State Financial Aid Program FY2010 (7070-0065)

1. Board of Higher Education Meeting | October 6, 2009 State Financial Aid ProgramFY2010 (7070-0065)

2. Background

3. Background Appropriation Summary • State resources for Financial Aid Programs appropriated under three line accounts: • 7070-0065 General Scholarship Account $87,875,218 • 7066-0016 Foster Child Grant $1,150,000 • 7066-0021 Foster & Adopted Fee Waiver $1,000,000

4. Background Budget Overview • $87m in FY2010 reflects a 10% reduction compared to FY2009 • This 10% overall reduction in appropriation for State Financial Aid is much less than the average reduction for other higher education accounts • Represents the Governor’s recognition of the importance of financial aid and efforts to minimize the impact of budget cuts on students

5. Background Budget Overview • “Earmarks” eliminated from the appropriation language • DHE given authority to establish programs’ funding levels • Underlying mandate that the DHE would continue to fund programs in prior year budget, but not at same levels

6. FY2010 Program Allocations

7. FY2010 Program Allocations Guiding Principles • Overarching principles guiding program allocations • Prioritization of MASSGrant, the Commonwealth’s primary need-based financial aid program • Consideration of average annual demand and expenditure of each program over past three years • Continued commitment to the Commonwealth’s workforce development needs • Recognizing national and local trends that can help predict levels of need and demand for certain programs (i.e., Pell Grant, MASSGrant)

8. FY2010 Program Allocation Additional Factors • Impact of changes in Federal Methodology—Automatic Zero Expected Family Contribution (EFC ) • Increase in annual Pell Grant awards—Stimulus Funds • Increase in financial aid applications (eligible)

9. FY2010 Program Allocations Vetting Process with Stakeholders • Review and discussion of funding scenarios included the following groups and organizations: • Executive Office of Education • Department of Early Education and Care • Association of Independent Colleges and Universities of Massachusetts (AICUM) • Statewide Financial Aid Advisory Committee • Various constituent groups (Boston Access, Strategies for Children)

10. FY 2010 Program Allocations Impact of Guiding Principles & Factors • All programs funded in FY2009 continue to be funded in FY2010 • MASSGrant funding increased by 18% • 20% average reduction for need-based programs • 20% average reduction for workforce development programs • Slightly higher reduction to programs with history of being under-utilized

11. FY2010 Program Allocations FY09 and FY10 Program Allocations

12. FY2010 Program Allocations MASSGrant Highlights • 12.5% increase in “on-time” applicants • 60% increase in the number of “on-time” applicants with an EFC=O (36,715 in FY2009; 56,237 in FY2010) • 30% change in number of students who are expected to receive MASSGrant • Given the projected “eligible” population, $43 million would be required to fund MASSGrant at the 2008-09 level ($28.8m available in FY2009) • Awards for MASSGrant required reduction to meet demand

13. Questions