Measuring University Performance Series (MUPS)
Issue II:4
Financial Aid
April 1, 1996
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The University of Florida series, Measuring University Performance, will continue with the issue of April 1, 1996. Future issues will take up additional topics reflecting the university's commitment to measuring university performance in quality and productivity of research, teaching, extension, and service. All of us at the University of Florida welcome comments and suggestions prompted by this series. Please write to the Office of Institutional Planning and Research, PO Box 113115, University of Florida, Gainesville, FL 32611-3115 (ufdata@aa.ufl.edu).
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As public universities throughout the country struggle to maintain quality--as state revenue to higher education grows less rapidly than costs and in some instances declines--everyone's attention turns to tuition and fees. Students in public universities pay widely varying prices for their undergraduate degrees. Tuition and fee packages among AAU public universities, for example, vary widely around a middle point of about $3,500 per year for in-state students. Many states increased tuition rapidly in recent years, while others, like Florida, kept tuition stagnant even as state support for public higher education declined. In the debate over who should pay for college, we focus much attention on the financial aid that helps students and their parents pay those costs. Financial aid means different things to different people. To some, it implies a grant or scholarship that helps a student pay for tuition and books. To others it means loans or subsidized employment. Financial aid is all of these things. It comes from many sources, and universities distribute it to students in accord with a bewildering array of rules and regulations that apply to the financial aid dollars from each of the sources. In spite of the complexity of the details, however, we can draw a profile of the financial aid provided to students at the University of Florida. The University of Florida, with all of the public universities in the state, has held tuition constant for the last five years even in the face of continuously rising tuition among our competitor institutions among the Association of American Universities public institutions. Tuition in Florida universities stagnated at about $1,700 per year in 1992-93 while our competitors' average tuition grew from over $2,500 to well over $3,500 in the same period. Florida residents who attend the University of Florida now pay only half of what the residents of other states spend to attend the public AAU university in their home state. Between 1991-92 and 1994-95 the University of Florida saw its tuition and required fees rise only 16% while its competitors' prices rose by 37%. Some may regard this as a triumph of efficiency by Florida's public universities, but it actually reflects a disinvestment in higher education as support per student from the state falls at the same time tuition fails to meet the market for price. Absent effective action such as the tuition proposals currently under discussion in the Florida legislature, the university will see a decline in the quality of library, technology, facilities, equipment, faculty, and staff. Even with the lower rates of tuition, students at the University of Florida take full advantage of all financial aid programs. Over half the financial aid distributed to our students comes in the form of loans. Scholarships and grants account for just under 40% of the aid, with subsidized employment and various custodial programs providing the remaining 7%. This profile indicates clearly that financial aid for students is less a process for distributing gifts or scholarships than it is a methodology for processing loans of various kinds. 
Not all financial aid represents support for students with a substantial financial need. At the beginning of this decade, in the 1990-91 academic year, we distributed just under $60 million dollars of need based aid to students who could demonstrate that they did not have the financial resources or their families did not have the financial capability to send them to college. We distributed about half as much (under $25 million) in non-need based aid to students as need based in 1991-92. By the 1994-95 academic year the need based aid grew to under $80 million dollars, but the non-need based aid accelerated by 300% to the same level. This growth in non-need based financial aid, dollars delivered to students through university based student aid programs that require no test of financial need, reflects the expansion of loan programs throughout this five year period and a change in the Federal definition of need. Looked at more closely, the financial aid (need and non-need) distributed by the University of Florida in the past academic year came from four primary sources. By far the largest amount, some 102 million dollars came from Federal sources, primarily various need and non-need based loan programs. State and private sources of funds, mostly grant programs and scholarship programs, provided $32 and $37 million dollars respectively, and the university from its own resources distributed some $21 million, in both need and non-need based aid. Clearly, then, the Federal loan programs remain the major engines of financial aid for this and every other comparable university. Even with stable tuition over these years, the loan indebtedness of students has risen dramatically. Recognizing that the cost of an education to students has remained virtually constant over most of this period, the dramatic increase in student loan indebtedness reflects more the availability of non-need based loans than it does any increase in the cost of higher education. The average loan indebtedness of UF undergraduates rose from $6,000 in 1990-91 to above $12,000 in 1994-95. 
University of Florida students, with a very low cost of education, can repay their loans and have a default rate under 5% while the national average is about 15%. An indication of the consumer nature of University of Florida student debt is that while college costs at the University of Florida have risen by about 15% between 1991-92 and 1994-95 the debt our students have incurred while in college has risen by 300%. Clearly, students buy something other than the cost of education. 
A more precise understanding of student indebtedness comes from an analysis of the baccalaureate degree recipients of Spring 1995. Of these 2,700 graduates, about 80% received financial aid at some point in their career. About 97% of African American students, 82% of Hispanic students, and 80% of White students received financial aid. Graduating seniors overall had about $15,000 in need based aid and $8,179 of non-need based aid. Some students had both kinds of financial aid. If we look at students with both need and non-need based aid, some 960 graduates, they received on average about $15,300 of need based aid, and $7,600 of non-need based aid. Those with only need based aid (280 students) had about $15,800 of aid and those who had no need (936 students) had about $8,794 of aid. Students appear to be willing to accumulate some non-need based assistance to improve the quality of their lives beyond the basic necessities required for attending college. In determining need, we follow standard national guidelines. We take the cost o f instruction plus the cost of living in Gainesville as the cost of an academic year. Then we subtract from this cost whatever the analysis of the student's and parents' resources and obligations indicates the family can afford towards this education. The remainder is the need the student has that we can meet with need-based financial aid. Amounts received above this are non-need based aid. The parents of a University of Florida student who receives financial aid have an average income of about $41,000 dollars. The average student, dependent on a parent, has an income of some $2,250 dollars. So the total family income of students included in our survey of incomes (about 17,000 students) is something on the order of $43,000 dollars. Students no longer dependent on their parents have an average income of about $10,000. Average incomes for student families range from a low of about $29,500 for black families to a high of about $45,500 for white families. 
Students with financial aid may feel slightly more pressure to graduate quickly. Some 56% of students with financial aid as compared to 45% of students without financial aid graduated within 4 years or less of entering as freshmen. A similar pattern exists for transfer students with 33% of the financial aid recipients and 29% of the non-financial aid recipients graduating within 2 years of transferring to the university. Average consumer debt in the United States including mortgages and credit cards runs about $18,500 per person including everyone from babies to great grandparents. Students at the University of Florida who graduate with some $12,000 of debt are well with in the range of consumer debt. In perspective, the first new car our graduate will buy will equal at a minimum the total indebtedness from a college degree. The car will decline in value every day after it leaves the showroom. The college degree, however, will grow in value as the student's life time earnings increase. | ||||||||||||
