DOCUMENT RESUME ED 3.!.0 943 HE 025 921 TITLE Research Findings from the 1987 National Postsecondary Student Aid Study. INSTITUTION Pelavin Associates, Inc., Washington, DC. SPONS AGENCY Office of Policy and Planning (ED), Washington, DC. PUB DATE 92 CONTRACT LC-88001001 NOTE 191p. PUB TYPE Reports Research/Technical (143) EDRS PRICE MF01/PC08 Plus Postage. DESCRIPTORS *College Students; Comparative Analysis; Enrollment; Higher Education; National Surveys; Paying for College; Private Colleges; Public Colleges; Research; *Resource Allocation; *Student Characteristics; Student Costs; *Student Financial Aid; *Student Loan Programs; Tuition; Undergraduate Study IDENTIFIERS *National Postsecondary Student Aid Study ABSTRACT This report consists of a series of papers analyzing survey data from the 1987 National Postsecondary Student Aid Study (NPSAS) concerning the characteristics of both aided and nonaided students, as well as the manner in which students financed their postsecondary education. The following papers are presented: (1) "Paying for College: The Role of Financial Aid in Meeting the Costs of Undergraduate Education" (Rita J. Kirshstein); (2) "Who Attends Proprietary Schools? Findings from NPSAS" (Laura H. Salganik, Patricia A. Hopper); (3) "The Distribution of Discretionary Financial Aid and Stafford Loans" (Dan Sherman, Jon Cohen); and (4) "Descriptive Tables of the Characteristics of Undergraduate Students by Race and Ethnicity." The first paper uses three different definitions of net price to look at what students from different economic backgrounds paid to attend college. The second paper compares the characteristics of students attending proprietary schools to those attending similar programs in community colleges. The third paper identifies the significant factors related to the awarding of institutional aid, campus-based aid, and Stafford loans. The final paper presents data on personal characteristics, enrollment, and student aid by racial and ethnic categories. The report's appendix provides tables of statistical data developed from survey information. (GLR) *********************************************************************** Reproductions supplied by EDRS are the best that can be made from the original document. *********************************************************************** RESEARCH FINDINGSLIR THE 1987 NATIONAL POSTSECONDARY STUDENT AID STUDY U.S. DEPARTMENT OF EDUCATION Othce of Ec/cabana! Research and improvement EDUCATIONAL RESOURCES INFORMATION CENTER IERIC1 terdus document his been reproduced as recewed from the person or organize bon Onginating O !Amor changes have been made to imorove Prepared Under Contract by: reproduction Ovally Points of view or opintons stated .o this OoCu- meat do not necessarily represent °Motet OERI Pos.:on or 00I,CY Pelavin Associates, Inc. Washington, D.C. 20036 Contract No. LC 88001001 4 1(q 0 U.S. DEPARTMENT OF EDUCATION OFFICE OF POLICY AND , ! ; -I.. EXECUTIVE SUMMARY The 1987 National Postsecondary Student Aid Study (NPSAS) is a nationally representative survey of students enrolled in postsecondary institutions during the fall of 1986. Data were collected from 43,176 students enrolled in about 1,000 institutions. In the fall of 1986, institutional data were collected from registration and financial aid records. In the spring of 1987, questionnaires were mailed to students and to a subsample of parents, and financial aid records were updated. NPSAS collected detailed information on the characteristics of both aided and nonaided students, as well as the manner in which they financed their postsecondary educations. This report consists of a series of papers analyzing the survey data. The following is a summary of each of the papers. Paying for College. The Role of Financial Aid in Meeting the Costs of Undergraduate EJucation Throughout the 1980s, tuitions in all types of higher education institutions grew considerably faster than both inflation and median family income. While financial aid also increased during this period, its growth did not offset the escalation in tuitions. Furthermore, loans as a form of financial aid increased faster than either grants or work study. This paper focuses on what undergraduate students from different economic backgrounds actually paid to attend college in the 1986-87 academic year after financial aid awards were considered. Three different definitions of "net price" were used to compare the impact of different types of financial aid. These definitions are: COLLEGE COSTS - GRANTS; COLLEGE COSTS - (GRANTS + 1/2 LOANS); and COLLEGE COSTS - (GRANTS + LOANS + WORK STUDY). Each of these net price definitions results in a different concept of financial aid. They range from a definition which only includes a pure subsidy, grants, to a definition which is equivalent to the notion of "current price," or the immediate money needed to pay for college after all financial aid -- grants, loans, and work study -- is deducted from total college costs. Findings using these three definitions result in interesting differences, particularly for students in higher cost schools. i Major findings from our analyses include: Financial aid resulted in substantial reductions in the cost of postsecondary education for lower-income students. Lower-income students relied heavily on loans and work study to supplement grants and further reduce their educational costs; and Financial aid played a particularly critical role in reducing the premium paid by lower-income students to attend higher priced private colleges and universities. Further findings reveal differences in the overall contribution of Federal aid to students who attended public and private higher educational institutions. Federal financial aid awards are the primary contributor to the total financial aid package for lower-income students enrolled in public four-year colleges and universities. In the private sector, Federal aid is a smaller proportion of total costs than is aid from other sources, particularly institutional aid. Even students from higher income backgrounds appear to benefit from institutional aid awards. Who Attends Proprietary Schools? Findings From NPSAS Two very different types of educational institutions offer postsecondary vocational training: proprietary schools and less-than-four-year public institutions. .Less-than-four-year public schools, including community colleges and public vocational schools, receive considerable support through state subsidies and have relatively low student tuition. Proprietary schools, on the other hand, are for-profit businesses whose major revenue source is student tuition. Th,.. vast majority of their students receive Federal financial aid, including student loans that must be repaid even if the students do not complete their training. In spite of the high costs and the need to take out loans to