculations; U.S. Department of Education. Office of Postsecondary Education. FISAP data (Feb. 27, 2004); and
U.S. Department of Education. Office of Postsecondary Education. Campus-Based Programs Allocation Data (Apr. 2, 2004).
Notes: Does not include allocation reductions and the reallocation of underutilized funds.
^Actual.
*Estimated.
CRS-31
A cursory look at Figure 8 might suggest that eliminating base guarantees in
favor of allocating all FSEOG funding according to fair share procedures would not
have a significant effect on the distribution of funds. However, looking only at
categories of institutions may mask the effects of changes in the allocation
procedures on individual institutions. When examining the number of IHEs in each
category that would experience a change in funding and the direction of that change,
it is found that a considerable amount of churning would likely occur across all
categories of IHEs. Table 5 shows estimates of the number of IHEs in each category
that would experience an increase, no change, or a decrease in funding. Perhaps of
most significance is that if funding for base guarantees were eliminated, vastly more
institutions in each COA category would experience an increase in funding than
would experience a decrease. However, the number of IHEs that would experience
a decrease in funding is greatest in the low-cost category, and declines across
categories as COA increases. Since more institutions would experience funding
increases than decreases, this also means that on average, funding increases would
be less for those institutions receiving more funds than would be funding decreases
for those institutions losing funds. (Estimations of potential funding changes for
individual institutions are beyond the scope of this report.)
Table 5. Counts of Institutions by COA Category According to
Estimated Change in FSEOG Allocation With Elimination of
Base Guarantee
1. Low
2. Lower- 3. Middle 4. Upper-
5. High
6. Very
Category
cost
mid cost
cost
mid cost
cost
high cost
Total
Less than
$7,500 to
$9,000 to $11,500 to $16,500 to
$26,000
COA
$7,500
$8,999
$11,499
$16,499
$25,999
and above
Increase
442
510
472
481
415
131
2,451
No change
74
95
98
85
37
5
394
Decrease
268
193
185
169
110
34
959
Total
784
798
755
735
562
170
3,804
Sources: CRS calculations; U.S. Department of Education, Office of Postsecondary Education,
FISAP data, Feb. 27, 2004; and U.S. Department of Education, Office of Postsecondary Education,
Campus-Based Programs Allocation Data, Apr. 2, 2004.
Note: In most instances where institutions would receive no change in their allocation, this is because
the amount requested is less than the institution would be entitled to receive according to fair share
criteria. These institutions likely would receive increased funding if requested.
FWS Allocations
Under the FWS program, approximately two-thirds of the funds available are
allocated for base guarantees and one-third for fair share increases. With a somewhat
greater percentage of funding currently allocated for base guarantees than under the
FSEOG program, it might be expected that if base guarantees were to be eliminated,
there would be a more noticeable shift than estimated for the FSEOG program in the
distribution of funds. Figure 9 shows a comparison across COA categories of
current FWS allocations and estimates of what IHEs might receive if all FWS
funding were to be allocated according to fair share procedures. The figure shows






































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































CRS-32
that overall, middle-cost (category 3) and upper middle-cost (category 4) IHEs would
experience sizable decreases in funding, while very high-cost (category 6) IHEs
would experience a sizable funding increase. (Smaller changes in funding would
occur in the other categories.)
Given that two-thirds of FWS funding is currently allocated for base guarantees,
it might be expected that there could also be a greater degree of churning within each
category in the amount of funds estimated to be received than was found for the
FSEOG program. Table 6 shows estimates of the number of IHEs in each category
that would experience an increase, no change, or a decrease in funding if base
guarantees were to be eliminated. The table shows that in each category, while more
IHEs would experience an increase than a decrease in funding, the numbers are not
as skewed as for the FSEOG program. Still, greater proportions of high-cost and
very high-cost IHEs would experience funding increases if base guarantees were
eliminated than would IHEs in any of the other categories.
Figure 9. Comparison of FWS Allocations to IHEs Under Current
Procedures and Estimated Allocations with Elimination of Base
Guarantees, by Groups of Institutions, ranked by COA:
AY2004-2005
$250,000,000
$35,000
$30,000
$200,000,000
)
$25,000
titutions
oup
$150,000,000
A
$20,000
O
to Ins
by gr
ate
tions
g
$15,000
dian C
$100,000,000
Me
lloca
ggre
A
(a
$10,000
FWS
$50,000,000
$5,000
$0
$0
2. Lower-mid
4. Upper-mid
6. Very high
1. Low cost
3. Middle cost
5. High cost
cost
cost
cost
FWS: current procedures^
$103,501,000 $141,174,000 $206,203,000 $189,278,000 $195,583,000 $157,975,000
FWS: no base guarantee*
$105,952,000 $138,814,000 $194,628,000 $184,565,000 $197,653,000 $172,600,000
Median COA
$7,111 $8,041 $10,205 $13,543 $19,944 $29,562
Institutions
640
623
614
703
592
187
Institutions Grouped by COA Category
Sources: CRS calculations; U.S. Department of Education. Office of Postsecondary Education. FISAP data (Feb. 27, 2004); and
U.S. Department of Education. Office of Postsecondary Education. Campus-Based Programs Allocation Data (Apr. 2, 2004).
Notes: Does not include allocation reductions and the reallocation of underutilized funds.
^Actual.
*Estimated.
CRS-33
Table 6. Counts of Institutions by COA Category According to
Estimated Change in FWS Allocation with Elimination of Base
Guarantee
1. Low
2. Lower- 3. Middle 4. Upper-
5. High
6. Very
Category
cost
mid cost
cost
mid cost
cost
high cost
Total
Less than
$7,500 to
$9,000 to $11,500 to $16,500 to
$26,000
COA
$7,500
$8,999
$11,499
$16,499
$25,999
and above
Increase
355
343
293
367
357
127
1,842
No change
145
138
117
130
94
39
663
Decrease
140
142
204
206
141
21
854
Total
640
623
614
703
592
187
3,359
Sources: CRS calculations; U.S. Department of Education, Office of Postsecondary Education,
FISAP data, Feb. 27, 2004; and U.S. Department of Education, Office of Postsecondary Education,
Campus-Based Programs Allocation Data, Apr. 2, 2004.
