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States are increasing the financial aid they provide to undergraduates, with need-based aid rising at a much faster pace than non-need-based aid.

Funding for undergraduate need-based grant aid increased nationwide from about $7 billion in 2013 to about $7.4 billion in 2014, an increase of 4 percent when adjusted for inflation, according to a report released today by the National Association of State Student Grant and Aid Programs.

Need-based aid accounts for about three-fourths of all state grant aid, which in 2014 totaled $11.7 billion. Though overall aid also grew last year -- at an adjusted rate of 1.6 percent -- the growth of need-based aid was more than double.

Non-need-based aid grew less than a percent last year, when adjusted for inflation.

“The last few years the pendulum has swung back toward need-based aid,” said Frank Ballmann, director of NASSGAP’s Washington office. “As states have had budget shortfalls, they’ve realized it’s much more efficient to help people who would not otherwise go to college, or pay for college, then it is to try to help everyone equally.”

He continued: “If I’m a student from an upper-middle-class family, there’s a good chance I’m going to go to college one way or the other. But if I’m from a lower-income family, the probability of going to college without financial aid is pretty much zero.”

States increased need-based aid in 2013 as well, growing such aid 3.5 percent even as overall spending on aid reached a plateau that year.

Need-based aid by state:

The average amount of need-based aid per undergraduate in 2014 was $533, up from $509 the previous year. Yet funding varies vastly depending on the state; for example, Washington awarded $1,316 per student while South Dakota awarded $5 per undergraduate.

In fact, eight states distribute 70 percent, or $5.2 billion, of all the need-based aid awarded in the country. Those states include California, New York, Texas, Pennsylvania, New Jersey, Illinois, Washington and North Carolina. And two states, Georgia and New Hampshire, have no need-based aid programs. Yet Georgia’s non-need-based aid is the most generous of any other state, awarding some $570 million in 2014.

That year 35 states increased or held close to level spending for their primary need­-based grant program, and the average award amounts to students increased about 5 percent from the year before. Such increases reflect an effort by states “to recognize that the cost of attending [college] is rising,” said Ballmann.

Though much of the aid distributed by states is either need based or non-need based, some of the grants are a mix of both. According to the report, 47 percent was exclusively need based, 18 percent was non-need based and 34 percent was a mix.

Fully 85 percent of state aid in 2014 was in the form of grants -- roughly 4.5 million of them nationwide. The rest of state aid -- some $1.7 billion -- was distributed in the form of loans, loan assumptions, conditional grants, work-study and tuition waivers. Loans and tuition waivers accounted for about two-thirds of nongrant funds awarded.

Undergraduate Grant Aid 2014 (in millions)
State

Primary need-based aid program

Need-based aid Non-need-
based aid
Total
Alabama $2.611 $3.935 $2.245 $8.791
Alaska 3.890 - 7.824 11.714
Arizona 2.320 19.027 - 21.347
Arkansas 5.284 2.999 125.835 134.118
California 1,671.755 0.187 2.380 1,674.321
Colorado 73.613 - 0.420 74.033
Connecticut 33.577 6.227 0.268 40.073
Delaware 1.011 12.811 7.494 21.316
Florida 134.187 11.114 310.622 455.923
Georgia - - 569.924 569.924
Hawaii 0.285 3.498 - 3.782
Idaho 1.236 0.184 3.559 4.979
Illinois 372.189 0.084 1.051 373.324
Indiana 139.775 129.621 6.144 275.540
Iowa 49.592 9.977 4.802 64.370
Kansas 16.185 1.957 - 18.143
Kentucky 62.344 30.236 110.853 203.432
Louisiana 26.101 - 222.576 248.678
Maine 12.065 - - 12.065
Maryland 72.146 34.575 2.880 109.601
Massachusetts 38.600 48.443 4.062 91.105
Michigan 22.916 72.241 1.014 96.172
Minnesota 172.514 7.422 0.063 179.999
Mississippi 7.443 0.881 19.629 27.954
Missouri 59.878 0.671 46.863 107.412
Montana 2.019 1.686 1.339 5.044
Nebraska 16.420 0.921 - 17.341
Nevada 9.764 - 23.866 33.630
New Hampshire - - - -
New Jersey 350.130 34.449 7.764 392.342
New Mexico 11.084 13.590 68.145 92.820
New York 935.569 12.037 30.440 978.046
North Carolina 225.817 100.332 6.962 333.111
North Dakota 9.631 0.310 6.522 16.463
Ohio 80.856 - 38.538 119.394
Oklahoma 19.936 64.769 10.690 95.394
Oregon 54.933 0.441 - 55.374
Pennsylvania 450.474 6.971 1.525 458.970
Puerto Rico 15.109 14.051 - 29.160
Rhode Island 11.921 - - 11.921
SC CHE 24.991 - 295.894 320.884
SC TGC 35.650 - - 35.650
South Dakota 0.200 - 4.508 4.708
Tennessee 50.273 37.289 278.280 365.841
Texas 345.427 367.547 - 712.974
Utah 2.771 - 6.087 8.858
Vermont 15.083 2.201 0.109 17.392
Virginia 83.154 76.733 71.654 231.542
Washington 303.041 51.206 0.529 354.776
Washington, DC 1.197 - 30.597 31.794
West Virginia 40.780 4.637 59.415 104.832
Wisconsin 106.620 18.973 2.985 128.579
Wyoming - 15.150 - 15.150
Total 6,184.365 1,219.382 2,396.357 9,800.105

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