MORTGAGING OUR FUTURE

HOW FINANCIAL BARRIERS TO COLLEGE

UNDERCUT AMERICA’S GLOBAL COMPETITIVENESS

A REPORT OF THE ADVISORY COMMITTEE

ON STUDENT FINANCIAL ASSISTANCE

WASHINGTON DC

SEPTEMBER 2006

MORTGAGING OUR FUTURE

HOW FINANCIAL BARRIERS TO COLLEGE

UNDERCUT AMERICA’S GLOBAL COMPETITIVENESS

A REPORT OF THE ADVISORY COMMITTEE

ON STUDENT FINANCIAL ASSISTANCE

WASHINGTON DC

SEPTEMBER 2006

.

Advising Congress and

the Secretary of Education

for nearly 20 Years

Advisory Committee on 

Student Financial Assistance

80 F Street NW, Suite 413

Washington DC 20202-7582

Tel: 202/219-2099 • Fax: 202/219-3032

ACSFA@ed.gov

www.ed.gov/acsfa

The Advisory Committee on Student Financial Assistance (Advisory Committee) is a Federal 

advisory committee chartered by Congress, operating under the Federal Advisory Committee 

Act (FACA); 5 U.S.C., App. 2). The Advisory Committee provides advice to the Secretary 

of the U.S. Department of Education on student financial aid policy. The findings and 

recommendations of the Advisory Committee do not represent the views of the Agency, and 

this document does not represent information approved or disseminated by the Department 

of Education.

EXECUTIVE SUMMARY

America’s global competitiveness depends on the ability of our high school graduates to earn at 

least a bachelor’s degree. As in recent decades, financial barriers are a major factor in preventing 

large numbers of college-qualified students from earning a bachelor’s degree, particularly those 

from low- and moderate-income families. These bachelor’s degree losses are an unmistakable 

signal that our nation has yet to make the full investment in student aid necessary to secure our 

economic future—a dire warning that we are requiring millions of students to mortgage their future and ours as well. 

We have failed to take accurate account of the impact of price barriers on our lowest income students, especially those who have prepared and planned for college:

•	 During the 1990s, between nearly 1 million and 1.6 million bachelor’s degrees were lost among college-qualified high school graduates from lowand moderate-income families.

•	 During the current decade, between 1.4 million and 2.4 million more

bachelor’s degrees will likely be lost, as the number of high school 

graduates increases and academic preparation improves.

These estimates are extremely conservative, reflecting only those losses that occur among lowand moderate-income college-qualified high school graduates and only to the extent that they are 

unable to enroll and persist in college at the same rates as their middle-income peers. Total losses, 

including those among middle-income students, are much higher (Figure 28, page 35).

The loss ranges are based on two measures of “college qualification” or academic preparation, one 

more rigorous than the other: 

•	 The lower end of the loss range includes only those high school graduates 

who took at least Trigonometry. 

•	 The upper end includes only those high school graduates who took at least 

Algebra II. 

It is extremely important to note that these bachelor’s degree loss estimates exclude a very large 

portion of low- and moderate-income 8th graders who either do not graduate from high school or 

graduate but are not college-qualified under at least one of these measures (Table 1, page 37). The 

bachelor’s degree losses in this report, therefore, represent the cream of the nation’s high school 

graduate crop. These are students who—

•	 expected and planned to earn a bachelor’s degree and had completed the 

courses required to attend a four-year college;

	 •	 had more financial aid information than their middle-income peers;

	 •	 were not likely deterred by application forms and processes, which 

millions of far less qualified students complete successfully each year.

College 

Qualification 

Measures

Students 

in the Loss 

Estimates

Bachelor’s 

Degree Loss

Estimates

 iii
These bachelor’s degree losses will be difficult, if not impossible, to stem through strictly nonfinancial means. Although academic preparation appears to have improved, early information 

and student expectations to complete college have certainly expanded, and financial aid forms 

and processes have been greatly simplified over the last decade and a half, bachelor’s degree 

completion rates by family income show no sign of improving. Financial barriers in the form 

of record level work and loan burden caused by rising college prices and insufficient need-based 

grant aid continue to undermine advances in other areas. 

In addition to the direct effects of financial barriers on the success of low- and moderate-income 

college-qualified high school graduates, there are pervasive indirect effects on students from 

middle school through high school who strive to become college-qualified. Today’s financial 

barriers serve to reduce the pool of college-qualified high school graduates tomorrow by—

• weakening incentives to prepare academically,

• compromising the effectiveness of early intervention efforts,

• making further simplification of student aid more difficult.