Note: In most instances where institutions would receive no change in their allocation, this is because
the amount requested is less than it would be entitled to receive according to fair share criteria. These
institutions likely would receive increased funding if requested.
Perkins Loan FCCs
Under the Perkins Loan program, more than 92% of funding for FCCs is
currently allocated for institutional base guarantees. Since only a small amount is
allocated for fair share increases, it should be expected that if base guarantees were
to be eliminated, the redistribution of FCC allocations would be greater than for the
other two programs. Figure 10 shows a comparison across categories of institutions
of current FCC allocations and estimated FCC allocations based on the elimination
of the base guarantee. If base guarantees were to be eliminated, it is estimated that
in the aggregate, lower middle-cost IHEs (category 2) and very high-cost IHEs
(category 6) would experience increases in funding, while across the other categories,
aggregate funding would decrease.
Table 7 shows estimates of the number of IHEs in each category that would
experience an increase, no change, or a decrease in allocations for FCCs if base
guarantees were to be eliminated. Unlike the other two programs, the number of
IHEs that would experience funding increases relative to the number that would
experience decreases is not as great, and in one category — low-cost IHEs — more
institutions would experience a decrease than an increase. Consistent with the other
two programs, across COA categories, the greatest proportions of institutions that
would experience allocation increases are high-cost and very high-cost IHEs.































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































CRS-34
Figure 10. Comparison of Perkins Loan FCC Allocations to IHEs
Under Current Procedures and Estimated Allocations with
Elimination of Base Guarantees, by Groups of IHEs, ranked by COA:
AY2004-2005
$30,000,000
$35,000
s
$30,000
$25,000,000
titution
)
$25,000
to Ins
$20,000,000
oup
A
tions
$20,000
O
by gr
$15,000,000
lloca
ate
A
g
$15,000
dian C
C
Me
FC
ggre
$10,000,000
(a
$10,000
Loan
$5,000,000
ins
$5,000
rk
e
P
$0
$0
2. Lower-mid
4. Upper-mid
6. Very high
1. Low cost
3. Middle cost
5. High cost
cost
cost
cost
FCC: current procedures^
$1,794,000 $8,086,000 $21,947,000 $20,427,000 $24,444,000 $19,436,000
FCC: no base guarantee*
$1,304,000 $9,193,000 $19,051,000 $19,899,000 $24,163,000 $22,230,000
Median COA
$6,989 $8,412 $10,144 $13,807 $20,360 $29,371
Institutions
42
137
270
344
436
163
Institutions Grouped by COA Category
Sources: CRS calculations; U.S. Department of Education. Office of Postsecondary Education. FISAP data (Feb. 27, 2004); and
U.S. Department of Education. Office of Postsecondary Education. Campus-Based Programs Allocation Data (Apr. 2, 2004).
Notes: Does not include allocation reductions and the reallocation of underutilized funds.
^Actual.
*Estimated.
Table 7. Counts of Institutions by COA Category According to
Estimated Change in Perkins Loan FCC Allocation with
Elimination of Base Guarantee
1. Low
2. Lower- 3. Middle 4. Upper-
5. High
6. Very
Category
cost
mid cost
cost
mid cost
cost
high cost
Total
Less than
$7,500 to
$9,000 to $11,500 to $16,500 to
$26,000
COA
$7,500
$8,999
$11,499
$16,499
$25,999
and above
Increase
16
78
149
195
266
94
798

No change
3
5
5
5
11
4
33
Decrease
23
54
116
144
159
65
561
Total
42
137
270
344
436
163
1,392
Sources: CRS calculations; U.S. Department of Education, Office of Postsecondary Education,
FISAP data, Feb. 27, 2004; and U.S. Department of Education, Office of Postsecondary Education,
Campus-Based Programs Allocation Data, Apr. 2, 2004.
Note: In most instances where institutions would receive no change in their allocation, this is because
the amount requested is less than the institution would be entitled to receive according to fair share
criteria. These institutions likely would receive increased funding if requested.
CRS-35
Summary
In this part of the report, estimates were presented of shifts that might occur in
the distribution of campus-based funding allocations across categories of IHEs
should changes be made to phase out base guarantee funding in favor of allocating
funding entirely according to fair share criteria. These estimates showed that since
it is often higher-cost IHEs that currently receive less than their “fair share” as
calculated according to the allocation procedures, these institutions in the aggregate
would receive increased allocations if funding were to be allocated solely according
to existing fair share procedures. Since the fair share formulas calculate greater
amounts of need on a per-student basis for IHEs with high costs than low costs, this
is not surprising.
The estimates presented in this part were based on the prospect of eliminating
base guarantees in favor of allocating all funding according to the existing fair share
formulas. In general, it is estimated that this would result in more IHEs experiencing
allocation increases than decreases, although across categories of institutions, higher-
cost IHEs would experience allocations increases in the greatest proportions. If
proposals were also made to modify the calculation of institutional need in some
way, this could also affect the distribution of funds. For example, if the amount of
FSEOG need or adjusted self-help need calculated on a per-student basis under fair
share formulas were to be limited to the federal share of FSEOG or Perkins Loan
awards, respectively, the amount of institutional need calculated on a per-student
basis would vary significantly less across IHEs based on their cost of attendance.
Additionally, more accurate calculations of aggregate student need might also be
obtained if the income categories used in the Table of EFCs were revised upward to
better reflect the incomes current FSA applicants. Thus, more significant changes
in the distribution of funds across institutions could be brought about by both phasing
out the funding for institutional base guarantees and by reexamining and modifying
the fair share allocation procedures.
Distribution of Campus-Based Aid to Students
This last part of the report explores the distribution of aid to students under the
campus-based programs. The framework developed earlier in the report —
participating IHEs grouped into categories based on their average COA — is used to
show the differences that exist between IHEs in the proportion of students with
different incomes and dependency status that receive campus-based awards and the
value of their awards. The distribution of awards is shown and briefly described for
each of the three programs, and for combined aid awarded through all the programs.
