Students Are on the Move. Their Financial Aid Is Not

Important changes to federal student aid are on the horizon. The Consolidated Appropriations Act of 2021 simplifies the Free Application for Federal Student Aid at long last, reducing the number and complexity of questions that students and families must answer to determine their eligibility for federal aid. The bill package also includes provisions that make student eligibility for the Pell Grant more predictable while expanding access to the maximum award for independent adult students.

Building upon this momentum, President Biden announced last week his American Families Plan, which proposes to increase the maximum Pell Grant award by approximately $1,400 to help low-income students better finance increasing college costs. These structural changes and investments are good news for today’s students, many of whom struggle to navigate complex financial aid application processes and obtain the aid needed to bring their college goals within reach.

As promising as these federal policy developments have been, we can’t help but note that at least one key lens is missing: how financial aid must be redesigned to keep up with today’s highly mobile students. We know that 38 percent of first-time students change institutions within their first six years, and nearly half of all bachelor’s degree holders complete some credits in community colleges. In addition, 34 percent of all students earn some college credits in high school, and another 35 percent of students earn credits online, likely transferring these credits as they advance in their educational journeys.

Beyond those students who are already enrolled in higher education, there are at least 15 million adults who hold some college credits but have not yet completed a degree, as well as a large population of adults with military and other work-based learning experiences, digital badges and MOOC courses who may benefit from returning to college. Taken together, we can readily see that the majority of today's current and prospective students might actually be understood as transfer students who frequently, if not seamlessly, move across their learning, work and lived experiences.

Unfortunately, while students may be nimble and on the move, their aid is not. Indeed, the simple act of googling “transfer students” and “financial aid” is a harrowing experience. The first website that comes up is the Federal Student Aid site entitled “Resources for Transfer Students.” The following direct quotes from that webpage send a clear message to students who count on their financial aid: transferring across learning environments is at best administratively cumbersome and at worst, financially risky and a bad idea:

• “Most financial aid will not automatically transfer with you.”
• “Ask whether your account at [your current] school is fully settled. (If it isn’t, your transcript may be withheld.)”
• Your federal student loans automatically “enter repayment status when you withdraw from a school to transfer to another school. To avoid having to start making payments on your loans while you're enrolled at your new school, you can get an in-school deferment if you qualify.” (emphases added)

While the webpage sounds the alarm on all kinds of potential problems that can arise when a student transfers, the solution it offers students in this position is to check the website or contact the college to which a student plans to transfer. But students navigating transfer are already overwhelmed by too much information, and research tells us that they seldom get clear answers even when they attempt to go straight to the source.

Transfer processes are notoriously complex and don’t provide the certainty students need to make concrete plans. Transfer students often face a high degree of credit loss and receive inconsistent and unclear information about how much of their previous credits or learning will be counted, how much time it will take them to complete their degree or credential, or how much they can expect it all to cost. Add to that burden the experience of dealing with potentially higher tuition at a new institution, the bureaucratic processes related to moving aid and the prospect of losing aid altogether (or being thrown into loan repayment) and the barriers to transfer feel almost insurmountable. No wonder many are discouraged from continuing on.

While this blog post elevates one example of how federal policy makers may not have transfer students at the forefront when designing financial aid communications, it serves to illustrate the scope of a much broader problem. State financial aid is also frequently a challenge for transfer students. Only three states have aid designed for transfer students, and much as for federal aid, the burden typically rests on the student to reapply for state aid upon moving from one institution to another. In many states, where aid is allocated directly to institutions for them to package and award to students, transfer students are further undermined.

While technically eligible for aid, they are not prioritized by institutions and are frequently placed at the end of the long line of eligible students. Many institutions prioritize aid for first-year freshmen, or for existing students who have earned special distinctions and are awarded aid by faculty or departments. The unintended consequence is that transfer students -- many of whom are now facing higher tuition at a university than they paid at their community college -- do not receive state aid, even when they have demonstrated need and meet all eligibility requirements.

To broaden financial aid access and improve equity for learners, we need to think about aid programs in new ways. While streamlining application forms like the FAFSA is significant, can we go further to automate aid screening, award disbursement and renewal processes -- thereby eliminating the hoops that students must jump through? Can we envision a new system of aid that recognizes and responds to the high degree of mobility that learners experience in their educational journeys?

The Tackling Transfer Policy Advisory Board -- managed by HCM Strategists in collaboration with Sova and the Aspen Institute College Excellence Program as part of Tackling Transfer -- is doing just that. This group of experienced practitioners and policy experts will make recommendations for financial aid and more through its forthcoming state and federal policy framework. We hope that as Congress and the Biden administration continue to take up these incredibly important -- and sizable -- investments in the future of our nation, and states respond to these investments, policy makers at both the state and federal levels take critical steps to ensure that students have actionable information, bureaucracy is reduced and aid is set up to follow students nimbly as they move through higher education in new ways.