These findings have important implications for federal, state, and institutional financial aid policy. 

To increase bachelor’s degree attainment, the nation must— 

• reinvigorate the access and persistence partnership to increase need-based 

aid from all sources,

•	 restrain increases in the price of college and offset necessary increases 

with need-based aid,

•	 moderate the trend—at all levels—toward merit-based aid and increasing 

reliance on loans,

•	 reduce financial barriers to transfer from two-year to four-year colleges,

•	 strengthen early intervention programs for low- and moderate-income 

middle school students,

•	 invest in efficient and productive remediation in college.

Taking these actions collectively will lower financial barriers, improve bachelor’s degree attainment 

rates, expand the pool of college-qualified high school graduates over time, and enhance America’s 

economic competitiveness. 

The losses also provide a framework for evaluating current student aid proposals, particularly 

their rationale and supporting data. Given the paramount importance of maintaining America’s 

competitiveness, proposals aimed at lowering financial barriers through increased need-based aid 

from all sources should receive top priority. Overhauling or dismantling the Title IV programs—

which suffer primarily from inadequate funding—is unnecessary. Well-designed improvements to 

increase efficiency and further streamline delivery are all that is required. 

The current reauthorization of the Higher Education Act presents an ideal opportunity to make 

lasting improvements in student aid that will increase educational attainment, strengthen America’s 

global competitiveness, and create a brighter future for all Americans. 

Indirect Effects 

of Financial 

Barriers 

Implications 

for Student 

Aid Policy 

 iv
FOREWORD

Twenty years ago, Congress created the Advisory Committee on Student Financial Assistance to 

be an objective, nonpartisan source of expertise and advice on student aid policy. The charge given 

to us was to make recommendations to Congress and the Secretary of Education that maintain and 

improve college access and persistence for needy students. Through four administrations, eleven 

Congresses, and three reauthorizations of the Higher Education Act, our Committee has made 

every effort to fulfill this mandate.

This report follows up our two previous reports, Access Denied and Empty Promises, by focusing 

on how financial barriers created by rising college prices and insufficient need-based financial 

aid undercut bachelor’s degree attainment in the United States. We focus on bachelor’s degree 

attainment not because every high school graduate must or should earn a bachelor’s degree, but 

because our financial aid system is founded on the principle that any youth, regardless of family 

income, should have the financial opportunity to earn such a degree, if he or she aspires to do 

so and prepares adequately. This longstanding principle is not merely altruistic, but also highly 

practical. Americans benefit greatly from increasing the educational attainment and economic 

productivity of our entire citizenry. 

While our nation’s competitiveness in the world economy has long been an issue, it is a particular 

focus and concern of federal policy today. Assessing the extent to which the loss of bachelor’s 

degrees and the subsequent negative impact on competitiveness can be attributed to financial 

barriers is of overriding importance. 

It is particularly urgent because as concerns about competitiveness have risen, so also have 

questions about whether financial barriers really matter, and whether the Title IV programs have 

been effective in reducing those barriers. The major finding of this report is that, beyond any 

reasonable doubt, financial barriers do matter greatly and that the funding of Title IV programs 

along with that of state and college programs, while generous, simply has been inadequate to lower 

these barriers in the face of rising college prices. Blaming underfunded student aid programs for 

disappointing rates of college enrollment and persistence seems unproductive.

To make these points as persuasively as possible, this report focuses on college-qualified high 

school graduates. The bachelor’s degree loss estimates, therefore, exclude a large portion of lowand moderate-income 8th graders who do not graduate from high school or graduate not fully 

prepared to attend a four-year college (Tables 1 and 2, page 37). But nothing in this report 

should be construed as implying that these students—who are also deserving recipients of Title 

IV assistance—should be left behind, or that scarce funds should be shifted away from them to 

their peers who are better prepared. Title IV has multiple purposes, one of which is to offset the 

continuing disparity between the likelihood that poor and wealthy 8th graders can become collegequalified. And the data show clearly that we are a long way from achieving a level playing field 

in that regard. 

The same is true of the large population of low- and moderate-income nontraditional students. 

This report does not deal with that problem directly but chooses to focus on the underlying access 

and persistence pipeline that gives rise to that population. Financial barriers to college are a major 

 

 v
cause of delayed and part-time enrollment in the first place, as well as a major obstacle to returning 

to college in pursuit of a degree. 