FSEOG Aid
The distribution of FSEOG aid awarded to students is presented in Table 8.
The table shows for all students combined and for categories of students grouped by
income bands and dependency status, the total number of eligible aid applicants, the
number and percent awarded FSEOG aid, and average award amounts. This
information is presented for each COA category of IHEs. Very high-cost IHEs award
CRS-36
FSEOG grants averaging $2,460 to 20.0% of students who applied for federal aid.
This compares with low-cost IHEs which provide 12.2% of federal aid applicants
with FSEOG aid; however, grants at these IHEs average only $432, or less than one-
fifth of the average amount provided to students at very high-cost institutions. When
viewed as a percentage of median COA by category, FSEOG grants at very high-cost
IHEs cover 8.3% of COA, while grants at low-cost IHEs cover 6.1% of COA.
Table 8. Distribution of FSEOG Aid to Students Attending
Institutions Participating in the FSEOG Program, by Student
Type and Income, by COA Category: AY2002-2003
1. Low
2. Lower- 3. Middle 4. Upper-
5. High
6. Very
COA category
Total
cost
mid cost
cost
mid cost
cost
high cost
Median COA
$7,068
$8,078
$10,134
$13,413
$19,893
$29,523
$9,905
Institutions
784
798
755
735
562
170
3,804
All students
Total FSEOG aid
$99 mil. $135 mil. $219 mil. $224 mil. $204 mil. $149 mil. $1.03 bil.
Aid applicants
1,917,279 2,214,390 2,241,813 1,551,039
867,656
302,927 9,095,104
Aid recipients
230,780
288,291
345,943
269,201
156,455
60,637 1,351,307
Pct. received aid
12.0%
13.0%
15.4%
17.4%
18.0%
20.0%
14.9%
Average award
$432
$469
$633
$832
$1,304
$2,460
$763
Undergraduate dependent: $60,000 and above
Aid applicants
146,660
299,293
621,887
512,090
390,453
181,135 2,151,518
Aid recipients
475
844
3,141
4,293
3,892
2,538
15,183
Pct. received aid
0.3%
0.3%
0.5%
0.8%
1.0%
1.4%
0.7%
Average award
$346
$597
$906
$930
$1,183
$2,010
$1,134
Undergraduate dependent: $42,000 to $59,999
Aid applicants
121,411
174,826
234,444
172,203
114,466
40,056
857,406
Aid recipients
2,722
5,679
15,878
18,976
19,999
9,778
73,032
Pct. received aid
2.2%
3.2%
6.8%
11.0%
17.5%
24.4%
8.5%
Average award
$419
$556
$787
$896
$1,262
$2,266
$1,112
Undergraduate dependent: $24,000 to $41,999
Aid applicants
211,284
245,844
264,586
179,284
106,635
36,010 1,043,643
Aid recipients
17,214
29,113
54,661
57,816
50,233
22,767
231,804
Pct. received aid
8.1%
11.8%
20.7%
32.2%
47.1%
63.2%
22.2%
Average award
$435
$495
$773
$922
$1,356
$2,494
$1,045
Undergraduate dependent: $0 to $23,999
Aid applicants
284,411
271,887
276,056
155,879
77,372
26,504 1,092,109
Aid recipients
45,749
60,857
86,665
66,895
39,166
18,031
317,363
Pct. received aid
16.1%
22.4%
31.4%
42.9%
50.6%
68.0%
29.1%
Average award
$456
$497
$707
$936
$1,522
$2,735
$895
Undergraduate independent: $16,000 and above
Aid applicants
541,142
651,623
389,988
287,262
100,507
8,194 1,978,716
Aid recipients
52,869
64,198
51,078
34,926
12,313
1,224
216,608
Pct. received aid
9.8%
9.9%
13.1%
12.2%
12.3%
14.9%
10.9%
Average award
$406
$447
$503
$661
$849
$1,791
$515
CRS-37
1. Low
2. Lower- 3. Middle 4. Upper-
5. High
6. Very
COA category
Total
cost
mid cost
cost
mid cost
cost
high cost
Median COA
$7,068
$8,078
$10,134
$13,413
$19,893
$29,523
$9,905
Institutions
784
798
755
735
562
170
3,804
Undergraduate independent: $0 to $15,999
Aid applicants
612,371
570,917
454,852
244,321
78,223
11,028 1,971,712
Aid recipients
111,751
127,600
134,520
86,295
30,852
6,299
497,317
Pct. received aid
18.2%
22.4%
29.6%
35.3%
39.4%
57.1%
25.2%
Average award
$434
$455
$554
$742
$1,165
$2,165
$593
Sources: CRS Calculations; ED, FISAP data, Feb. 27, 2004.
Table 8 also shows that as institutional COA increases, IHEs are able to give
larger FSEOG awards to greater proportions of students across almost all income
bands. Perhaps what is most striking, however, is that at very high-cost IHEs, a
greater percentage of undergraduate dependent students from families with incomes
as high as between $42,000 and $60,000 receive FSEOG aid than do students in any
income range in the two lowest-cost categories of IHEs. The average FSEOG awards
provided to students at the highest-cost IHEs are also approximately four times as
great as the amount received by students at low-cost IHEs. These findings are
particularly noteworthy because IHEs are required to award FSEOG aid first to
students with exceptional financial need (defined as having the lowest EFCs at the
institutions), with priority going to recipients of Pell Grants.34 Thus, at some higher-
cost IHEs, even after awarding FSEOG aid to all eligible Pell Grant recipients, there
often remain sufficient funds to allow FSEOG aid to be provided to eligible students
higher up the income ladder. At lower-cost IHEs, this typically is not the case.
Given that at each participating institution, priority in the awarding of FSEOG
aid must go to Pell Grant recipients, it may be interesting to see how the distribution
of FSEOG aid compares with the distribution of Pell Grant aid. Table 9 shows for
both programs, the total amount of aid awarded, the number of aid recipients, and
average award amounts, by COA category. In the Pell Grant program, the largest
amounts of total aid are awarded to the largest numbers of students at lower- and
middle-cost IHEs. Less than 10% of Pell Grant aid goes to students attending IHEs
in the high-cost and very high-cost categories. Average Pell Grant award amounts
increase slightly across categories of IHEs as COA increases.