pay for their education, growing numbers of students continue to enroll in proprietary schools. This expansion has important policy implications at the Federal level because it has resulted in a large increase in the percentage of Pell Grant and Stafford Loan dollars supporting proprietary school students. In 1988-89, 34.4 percent of Stafford Loan borrowers attended proprietary schools and received 29.9 percent of the loan dollars. Clearly, Federal financial aid has made proprietary schools accessible to low-income students who might not otherwise have been able to afford the tuition. The purpose of this study is to analyze the characteristics of full-time proprietary students and to compare them to the characteristics of students enrolled in similar programs in less-than- four-year public schools. Major findings from the study indicate that: When comparisons were made between programs of similar duration, the characteristics of proprietary and public school students were similar. Shorter programs (defined as being less than two years) attracted students who were more likely to be below the poverty line, independent, older, and not to have completed ii high school regardless of whether the institution was public or proprietary. However, since 70 percent of proprietary school students were enrolled in shorter programs compared to only 14 percent of public school students, overall proprietary students were more likely to fit the above profile. Even after controlling for program duration, black students were more likely and Asian students were less likely than white students to enroll in proprietary schools. The chances of Hispanic students enrolling in proprietary schools were similar to those of white students. Business-related courses had the largest share of enrollment in both types of schools. However, proprietary school students were more likely to be enrolled in administrative support and secretarial programs, while students in public schools were enrolled in business and management, accounting, and banking and finance. Proprietary school students received Pa Grants and Guaranteed Student Loans at a much higher rate than public school students. These differences, some of which are undoubtedly related to the fact that tuition is considerably higher at proprietary schools, persisted regardless of whether the students' family incomes were above or below the poverty level. Students' reasons for selecting the schools they attended suggest that availability of aid attracts students to proprietary schools, while lower costs attract them to public schools. The Distribution of Discretionary Financial Aid and Stafford Loans In analyzing the distribution of student aid, a relevant consideration is whether institutions have discretion over the type of aid in question. For those types of aid that the student brings to the institution, e.g., Pell Grants, private scholarships, and the like, it is the funding source who determines who receives the aid and how much they receive. However, for those types of aid over which institutions do have discretion, an important issue is the factors institutions consider in distributing this aid. The purpose of this report is to investigate the relative importance placed by institutions on various factors in the distribution of discretionary aid. Discretionary aid is defined in this report to include the three Federal campus-based aid programs, Supplemental Education Opportunity Grants (SEOG), College Work Study (CWS), Perkins Loans, and institutional aid. We also analyzed Stafford Loans because, while a student makes the decision on whether to borrow, this decision will depend on the extent to which the institution meets a student's need through discretionary aid sources. To examine the award of discretionary and Stafford aid, a multivariate model is estimated relating the amount of each of these sources of aid to financial need and other student characteristics, such as grade point average, race, gender, and dependency status. Separate equations are estimated for each aid source for both four-year public and private institutions, and the data set is restricted to full-time, full-year aided undergraduates. iii The following findings emerge from the analysis regarding the effect of three key factors on institutions' distribution of discretionary aid and Stafford Loans: Financial Need. Financial need was a major consideration in how institutions distributed discretionary aid and Stafford Loans. As financial need increased, so did both the probability of receiving aid and the amount of aid received. This result was found for all five sources of aid considered and in both four-year public and private institutions. Grade Point Average. In distributing their own funds, institutions clearly were interested in attracting and retaining higher ability students. For a given level of need, students with higher GPAs were both more likely to receive institutional aid and to receive larger amounts. For example, other things being equal, an aided student at a four-year private institution with a 1.0 GPA had a 46 percent chance of receiving institutional aid compared to a 70 percent chance for a student with a 4.0 GPA. The student with the 4.0 GPA received $1,300 more in aid than the student with the 1.0 GPA. Conversely, GPA was negatively related to the receipt of a Stafford loan. Other things being equal, an aided student at a four-year private institution with a 1.0 GPA had an 85 percent chance of receiving a Stafford loan compared to a 64 percent chance fors student with a 4.0 GPA. Race. Non-white students were more likely to receive SEOG and CWS awards than were whites, holding other factors, including need, constant. On the other hand, non-whites were less likely to participate in the Stafford Loan program. There was no difference in the receipt of institutional aid between white.and non- white students. iv ACKNOWLEDGEMENTS The authors would like to thank Daniel Goldenberg of the Department of Education for making the publication of these papers possible. V LIST OF PAPERS PAYING FOR COLLEGE: THE ROLE OF FINANCIAL AID IN MEETING THE COSTS OF UNDERGRADUATE EDUCATION WHO ATTENDS PROPRIETARY SCHOOLS? FINDINGS FROM NPSAS THE DISTRIBUTION OF DISCRETIONARY FINANCIAL AID AND STAFFORD LOANS DESCRIPTIVE TABLES OF THE CHARAC:i ERISTICS OF UNDERGRADUATE STUDENTS BY RACE AND ETHNICITY , PAYING FOR COLLEGE: THE ROLE OF FINANCIAL AID IN MEETING THE COSTS OF UNDERGRADUATE EDUCATION Rita J. Klrshstein TABLE OF CONTENTS Page Introduction 1 Trends in Tuitions, Financial Aid, Family Income, and Enrollments 3 Methodology 9 College Costs 10 Financial Aid 10 Net Price 11 Income 12 College Costs, Inc° Me, and Financial Aid 12 Net Price 19 The Contribution of Loans and Work Study 21 Reducing the Public/Private Cost Differential 21 The Federal Role 23 Conclusions 30 APPENDIX A: Tables 33 Iii