Lastly, while this report centers on the relationship between bachelor’s degree attainment and 

our nation’s competitiveness in the global economy, we recognize and wish to call attention to 

our belief that the purpose of college goes well beyond that. Perhaps the most important purpose 

is to build within students the skills of critical thinking, adaptability, and social engagement that 

improve life for all Americans. 

With respect to the underlying causes of financial barriers and their elimination, this report is 

strictly objective and nonpartisan. No administration or level of government is blamed for the 

estimated losses, nor held exclusively responsible for eliminating them. We also recognize that 

not all of the losses should be seen as a response to inadequate finances. In some cases, family or 

societal issues can exacerbate the effects of financial barriers. As a society, all of us together—the 

federal and state governments, colleges, and the private sector as well—have allowed these barriers 

to grow to current record levels over the last three decades. The only practical way that we as a 

nation can avoid these losses is through a joint and cooperative effort spearheaded by a partnership 

of all stakeholders, led by the Department of Education, designed to increase need-based grant aid 

from all sources.

Our Committee feels unanimously that unless we begin to work together to lower the financial 

barriers to college enrollment and persistence identified in this report, much of our considerable 

efforts to improve academic preparation, broaden early intervention, maximize outreach and 

information, and simplify student aid forms and processes will be frustrated. 

Without a cooperative effort from all stakeholders, the losses of bachelor’s degrees estimated in 

this report as well as their negative impact on America’s economic competitiveness, will prove 

inescapable.

Clare Cotton, Chair

Judith Flink, Vice Chair

Advisory Committee on Student Financial Assistance

 vi
ACKNOWLEDGEMENTS

The Advisory Committee thanks the countless individuals in the higher education community who 

have provided unwavering support in our efforts to make recommendations to Congress and the 

Secretary of Education that increase college access and persistence for low- and moderate-income 

students. For technical assistance in analyzing the data, we thank John Lee and Sue Clery of JBL 

Associates.

This report would not have been possible without the support of the U.S. Department of Education as evidenced by the development and maintenance of research databases, supported by the 

National Center for Education Statistics. The analyses in this report are based almost exclusively 

on the National Education Longitudinal Study of 1988, the Education Longitudinal Study of 2002, 

and the National Postsecondary Student Aid Survey. These databases allow policymakers and 

researchers to analyze national trends in college enrollment, persistence, and degree completion. 

The Department of Education’s significant investment in these databases and in education research 

continues to be critically important in determining the causes of educational inequality and identifying potential solutions.

 vii

TABLE OF CONTENTS

Executive Summary.........................................................................................iii

Foreword.......................................................................................................v

Acknowledgements.........................................................................................vii

Keeping America Competitive.............................................................................1

The Impact of Financial Barriers on Bachelor’s Degree Attainment .............................7

Findings and Policy Implications.........................................................................41

The Current HEA Reauthorization......................................................................51

Endnotes......................................................................................................53

References...................................................................................................59

Appendices...................................................................................................63

Countries with 

growing 

economies, like 

China and India, 

are threatening to 

match or surpass 

the United States 

in technological 

innovation, 

research, and 

development. 

America’s global 

competitiveness 

depends not only 

on investment in 

research, science, 

and technology, 

but also on 

investment in 

human capital—

higher education. 

Keeping America Competitive

Disturbing data on America’s global competitiveness are a wake-up call to 

leaders in government and business that we cannot stand idle and expect 

to maintain our position as a world leader in industry and technology. 

A call for a renewed focus on economic competitiveness came from the 

National Academies. Their report, Rising Above the Gathering Storm: 

Energizing and Employing America for a Brighter Future, documents 

mounting evidence of existing challenges to America’s economic standing in a variety of areas, including output, research capacity, and levels of 

educational attainment. Evidence from the National Academies’ report 

and data from the Organisation for Economic Co-operation and Development (OECD) demonstrate that countries with growing economies, like 

China and India, are threatening to match or surpass the United States in 

technological innovation, research, and development.1

Maintaining America’s economic competitiveness and capacity for 

technological innovation is directly related to maintaining our nation’s 

economic growth and improving our current standard of living. The National Academies’ report cautions that America’s ability to lead the world 

in science and engineering is related to both the creation of high-quality 

jobs in America, and the ability to respond to the need for cleaner, more 

reliable sources of affordable energy.2

 In addition, as President George W. 

Bush noted in introducing the White House’s American Competitiveness 

Initiative (ACI) in February 2006, the United States’ position as a world 

leader in science and technology has resulted in strong economic growth 

and improvements in the livelihoods of many Americans.3

 Because of 

the relevance of competitiveness to both our economy and society, the 

National Academies’ report and the White House’s ACI recommend a 

comprehensive federal effort to sustain and improve America’s competitive advantage. 