34 HEA, §413C(c)(2)(A) [20 U.S.C. §1070b-2(c)(2)(A)].
CRS-38
Table 9. Comparison of Pell Grant Awards and FSEOG Awards
for Institutions Participating in the FSEOG program, by COA
Category: AY2002-2003
1. Low
2. Lower- 3. Middle 4. Upper-
5. High
6. Very
COA category
Total
cost
mid cost
cost
mid cost
cost
high cost
Median COA
$7,068
$8,078
$10,134
$13,413
$19,893
$29,523
$9,905
Institutions
784
798
755
735
562
170
3,804
Pell Grants
Total aid
$2.51 bil. $3.04 bil. $2.74 bil. $1.66 bil. $0.75 bil. $0.21 bil. $10.91 bil.
Recipients
1,157,431 1,323,866 1,108,451
683,267
302,572
81,515 4,657,102
Avg. award
$2,172
$2,297
$2,471
$2,424
$2,467
$2,593
$2,342
FSEOG awards
Total aid
$0.10 bil. $0.14 bil. $0.22 bil. $0.22 bil. $0.20 bil. $0.15 bil.
$1.03 bil.
Recipients
230,780
288,291
345,943
269,201
156,455
60,637 1,351,307
Avg. award
$432
$469
$633
$832
$1,304
$2,460
$763
Sources: CRS Calculations; U.S. Department of Education, Pell Grant recipient data file, Sept. 10,
2004; and ED, FISAP data, Feb. 27, 2004.
In the FSEOG program, the greatest number of aid recipients are at middle-cost
institutions. However, both the number of students receiving FSEOG aid relative to
the number receiving Pell Grants and average FSEOG award amounts increase
steadily with average COA. At low-cost IHEs, one-fifth as many students receive
FSEOG awards as receive Pell Grants, and the average award amount is
approximately one-fifth the amount of the average Pell Grant. At very high-cost
IHEs, approximately three-fourths as many students receive FSEOG awards as
receive Pell Grants, and average award amounts are approximately 95% of the
amount of the average Pell Grant. The data in Table 9 show that under the Pell
Grant program, a relatively even amount of aid is awarded to eligible students,
largely irrespective of the institution they attend (although Pell Grant recipients tend
to be concentrated in low- and middle-cost IHEs). In contrast under the FSEOG
program, the proportion of students awarded grants and the average grant amount
tend to vary according to the COA of the institution the students attend, with students
at very high-cost institutions receiving the largest awards.
FWS Aid
Information on the distribution of FWS aid to students is presented in Table 10.
Undergraduate students receive FWS award amounts that range on average between
$1,093 and $1,673, varying by institutional COA and student dependency and income
categories. In many instances, graduate and professional students receive
substantially greater award amounts than undergraduates receive, especially at very
high-cost IHEs where awards average $2,961. When examining the distribution of
aid to different types of students — both within and across categories of institutions
— Table 10 shows that average aid per student differs only modestly (the exception
being for graduate and professional students), while the proportion of students
receiving awards varies widely.
CRS-39
Table 10. Distribution of FWS Aid to Students Attending
Institutions Participating in the FWS Program, by Student Type
and Income, by COA Category: AY2002-2003
1. Low
2. Lower- 3. Middle 4. Upper-
5. High
6. Very
COA category
Total
cost
mid cost
cost
mid cost
cost
high cost
Median COA
$7,111
$8,041
$10,205
$13,543
$19,944
$29,562
$10,669
Institutions
640
623
614
703
592
187
3,359
All students
Total FWS aid
$102 mil. $143 mil. $216 mil. $213 mil. $228 mil. $191 mil. $1.09 bil.
Aid applicants
1,915,336 2,206,169 2,488,661 1,819,092 1,110,771
444,114 9,984,143
Aid recipients
67,535
94,776
151,529
146,290
177,409
120,053
757,592
Pct. received aid
3.5%
4.3%
6.1%
8.0%
16.0%
27.0%
7.6%
Average award
$1,517
$1,511
$1,426
$1,459
$1,287
$1,590
$1,445
Graduate and professional students
Aid applicants
2,781
70,161
248,726
236,627
220,284
135,279
913,858
Aid recipients
30
1,406
6,978
8,797
15,166
15,423
47,800
Pct. received aid
1.1%
2.0%
2.8%
3.7%
6.9%
11.4%
5.2%
Average award
$1,026
$2,067
$2,344
$2,545
$2,301
$2,961
$2,557
Undergraduate dependent: $60,000 and above
Aid applicants
144,574
299,936
626,589
515,999
392,868
183,685 2,163,651
Aid recipients
1,093
4,187
18,143
27,498
59,944
50,432
161,297
Pct. received aid
0.8%
1.4%
2.9%
5.3%
15.3%
27.5%
7.5%
Average award
$1,404
$1,368
$1,267
$1,205
$1,093
$1,289
$1,202
Undergraduate dependent: $42,000 to $59,999
Aid applicants
120,636
174,732
234,904
172,955
115,126
40,354
858,707
Aid recipients
3,653
8,886
23,748
27,272
35,217
19,584
118,360
Pct. received aid
3.0%
5.1%
10.1%
15.8%
30.6%
48.5%
13.8%
Average award
$1,397
$1,488
$1,354
$1,317
$1,164
$1,407
$1,309
Undergraduate dependent: $24,000 to $41,999
Aid applicants
210,013
244,791
263,074
179,381
107,246
36,227 1,040,732
Aid recipients
9,670
17,592
34,448
33,276
33,974
18,507
147,467
Pct. received aid
4.6%
7.2%
13.1%
18.6%
31.7%
51.1%
14.2%
Average award
$1,388
$1,517
$1,377
$1,377
$1,225
$1,483
$1,373
Undergraduate dependent: $0 to $23,999
Aid applicants
282,098
268,561
270,813
154,691
77,958
26,576 1,080,697
Aid recipients
14,636
21,282
33,954
26,216
20,186
12,414
128,688
Pct. received aid
5.2%
7.9%
12.5%
16.9%
25.9%
46.7%
11.9%
Average award
$1,301
$1,410
$1,339
$1,445
$1,341
$1,549
$1,389
Undergraduate independent: $16,000 and above
Aid applicants
547,601
591,592
397,647
306,461
112,702
9,862 1,965,865
Aid recipients
10,806
11,033
7,318
5,418
2,986
686
38,247
Pct. received aid
2.0%
1.9%
1.8%
1.8%
2.6%
7.0%
1.9%
Average award
$1,589
$1,449
$1,496
$1,640
$1,246
$1,354
$1,507
CRS-40
1. Low
2. Lower- 3. Middle 4. Upper-
5. High
6. Very
COA category
Total
cost
mid cost
cost
mid cost
cost
high cost
Median COA
$7,111
$8,041
$10,205
$13,543
$19,944
$29,562
$10,669
Institutions
640
623
614
703
592
187
3,359
Undergraduate independent: $0 to $15,999
Aid applicants
607,633
556,396
446,908
252,978
84,587
12,131 1,960,633
Aid recipients
27,647
30,390
26,940
17,813
9,936
3,007
115,733
Pct. received aid
4.5%
5.5%
6.0%
7.0%
11.7%
24.8%
5.9%
Average award
$1,669
$1,602
$1,513
$1,653
$1,459
$1,673
$1,595
Sources: CRS Calculations; ED, FISAP data, Feb. 27, 2004.
