States Increase Spending on Student Financial Aid

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May 30, 2006

State spending on student financial aid increased by more than 8 percent in 2004-05, greater growth than in 2003-04, when spending rose by 6 percent. According to the National Association of State Student Grant and Aid Programs's 36th Annual Survey Report on State-Sponsored Student Financial Aid, states awarded $7.9 billion in state financial aid, the majority of which (85 percent) continues to be in the form of grants. Continuing with recent trends, this year merit-based aid again increased at a faster rate than need-based aid. In NASSGAP’s 10-year analysis of state-based programs, between 1994-95 and 2004-05, merit-based state aid quadrupled, while need-based aid doubled.

Other findings include:

California, Illinois, Indiana, New Jersey, New York, Ohio, Pennsylvania, and Texas account for the majority of all need-based aid.
South Carolina, Washington, D.C., Georgia, New York, and Indiana awarded the largest amount of grant aid per person (ages 18-24).
The majority of states, along with Puerto Rico and Washington, D.C., increased state spending on student financial aid this year; 11 states decreased spending; and one state maintained the same spending as last year.
Tennessee had the largest increase (216 percent) in spending of any state, as a result of a new lottery-scholarship program.

The full results are available on the NASSGAP Web site.