America’s global competitiveness depends not only on investment in 

research, science, and technology, but also on investment in human 

capital—higher education. Statistics that highlight differences in educational attainment show that our competitors are equaling or surpassing 

us in educational achievement. According to the National Center for 

Education Statistics (NCES), in the 2003 administration of the Program 

for International Student Assessment (PISA), the United States scored 
lower in terms of math literacy and problem solving than the average 

score for most OECD countries.4

In addition, indicators from the National Science Board and National 

Science Foundation show that students who were non-citizens had the 

largest growth in attainment of science and engineering doctorate degrees. In 2001, more than one-third of such degrees were awarded to 

foreign-born students.5

 For this reason, both the ACI and the National 

Academies’ reports call for increased federal investments in science 

and engineering research programs, and for improvements in math and 

science education across the entire education pipeline. 

America’s competitive advantage in the global economy depends upon 

increasing rates of success in postsecondary education and increasing 

rates of bachelor’s degree attainment in particular. The decline in manufacturing jobs in today’s knowledge economy has resulted in an increased 

need for highly skilled workers, particularly those who have attained at 

least a bachelor’s degree.6

 For example, the Bureau of Labor Statistics 

estimated in 2001 that jobs requiring some form of postsecondary education will constitute 42 percent of total job growth between 2000 and 

2010; such jobs accounted for 29 percent of all jobs in 2000.7

 

In addition, New England 2020, a recent report commissioned by the 

Nellie Mae Foundation, predicts a decline in the percentage of 30-yearolds with a bachelor’s degree or higher in Massachusetts, Connecticut, 

Vermont, and Maine—partially due to changing demographics—and 

links this decline to the availability of a skilled workforce in these states.8

Increasing bachelor’s degree attainment rates would result in the flexible, 

productive, and innovative workforce necessary to fill the high-quality 

jobs that the National Academies indicated were vital to maintaining 

our economic advantage.9

Moreover, the earning power and income taxes paid by bachelor’s degree 

recipients are significantly higher than those who earn an associate’s 

degree, or no degree at all. Accordingly, the National Center for Public 

Policy and Higher Education and the National Center for Higher Education Management Systems predict a decline in personal income levels in 

the United States between 2000 and 2020 and a subsequent decline in the 

nation’s tax base if bachelor’s degree attainment rates do not increase. 

These organizations predict a decline in the share of the population age 

25 to 64 with a bachelor’s degree, and a decline in personal income per 

capita by $325, or 2 percent. In comparison, personal income per capita 

grew by 41 percent nationally between 1980 and 2000.10 The College 

Board also estimates that the typical full-time, year-round worker with a 

bachelor’s degree earned $49,900 per year in 2003 and paid $11,800 in 

America’s 

competitive 

advantage in the 

global economy 

depends upon 

increasing rates of 

bachelor’s degree 

attainment. 

Increasing 

bachelor’s degree 

attainment rates 

would result 

in the flexible, 

productive, 

and innovative 

workforce 

that is vital to 

maintaining 

our economic 

advantage. 

2
taxes, compared to a similar worker with an associate’s degree who earned 

$37,600 per year and paid $8,400 in taxes. Workers with only a high 

school diploma earned $30,800 per year and paid $6,500 in taxes.11

Clearly, there are both private and public benefits to bachelor’s degree 

attainment. 

Unequal Bachelor’s Degree 

Attainment Rates

Because bachelor’s degree attainment is essential to America’s economic 

future, narrowing income-related gaps in degree attainment is of critical 

importance. Doing so requires that college-qualified high school graduates from low- and moderate-income families have the financial resources 

to enroll and persist through degree completion.12 However, our nation 

is nowhere near achieving this goal, and significant gaps in bachelor’s 

degree attainment rates by family income continue to exist. 

Among 8th graders in 1988, the following percentages attained a bachelor’s degree by the year 2000, by family income (Figure 1): 

•	 16 percent of low-income

•	 27 percent of moderate-income

•	 43 percent of middle-income

•	 65 percent of high-income.

Over four times as many high-income 8th graders attained a bachelor’s 

degree as their low-income peers. 

Further, significant gaps in bachelor’s degree attainment rates by family 

income are likely to persist throughout the decade. Among 8th graders 

in 2000, the following percentages are projected to attain a bachelor’s 

degree by the year 2012 (Figure 1):

 13

•	 20 percent of low-income

•	 32 percent of moderate-income

•	 49 percent of middle-income

•	 68 percent of high-income.