Compared with the distribution of FSEOG awards, there is significantly less
variation across categories of IHEs in the value of FWS awards provided to students
and somewhat greater variation in the proportion of students receiving FWS aid. The
modest variation across IHEs in award amounts is likely due in large part to the
nature of the program being that aid is provided as compensation for part-time
employment and because award amounts are dependent upon the number of hours
worked and the hourly wage rate. A national study of the FWS program found that
during the 1997-1998 award year, students receiving FWS awards worked an average
of 11 hours per week and earned an average wage of $6.10 per hour. Approximately
one-third earned the minimum wage of $5.15 per hour and only 30% earned more
than $6.00 per hour. The study found only small variations across institutions when
controlling for institution type and control, and for institution size and location.35
The percentage of students receiving FWS aid increases across COA categories,
while the proportion of the COA the award covers declines. At low-cost IHEs, while
only 3.5% of eligible students received FWS aid, the average award of $1,517
covered 21.3% of median COA. At very high-cost IHEs, 27.0% of eligible
applicants received awards; however, the average award of $1,590 covered only 5.4%
of median COA.
Perkins Loan Aid
The distribution of Perkins Loan aid to students is presented in Table 11.
Across student types and categories of IHEs, the distribution of aid is quite similar
to that for the FWS program. Award amounts vary only slightly across COA
categories for any student type. Graduate and professional students are awarded
substantially larger loans, consistent with the maximum loan amount being higher for
graduate and professional students than it is for undergraduates. For any of the
various student types, much higher proportions of students attending high-cost and
very high-cost IHEs are awarded Perkins Loan aid than are students at low- to
middle-cost IHEs. This pattern becomes readily apparent when making comparisons
35 U.S. Department of Education, Office of the Under Secretary, Planning and Evaluation
Service, Postsecondary, Adult, and Vocational Education Division, The National Study of
the Operation of the Federal Work-Study Program: Summary Findings from the Student and
Institutional Surveys (Washington, DC., 2000), pp. 16, C-17, C-50.
CRS-41
across both COA categories and student types — 20.6% of undergraduate dependent
students attending very high-cost institutions who are from families with incomes of
$60,000 and above receive Perkins Loan aid, a proportion greater than in any of the
income bands shown for the low-, lower middle-, and middle-cost categories of IHEs.
Still, for Perkins Loan recipients who attend low-cost IHEs, their awards cover, on
average, 25.4% of median COA, whereas for Perkins Loans awarded to students
attending very high-cost IHEs, the average award covers only 8.4% of median COA.
Table 11. Distribution of Perkins Loan Aid to Students
Attending IHEs Participating in the Perkins Loan Program, by
Student Type and Income, by COA Category: AY2002-2003
1. Low
2. Lower- 3. Middle 4. Upper-
5. High
6. Very
COA category
Total
cost
mid cost
cost
mid cost
cost
high cost
Median COA
$6,978
$8,374
$10,158
$13,754
$20,170
$29,609
$13,807
Institutions
83
220
366
439
492
184
1,784
All students
Total Loan aid
$11 mil. $81 mil. $331 mil. $349 mil. $380 mil. $301 mil. $1.45 bil.
Aid applicants
342,970 1,200,052 2,145,517 1,516,997 1,027,186
444,549 6,677,271
Aid recipients
6,254
42,469
177,029
192,924
185,522
121,001
725,199
Pct. received aid
1.8%
3.5%
8.3%
12.7%
18.1%
27.2%
10.9%
Average award
$1,770
$1,902
$1,873
$1,811
$2,050
$2,484
$2,004
Graduate and professional students
Aid applicants
3,333
62,466
236,465
220,392
210,381
137,135
870,172
Aid recipients
16
3,610
21,434
20,532
27,750
29,192
102,534
Pct. received aid
0.5%
5.8%
9.1%
9.3%
13.2%
21.3%
11.8%
Average award
$3,132
$2,405
$2,788
$2,688
$3,335
$3,796
$3,189
Undergraduate dependent: $60,000 and above
Aid applicants
22,826
172,317
598,035
476,872
370,259
183,153 1,823,462
Aid recipients
105
1,799
16,941
25,492
46,656
37,817
128,810
Pct. received aid
0.5%
1.0%
2.8%
5.3%
12.6%
20.6%
7.1%
Average award
$1,766
$1,680
$1,650
$1,707
$1,735
$1,982
$1,790
Undergraduate dependent: $42,000 to $59,999
Aid applicants
21,846
94,153
219,058
152,651
107,096
40,170
634,974
Aid recipients
273
3,431
25,926
30,664
34,812
17,983
113,089
Pct. received aid
1.2%
3.6%
11.8%
20.1%
32.5%
44.8%
17.8%
Average award
$1,716
$1,742
$1,738
$1,783
$1,814
$2,073
$1,827
Undergraduate dependent: $24,000 to $41,999
Aid applicants
41,640
129,322
238,516
151,936
98,166
36,035
695,615
Aid recipients
420
5,053
35,329
39,617
35,529
18,085
134,033
Pct. received aid
1.0%
3.9%
14.8%
26.1%
36.2%
50.2%
19.3%
Average award
$1,741
$1,775
$1,756
$1,762
$1,857
$2,122
$1,835
Undergraduate dependent: $0 to $23,999
Aid applicants
66,237
136,395
227,737
121,856
69,397
26,400
648,022
Aid recipients
546
3,998
24,898
28,335
20,040
11,922
89,739
Pct. received aid
0.8%
2.9%
10.9%
23.3%
28.9%
45.2%
13.8%
Average award
$1,836
$1,796
$1,772
$1,739
$1,915
$2,169
$1,848
CRS-42
1. Low
2. Lower- 3. Middle 4. Upper-
5. High
6. Very
COA category
Total
cost
mid cost
cost
mid cost
cost
high cost
Median COA
$6,978
$8,374
$10,158
$13,754
$20,170
$29,609
$13,807
Institutions
83
220
366
439
492
184
1,784
Undergraduate independent: $16,000 and above
Aid applicants
81,975
346,454
288,432
216,495
99,649
9,792 1,042,797
Aid recipients
2,049
9,537
17,887
19,635
7,782
1,776
58,666
Pct. received aid
2.5%
2.8%
6.2%
9.1%
7.8%
18.1%
5.6%
Average award
$1,820
$1,869
$1,750
$1,534
$1,875
$2,250
$1,731
Undergraduate independent: $0 to $15,999
Aid applicants
105,113
258,945
337,274
176,795
72,238
11,864
962,229
Aid recipients
2,845
15,041
34,614
28,649
12,953
4,226
98,328
Pct. received aid
2.7%
5.8%
10.3%
16.2%
17.9%
35.6%
10.2%
Average award
$1,724
$1,936
$1,771
$1,631
$1,910
$2,210
$1,791
Sources: CRS Calculations; ED; FISAP data (Feb. 27, 2004).
