Federal Student Aid:

Expanding Eligibility for Less Than Halftime Students Could Increase Program Costs, But Benefits Uncertain

GAO-03-905: Published: Sep 10, 2003. Publicly Released: Oct 14, 2003.

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Despite the availability of federal, state, and other sources of student aid, concerns have been raised that adult undergraduates--those 24 and older--receive inadequate assistance in meeting the costs of postsecondary education, particularly those adults who take one to five credits per term (or less than halftime). These concerns have been raised because less-than halftime adult students are unable to participate in the largest federal student loan programs, the Stafford Loan programs, and they are eligible to receive only one of the two federal higher education tax credits, the Lifetime Learning tax credit. To better understand the needs of these adult students, GAO was asked to identify (1) the extent to which adults enroll less than halftime, the characteristics and factors associated with less-than- halftime enrollment, and the rates of completion among these students; (2) the extent to which adult students enrolled less than halftime receive federal, state, and other assistance to help them meet the cost of postsecondary education; and (3) the implications, including the budgetary impact, of changing the Pell Grant Program to allow less-than-halftime students to count room and board costs and personal expenses in their application for federal financial aid, and changing the Stafford loan programs to permit participation by less-than-halftime students.

In the 1999-2000 school year, 2.3 million adults enrolled in undergraduate education on a less-than-halftime basis, many seeking to balance school with other responsibilities. Compared with other adult students, the typical less-than-halftime adult student was more likely to work fulltime, be married, and have a household income over $30,000. Though 3 out of 4 less-than-halftime adult students expect to complete a degree or certificate program when they begin their education, most leave school without completing one. About 70 percent of less-than halftime adult students received some assistance--about 44 percent of their schooling costs--typically from sources other than federal or state student aid. The sources of assistance they received varied by household income: lower-income adult students enrolled less than halftime relied primarily upon student financial aid in meeting school costs, while higher-income households were assisted primarily by work-related sources such as the Lifetime Learning tax credit or employer assistance. We estimate that proposed changes to the Pell Grant programs would cost the federal government a minimum of $25 million for the 2003-2004 school year. Allowing less-than-halftime students to participate in the Stafford Loan programs would cost about $113 million per year. College administrators expressed reservations about expanding Stafford Loan eligibility due to concerns about increasing default rates. In commenting on our draft report, Education noted that they found it to be thorough and useful.

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