Although more low-income students who were 8th graders in 2000 are 

likely to attain a bachelor’s degree by the year 2012, they remain far 

less likely than their high-income peers to attain the degree. Persistent 

inequality of bachelor’s degree attainment rates by family income will 

be a challenge that our nation will confront for decades. This inequality will continue to undermine our ability to compete in the 21st century 

global economy.

Because 

bachelor’s degree 

attainment is 

essential to 

America’s 

economic future, 

narrowing incomerelated gaps in 

degree attainment 

is of critical 

importance. 

Although more 

low-income 

students who were 

8th graders in 2000 

are likely to attain 

a bachelor’s degree 

by the year 2012, 

they remain far 

less likely than 

their high-income 

peers to attain the 

degree. 

3
Only 16% of low-income 8th graders in 1988 who eventually became college-qualified high school graduates by taking at least 

Algebra II attained a bachelor’s degree by the year 2000, compared to 65% of their high-income peers. In 2000, 20% of low-income 8th graders are projected to attain a bachelor’s degree by 2012, but this rate is still far lower than the 68% of high-income 

8th graders. [Source: Calculations based on the analyses of the National Education Longitudinal Study of 1988/2000 and Education Longitudinal 

Study of 2002/2004.]

The access and persistence problem today has two components. First, on the left, college-qualified low- and moderate-income high 

school graduates are less likely to earn a bachelor’s degree than their upper-income peers—43% and 50% vs. 80%. Second, on the 

right, low- and moderate-income 8th graders are less likely to become college-qualified high school graduates—47% and 63% vs. 

86%. [Source: Calculations based on the analyses of the National Education Longitudinal Study of 1988/2000 and Education Longitudinal Study 

of 2002/2004.]

*High school graduates who completed at least Algebra II.

FIGURE 1: BACHELOR'S DEGREE ATTAINMENT

OF 8TH GRADERS IN 1988 AND 2000

BY FAMILY INCOME

16%

20%

27%

32%

43%

49%

65%

68%

Percent of 8th Graders in 1988 Who Earned a Bachelor's

Degree by 2000

Percent of 8th Graders in 2000 Projected to Earn a

Bachelor's Degree by 2012

Low-Income

Moderate-Income

Middle-Income

High-Income

FIGURE 2: CORE FEATURES OF THE ACCESS & PERSISTENCE PROBLEM

FOR COLLEGE-QUALIFIED HIGH SCHOOL GRADUATES*

43%

47%

50%

65% 63%

76%

80%

86%

Percent of College-Qualified High School Graduates in 2004

Projected to Earn a Bachelor's Degree by 2012

Percent of 8th Graders in 2000 Projected to Become CollegeQualified High School Graduates in 2004

Low-Income

Moderate-Income

Middle-Income

High-Income

Can a college-qualified high school

graduate earn a bachelor's degree?

Can an 8th grader become a collegequalified high school graduate?
Two interrelated weaknesses in public policy underpin the nation’s unequal bachelor’s degree attainment by family income: 

•	 Failure to ensure the success of college-qualified high school 

graduates.

•	 Failure to increase the pool of college-qualified high school 

 graduates over time. 

Low- and moderate-income high school graduates who are college-qualified are far less likely to earn a bachelor’s degree than their middle- and 

high-income peers. Among 2004 college-qualified high school graduates, the following are projected to earn a bachelor’s degree by 2012, by 

family income (Figure 2):

•	 43 percent of low-income 

•	 50 percent of moderate-income 

•	 65 percent of middle-income 

•	 80 percent of high-income.

The goal of federal student assistance is to provide high school graduates 

who are adequately prepared the opportunity to pursue and complete college, regardless of family income. This goal has yet to be achieved and 

undercuts our nation’s competitiveness in the global economy.

The nation has failed to increase the pool of college-qualified high school 

graduates over time, particularly among low- and moderate-income students. The likelihood that an 8th grader will graduate from high school 

college-qualified is strongly and positively related to family income. 

Among 8th graders in 2000, the following are projected to become college-qualified high school graduates in 2004 (Figure 2):

•	 47 percent of low-income 

•	 63 percent of moderate-income 

•	 76 percent of middle-income 

•	 86 percent of high-income.

This highly unequal distribution of educational opportunity by family 

income is indicative of an unequal playing field that exists as early as 8th

grade.14 Such inequality directly undercuts our nation’s competitiveness 

in the global economy.