Combinations of Campus-Based Awards
Institutions may participate in any or all of the three campus-based programs.
The largest number of IHEs participate in the FSEOG program, followed by the FWS
program. Approximately half as many IHEs participate in the Perkins Loan program
as in the other two. Table 12 shows the number of institutions participating in the
various combinations of programs across categories of IHE, grouped by COA.
Across all COA categories, more than three-quarters of IHEs participate in both the
FSEOG and FWS programs. Within the two highest-cost categories of institutions,
more than three quarters participate in all three programs. Eligible students may
receive campus-based awards under any of the campus-based programs in which their
institution participates (however, only undergraduate students pursuing a first
baccalaureate course of study may receive FSEOG aid). Thus, students attending
institutions participating in all three programs have the advantage of being able to
access a larger pool of campus-based aid. This tends to favor students attending
higher-cost institutions.
In this section, the combinations of campus-based aid awarded to students under
the three programs is analyzed according to institutional COA. Only institutions
participating in all three campus-based programs are included in the analysis so that
comparisons can be made between IHEs that would be able to award aid to students
under each of the three programs, consistent with applicable program requirements.
(Higher-cost institutions participate in all three programs in the greatest percentages
— see Row g. in Table 12.) Information on the number of eligible applicants, the
number receiving campus-based awards, and the percent receiving aid and average
award amounts by program are presented in Table 13 for each COA category.
CRS-43
Table 12. Participation of Institutions in the Campus-Based
Financial Aid Programs (number and percent),
by Institutional COA: AY2004-2005
1. Low
2. Lower- 3. Middle 4 .Upper-
5. High
6. Very
Category
cost
mid cost
cost
mid cost
cost
high cost
All IHEs
Less than $7,500 to
$9,000 to $11,500 to $16,500 to
$26,000
COA
$7,500
$8,999
$11,499
$16,499
$25,999
and above
a. FSEOG only
150
166
144
60
10
3
533
18.8%
20.6%
18.6%
7.6%
1.7%
1.5%
13.4%
b. FWS only
13
7
14
37
15
2
88
1.6%
0.9%
1.8%
4.7%
2.5%
1.0%
2.2%
c. Perkins only
1
0
2
4
2
3
12
0.1%
0.0%
0.3%
0.5%
0.3%
1.5%
0.3%
d. FSEOG &
552
412
251
256
88
5
1,564
FWS
69.2%
51.2%
32.4%
32.3%
14.5%
2.6%
39.4%
e. FSEOG &
7
16
15
25
1
1
65
Perkins
0.9%
2.0%
1.9%
3.2%
0.2%
0.5%
1.6%
f. FWS &
0
0
4
16
26
19
65
Perkins
0.0%
0.0%
0.5%
2.0%
4.3%
9.8%
1.6%
g. FSEOG, FWS
75
204
345
394
463
161
1,642
& Perkins
9.4%
25.3%
44.5%
49.7%
76.5%
83.0%
41.4%
h. Total
798
805
775
792
605
194
3,969
100%
100%
100%
100%
100%
100%
100%
Source: CRS calculations; U.S. Department of Education, Office of Postsecondary Education, FISAP
data, Feb. 27, 2004.
This analysis shows that among students attending IHEs participating in all three
campus-based programs, at low-cost institutions, only 15.3% of students received any
type of campus-based aid with the average total award being $1,086. At very high-
cost institutions, 44.0% of students received campus-based aid, with total awards
averaging $3,228. When examining all students as a group, both the proportion of
students receiving aid and average aid amounts increased steadily with COA across
categories of institutions. At low-cost institutions, the average award covered 15.4%
of the median COA, while at very high-cost institutions, the average combined award
covered 10.9% of the median COA.
Graduate and professional students, who may receive aid only under the FWS
and Perkins Loan programs, received larger awards on average than did
undergraduate students in any category. Both the percentage of students receiving
aid and average award amounts increase consistently with institutional COA. In the
very high-cost category of institutions, 37.2% of undergraduate dependent students
from families with incomes of $60,000 and above receive some form of campus-
based aid, with the average total award being $2,127. Both the percentage of
students receiving aid and the average award amount are greater for students in this
category than for any undergraduate student category in both the low-cost and lower
middle-cost categories of IHEs.