Low- and 

moderate-income 

high school 

graduates who are 

college-qualified 

are far less likely to 

earn a bachelor’s 

degree than their 

middle- and highincome peers. 

The nation has 

failed to increase 

the pool of 

college-qualified 

high school 

graduates over 

time, particularly 

among low- and 

moderate-income 

students. 

5
The Dual Role of 

Need-Based Grant Aid

Financial barriers in the form of high prices net of all grant aid at fouryear public colleges play a critical role in both dimensions of unequal 

bachelor’s degree attainment rates by family income: 

•	 First, the barriers are a primary cause of low- and moderate-income, college-qualified high school graduates being unable to 

attain bachelor’s degrees at the same rate as their middle- and 

high-income peers. 

•	 Second, the barriers also reduce the number of low- and moderate-income students graduating from high school college-qualified, by diminishing incentives to prepare and plan for college.15

To demonstrate these points, this report—

•	 estimates losses of bachelor’s degrees among collegequalified high school graduates from low- and moderate-income families for the decade of the 1990s and the 

current decade;

•	 derives high-level findings about the impact of financial barriers, including an exploration of how such barriers undermine 

academic preparation, information, and simplification efforts; 

•	 identifies the broad implications of those findings for federal, 

state, and institutional policy. 

The purpose of the report is to formulate a flexible analytical framework 

in which the impact of financial barriers on bachelor’s degree attainment 

can be assessed. This framework must be used to evaluate priorities 

and proposals in the current reauthorization of the Higher Education 

Act (HEA).

Financial barriers 

are a primary 

cause of low- and 

moderate-income, 

college-qualified 

high school 

graduates being 

unable to attain 

bachelor’s degrees 

at the same rate as 

their middle- and 

high-income peers. 

The purpose 

of the report is 

to formulate a 

flexible analytical 

framework in 

which the impact 

of financial 

barriers on 

bachelor’s degree 

attainment can be 

assessed. 

6
THE IMPACT OF FINANCIAL BARRIERS 

ON BACHELOR’S DEGREE ATTAINMENT

The National Education Longitudinal Study of 1988 (NELS:88) tracked 

a cohort of 8th graders from 1988 through 2000, providing information 

on these students’ transition from high school through postsecondary 

education. Similar to NELS:88, the Education Longitudinal Study of 

2002 (ELS:2002) is a database that will track a cohort of 10th graders in 

2002 from high school through postsecondary education. These databases allow for comparative analyses between the two cohorts. A third 

database, the National Postsecondary Student Aid Survey (NPSAS), 

examines how students pay for postsecondary education and includes 

information on college costs and financial aid.16

Technical Approach

These three Department of Education (ED) data sets—NELS:88, 

ELS:2002, and NPSAS—can be used to determine the impact of financial barriers on high school graduates in the two cohorts and to estimate 

bachelor’s degree losses due to financial barriers in the 1990s and the 

current decade. To do so, the following steps are necessary:

•	 Identify those students in each cohort who are “college-qualified” 

high school graduates. 

•	 Determine the financial barriers—net prices of four-year public 

colleges—facing these students.

•	 Examine their 10th grade expectations to finish college, 12th grade 

plans to attend a four-year college, financial concerns, and actual 

enrollment behavior.

•	 Estimate the percentage and number who were (or will be) unable 

to earn a bachelor’s degree within eight years.

The final step requires using these estimates to calculate total losses of 

bachelor’s degrees in the 1990s and the current decade, and to attribute 

a portion of the losses to financial barriers. 

These three ED 

data sets—

NELS, ELS, and 

NPSAS—can be 

used to determine 

the impact of 

financial barriers 

on high school 

graduates in the 

two cohorts. 

The final step 

requires using 

these estimates 

to calculate total 

losses of bachelor’s 

degrees in the 

1990s and current 

decade, and to 

attribute a portion 

of the losses to 

financial barriers. 
Identifying College-Qualified

High School Graduates

The first step in isolating the impact of financial barriers on bachelor’s 

degree attainment is to focus on those high school graduates who are 

college-qualified. To do so, this report uses two measures of college 

qualification:

•	 High school graduates who took at least Algebra II—a measure 

comparable to the one introduced by NCES in 1997.

•	 High school graduates who took at least Trigonometry—a more 

rigorous measure under which far fewer high school graduates 

are identified as college-qualified.

Level of high school math is used because it has been shown to be a 

strong predictor of academic success in college.17 These two measures 

form the upper and lower bounds, respectively, of this report’s bachelor’s 

degree loss estimates and projections.

At Least Algebra II

Under the less rigorous measure, 52 percent of low-income students 

and 65 percent of moderate-income students who graduated from high 

school in 1992 were qualified to attend a four-year college, compared 

to 73 percent of middle-income students and 86 percent of high-income 

students (Figure 3). This measure is comparable to that used by NCES 

in a 1997 analysis of access to postsecondary education for 1992 high 

school graduates. In that study, NCES found that low-income high school 

graduates who were college-qualified had as much or more financial aid 

information as their middle-income peers, and attributed no differences 

in four-year college enrollment rates by income to complexity of application forms or processes.18 

Approximately the same percentage of low-income high school graduates 

were identified as college-qualified under the 1997 NCES measure (53 

percent) as are identified as college-qualified under the “at least Algebra 

II” measure (52 percent).

At Least Trigonometry

The second, more rigorous measure includes only those high school 

graduates who completed at least Trigonometry. Under this measure, 24 

percent of low-income high school graduates and 34 percent of moderateincome graduates were qualified to attend a four-year college, compared 

Level of high 

school math is 

used because it has 

been shown to be a 

strong predictor of 

academic success 

in college. 

Under the less 

rigorous measure, 

52 percent of lowincome students 

and 65 percent of 

moderate-income 

students were 

qualified to attend 

a four-year college.

8
FIGURE 3: PERCENT OF 1992 HIGH SCHOOL GRADUATES

WHO WERE QUALIFIED TO ATTEND A 4-YEAR COLLEGE

COMPARING MEASURES OF COLLEGE QUALIFICATIONS

53%

64%

74%

86%

52%

65%

73%

86%

24%

34%

43%

60%

Low-Income Moderate-Income Middle-Income High-Income

NCES 1997 Definition

At Least Algebra II

At Least Trigonometry

FIGURE 4: PERCENT OF 1988 8TH GRADERS EXCLUDED

FROM BACHELOR'S DEGREE LOSS ESTIMATES

WHEN "AT LEAST ALGEBRA II" MEASURE IS USED

29%

16%

9%

5%

34%

29%

25%

13%

34%

18%

45%

63%

Low-Income Moderate-Income Middle-Income High-Income

Did Not Graduate from High School

Graduated Not College-Qualified

Total Excluded from Projections

Bachelor’s degree loss estimates in this report use two measures of college qualification: first, that high school graduates have 

completed at least Algebra II; second, and more rigorous, that high school graduates have completed at least Trigonometry. The 

“at least Algebra II” measure is comparable to the one introduced by NCES in 1997 in that the percentage of high school graduates qualified by family income under the two measures varies by no more than one percentage point. [Source: National Education 

Longitudinal Study of 1988/2000.]

If college-qualified is defined as high school graduates who took at least Algebra II, a large portion of 8th graders from low- and 

moderate-income families are excluded from bachelor’s degree loss estimates—63% and 45%, respectively. Excluded from the 

analyses are all 8th graders who did not graduate from high school plus those who graduated but did not take at least Algebra II. 

[Source: National Education Longitudinal Study of 1988/2000.]
to 43 percent and 60 percent of their middle- and high-income peers, 

respectively (Figure 3).

Students Excluded 

from Loss Estimates

High school graduates who were not college-qualified were not included 

in the estimates of bachelor’s degree losses. This refers to those who 

did not graduate from high school or did not graduate from high school 

having taken at least Algebra II or at least Trigonometry. Excluded were 

a sizeable portion of high school graduates from all income groups, particularly from low-income and moderate-income families.19

At Least Algebra II

Under the “at least Algebra II” measure, the following percentages of 

1988 8th graders were excluded from the analyses, by family income 

(Figure 4):

•	 63 percent of low-income

•	 45 percent of moderate-income

•	 34 percent of middle-income

•	 18 percent of high-income.

Of 1988 low-income 8th graders, 63 percent were excluded because 29 

percent did not graduate from high school, and 34 percent graduated but 

did not take at least Algebra II. Of moderate-income 8th graders, 45 percent were excluded because 16 percent did not graduate, and 29 percent 

graduated but did not take at least Algebra II.

At Least Trigonometry

Even more low- and moderate-income 8th graders were excluded from 

the estimates when the “at least Trigonometry” measure was used. The 

following percentages of 1988 8th graders were excluded, by family 

income (Figure 5):

•	 83 percent of low-income

•	 71 percent of moderate-income

•	 61 percent of middle-income

•	 43 percent of high-income.