CRS-44
Table 13. Distribution of Campus-Based Financial Aid to Students Attending Institutions Participating in All Three
Campus-Based Programs, by Student Type and Income, by COA Category: (AY2002-2003)
Group:
1. Low cost
2. Lower-mid cost
3. Middle cost
4. Upper-mid cost
5. High cost
6. Very high cost
Median COA:
$7,068
$8,082
$10,142
$13,508
$19,939
$29,669
Institutions:
75
204
345
394
463
161
All students
Aid applicantsa
340,761
1,105,650
2,130,945
1,480,253
1,008,646
429,251
CBFA award recipients
51,967
186,182
423,964
362,530
331,653
188,704
Aid by program
recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award
FSEOGb
11.9%
$540
13.1%
$548
13.4%
$738
15.9%
$926
17.9%
$1,339
20.0%
$2,465
FWS
4.5%
$1,575
4.9%
$1,616
6.3%
$1,435
8.6%
$1,426
16.4%
$1,262
27.0%
$1,551
Perkins Loans
1.8%
$1,769
3.8%
$1,903
8.2%
$1,869
12.8%
$1,800
17.8%
$1,992
26.9%
$2,430
Total (unduplicated)
15.3%
$1,086
16.8%
$1,286
19.9%
$1,656
24.5%
$1,947
32.9%
$2,281
44.0%
$3,228
Graduate and Professional
Aid applicantsa
2,511
62,466
232,159
211,829
191,995
121,940
CBFA award recipients
40
4,634
24,894
24,450
26,763
29,425
Aid by program
recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award
FSEOGb
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
FWS
1.1%
$997
2.0%
$2,049
2.7%
$2,389
3.4%
$2,625
5.6%
$2,361
9.6%
$2,979
Perkins Loans
0.5%
$2,510
5.7%
$2,396
8.6%
$2,830
9.1%
$2,630
11.2%
$3,225
19.5%
$3,829
Total (unduplicated)
1.6%
$1,451
7.4%
$2,402
10.7%
$2,871
11.5%
$2,846
13.9%
$3,552
24.1%
$4,284
Undergraduate dependent: $60,000 and above
Aid applicantsa
22,797
171,132
597,268
470,539
370,230
183,150
CBFA award recipients
377
4,871
31,704
44,316
86,463
68,126
Aid by program
recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award
FSEOGb
0.3%
$533
0.3%
$622
0.5%
$937
0.8%
$989
1.0%
$1,182
1.4%
$2,011
FWS
1.1%
$1,594
1.8%
$1,413
2.9%
$1,274
5.5%
$1,200
15.7%
$1,092
27.4%
$1,290
Perkins Loans
0.5%
$1,766
1.0%
$1,677
2.8%
$1,649
5.4%
$1,706
12.6%
$1,735
20.6%
$1,982
Total (unduplicated)
1.7%
$1,641
2.8%
$1,552
5.3%
$1,659
9.4%
$1,758
23.4%
$1,721
37.2%
$2,127
CRS-45
Group:
1. Low cost
2. Lower-mid cost
3. Middle cost
4. Upper-mid cost
5. High cost
6. Very high cost
Median COA:
$7,068
$8,082
$10,142
$13,508
$19,939
$29,669
Institutions:
75
204
345
394
463
161
Undergraduate dependent: $42,000 to $59,999
Aid applicantsa
21,819
93,563
218,620
149,673
107,089
40,160
CBFA award recipients
1,420
10,512
48,288
51,061
57,946
28,673
Aid by program
recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award
FSEOGb
2.5%
$480
3.6%
$572
6.7%
$818
11.3%
$931
18.1%
$1,270
24.5%
$2,267
FWS
3.8%
$1,459
6.2%
$1,579
10.3%
$1,365
16.8%
$1,302
31.6%
$1,163
48.5%
$1,409
Perkins Loans
1.3%
$1,716
3.6%
$1,738
11.8%
$1,738
20.4%
$1,781
32.5%
$1,814
44.8%
$2,073
Total (unduplicated)
6.5%
$1,357
11.2%
$1,614
22.1%
$1,813
34.1%
$2,009
54.1%
$2,192
71.4%
$3,030
Undergraduate dependent: $24,000 to $41,999
Aid applicantsa
41,568
128,593
237,856
148,337
98,161
36,023
CBFA award recipients
5,260
25,464
82,620
77,127
66,945
30,644
Aid by program
recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award
FSEOGb
7.4%
$527
12.3%
$556
20.3%
$814
32.7%
$975
48.6%
$1,378
63.5%
$2,495
FWS
5.8%
$1,350
8.7%
$1,635
13.4%
$1,388
20.1%
$1,349
33.0%
$1,221
51.1%
$1,485
Perkins Loans
1.0%
$1,743
3.9%
$1,780
14.8%
$1,755
26.5%
$1,761
36.2%
$1,857
50.2%
$2,122
Total (unduplicated)
12.7%
$1,070
19.8%
$1,411
34.7%
$1,754
52.0%
$2,026
68.2%
$2,552
85.1%
$3,994
Undergraduate dependent: $0 to $23,999
Aid applicantsa
66,074
135,523
227,053
118,076
69,389
26,378
CBFA award recipients
13,492
40,557
86,870
60,756
43,345
21,506
Aid by program
recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award
FSEOGb
14.5%
$563
25.2%
$578
30.2%
$787
42.5%
$1,033
51.0%
$1,574
68.5%
$2,739
FWS
7.2%
$1,207
9.4%
$1,558
13.0%
$1,356
18.9%
$1,410
27.1%
$1,338
46.8%
$1,551
Perkins Loans
0.8%
$1,836
2.9%
$1,804
11.0%
$1,772
23.8%
$1,740
28.9%
$1,915
45.2%
$2,169
Total (unduplicated)
20.4%
$898
29.9%
$1,151
38.3%
$1,580
51.5%
$2,170
62.5%
$2,740
81.5%
$4,377
CRS-46
Group:
1. Low cost
2. Lower-mid cost
3. Middle cost
4. Upper-mid cost
5. High cost
6. Very high cost
Median COA:
$7,068
$8,082
$10,142
$13,508
$19,939
$29,669
Institutions:
75
204
345
394
463
161
Undergraduate independent: $16,000 and above
Aid applicantsa
81,590
267,393
284,403
210,751
99,587
9,777
CBFA award recipients
9,937
32,850
43,590
36,570
16,691
2,656
Aid by program
recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award
FSEOGb
9.8%
$511
9.9%
$515
11.3%
$608
11.1%
$753
12.0%
$882
15.0%
$1,804
FWS
2.0%
$1,846
1.8%
$1,533
2.0%
$1,476
1.9%
$1,604
2.6%
$1,195
6.8%
$1,365
Perkins Loans
2.5%
$1,822
3.4%
$1,869
6.2%
$1,751
9.1%
$1,529
7.8%
$1,868
18.2%
$2,250
Total (unduplicated)
12.2%
$1,073
12.3%
$1,135
15.3%
$1,311
17.4%
$1,421
16.8%
$1,612
27.2%
$2,667
Undergraduate independent: $0 to $15,999
Aid applicantsa
104,402
246,980
333,586
171,048
72,195
11,823
CBFA award recipients
21,441
67,294
105,998
68,250
33,500
7,674
Aid by program
recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award recipients avg. award
FSEOGb
18.2%
$544
22.8%
$539
26.7%
$679
35.0%
$849
39.9%
$1,212
57.7%
$2,187
FWS
5.1%
$1,945
6.2%
$1,694
6.6%
$1,523
8.1%
$1,600
12.3%
$1,427
24.6%
$1,693
Perkins Loans
2.7%
$1,725
6.0%
$1,939
10.3%
$1,770
16.5%
$1,633
17.8%
$1,903
35.7%
$2,209
Total (unduplicated)
20.5%
$1,185
27.2%
$1,246
31.8%
$1,427
39.9%
$1,694
46.4%
$2,063
64.9%
$3,602
Sources: CRS Calculations; ED, FISAP data, Feb. 27, 2004; ED, Campus-Based Programs Allocation Data, Apr. 2, 2004.
a. Students eligible for financial need under one or more of the campus-based programs, including graduate and professional students.
b. FSEOG students receiving FSEOG aid as a percentage of only those undergraduate students eligible for FSEOG aid.
CRS-47
Summary and Conclusions
The procedures currently used to allocate funds to institutions under the campus-
based programs were developed several decades ago in response to concerns that had
been raised about the inequitable distribution of funds. When these procedures were
developed, it was envisioned that funds would be allocated according to a series of
formulas designed to provide each institution with funding in proportion to its fair
share of aggregate student need. To ease the transition to the new formula-based fair
share method of allocating funds, for a limited period, IHEs were to receive a
conditional or base guarantee of funding proportional to the amount they had
received in a base year. However, instead of being phased out over time, base
guarantees remain the primary method for allocating the majority of the funds
appropriated for the campus-based programs. In recent years, proposals again have
been made to phase out funding for base guarantees and to transition to the allocation
of funds to institutions entirely on the basis of their fair share of aggregate student
need.
To facilitate an understanding of the potential consequences of modifying the
current procedures for allocating funds to institutions, this report has set out to
explain in detail the functioning of the current allocation procedures and the resulting
distribution of aid to students. Throughout the report, the distribution of funding to
institutions and the distribution of aid to students was explored by grouping
institutions into categories in rank order of their costs of attendance. It was shown
that under each of the campus-based programs the majority of funding is currently
allocated to institutions on the basis of their institutional base guarantees. In each of
the programs, there is only modest variation across categories of institutions in the
proportion of total funding allocated to institutions on the basis of their base
guarantees, while there is somewhat more variation across institutions grouped by
states. Most of the funding provided for the FSEOG and FWS programs is allocated
according to institutional base guarantees, and nearly all is for the Perkins Loan
program.
An analysis of the calculation of institutional need has shown that institutional
COA plays a critical role in determining the amount of aggregate need calculated
under the fair share formulas for any particular IHE. Since COA varies widely across
institutions, vastly different amounts of need can be calculated on a per-student basis
depending on the characteristics of the institution. In many instances, for high-cost
institutions the average amount of need calculated on a per-student basis greatly
exceeds the maximum award amount, and exceeds the federal share by an even
greater amount. When examined in the aggregate for categories of institutions, it was
shown that at low-cost institutions, institutional need is largely the aggregate need of
undergraduate independent students and low-income dependent students; whereas at
higher-cost institutions, institutional need is largely the aggregate need of upper-
income undergraduate dependent students and graduate and professional students.
It was also noted that for the FSEOG program, aggregate student need is offset by
Pell Grant aid (which is targeted primarily at low-income students), while no
adjustments are made for higher education tax benefits (which are beneficial
primarily to middle- and upper-income students).
CRS-48
The prospect of eliminating the allocation of funds for institutional base
guarantees in favor of providing all funding on the basis of fair share criteria was also
examined. It was found that in the FSEOG program, there would only be a modest
redistribution of funds across categories of IHEs based on COA. Nonetheless, there
would be a considerable amount of churning in the allocation of funds within
categories, and more institutions would receive an increase in funding than a
decrease. For the FWS and Perkins Loan programs, if funds were to be allocated
entirely on the basis of the fair share formulas, very high-cost IHEs, as a category,
would receive a funding increase, due to the high aggregate need of their student
bodies. Overall, however, more IHEs would receive allocation increases than
decreases if base guarantees were eliminated.
Analysis of the distribution of aid to students revealed that despite there being
a strong correlation between a student’s family income and the cost of attendance of
the institution a student attends, larger proportions of students at high-cost
institutions receive campus-based aid than students at low-cost institutions. In the
FSEOG program, award amounts are larger at high-cost IHEs than at low-cost ones,
while in the FWS and Perkins Loan programs, awards tend to be of similar values
across institutions and student groups. Higher-cost institutions are more likely to
participate in all three campus-based programs than are lower-cost institutions.
However, even when examining only institutions that participate in all three
programs, it is revealed that higher-cost institutions are able to give larger awards to
a higher proportion of their students than are lower-cost institutions.
The findings presented in this report highlight an important characteristic of
need based financial aid — that student financial need is relative to the COA at the
institution a student attends. A middle- or upper-income student attending a higher-
cost institution may have financial need, whereas a similarly situated student
attending a low-cost institution might have no financial need. Under the campus-
based programs, this has resulted in higher-cost institutions having greater
institutional need, on a per-student basis, than lower-cost institutions. In turn, this
has allowed higher-cost IHEs to provide larger awards — even to students with
higher incomes — than could be provided by lower-cost IHEs. Still, at higher-cost
IHEs, these substantially larger campus-based awards typically cover a much smaller
portion of COA than do awards at lower-cost IHEs.