It is essential to note that over 70 percent of low- and moderate-income 8th

graders were excluded from the estimated number of bachelor’s degrees 

10

Of 1988 lowincome 8th graders, 

63 percent were 

excluded, and of 

moderate-income 

8th graders, 45 

percent were 

excluded because 

they did not 

graduate from 

high school, or 

graduated but did 

not take at least 

Algebra II. 

Even more lowand moderateincome 8th graders 

were excluded 

from the estimates 

when the “at least 

Trigonometry” 

measure was 

used, 83 percent 

and 71 percent, 

respectively.
FIGURE 5: PERCENT OF 1988 8TH GRADERS EXCLUDED

FROM BACHELOR'S DEGREE LOSS ESTIMATES

WHEN "AT LEAST TRIGONOMETRY" MEASURE IS USED

29%

16%

9%

5%

54% 55%

52%

38%

83%

71%

61%

43%

Low-Income Moderate-Income Middle-Income High-Income

Did Not Graduate from High School

Graduated Not College-Qualified

Total Excluded from Projections

Alternatively, if college-qualified is defined more rigorously as high school graduates who have taken at least Trigonometry, a very 

high portion of 8th graders from low- and moderate-income families were excluded from bachelor’s degree loss estimates—83% 

and 71%, respectively. Excluded were all 8th graders who did not graduate from high school plus those 8th graders who did graduate but had not taken at least Trigonometry. [Source: National Education Longitudinal Study of 1988/2000.]

Net prices (family work and loan burden) at 4-year public colleges defined as total cost of attendance minus grant aid from all 

sources rose for the better part of the 1990s. During this period, total student aid increases at 4-year public colleges were exceeded 

by price increases. Thus, increases in student aid from all sources did not induce increases in 4-year college enrollment. [Source: 

National Postsecondary Student Aid Survey (NPSAS); calculations by T. Mortenson.]

FIGURE 6: NET PRICES (WORK AND LOAN BURDEN) FACING LOWAND MODERATE-INCOME FAMILIES AT 4-YEAR PUBLIC COLLEGES

SELECTED YEARS FROM 1990 TO 2000

BY FAMILY INCOME

$5,240

$7,051 $6,936

$7,500

$6,416

$8,312 $8,358

$8,958

$7,104

$9,175 $9,584

$10,645

1990 1993 1996 2000

$0-$19,999

$20,000-$39,999

$40,000-$59,999

In 1990 Dollars

$5,692 $6,799 $8,079
12

lost among college-qualified high school graduates when the “at least 

Trigonometry” measure was used. 

Decade of the 1990s

Understanding bachelor’s degree losses in the 1990s first requires examining how net prices at four-year public colleges increased over the 

decade, how those increases related to family income, and how those 

increases affected student and parent concerns about college costs and 

available financial aid.

Net Prices of Four-Year Public Colleges

In this report, net prices are defined as total cost of attendance—tuition, 

fees, and living expenses—minus grant aid from all sources at four-year 

public colleges, and can be thought of as the total work and loan burden 

facing the family. Between 1990 and 2000, net prices in NPSAS had 

increased for low- and moderate-income families (Figure 6):

•	 From $5,240 in 1990 to $7,500 in 2000 for incomes less than 

$20,000.

•	 From $6,416 in 1990 to $8,958 in 2000 for incomes between 

$20,000 and $39,999.

•	 From $7,104 in 1990 to $10,645 in 2000 for incomes between 

$40,000 and $59,999.

Despite increases in grant aid from all sources, net prices in constant 

dollars at four-year public colleges rose slightly throughout the 1990s. 

Because price increases offset increases in grant aid, there was no induced-enrollment effect at four-year public colleges due to increases in 

student aid.

Net Price as Percent of Family Income

Net prices affect students and families differently depending on the 

level of family income. The best way to measure financial barriers 

is to calculate the net price of a four-year public college as a percentage of family income. For example, a net price of $7,500 in 2000 

represented only 15 percent of income for a family earning $50,000, 

but 75 percent of income for a low-income family earning $10,000. 

The negative impact of net price on enrollment decisions varies inversely

Despite increases 

in grant aid 

from all sources, 

net prices in 

constant dollars 

at four-year 

public colleges 

rose slightly 

throughout the 

1990s; there 

was no inducedenrollment effect 

at four-year public 

colleges.

The best way to 

measure financial 

barriers is to 

calculate the net 

price of a fouryear public college 

as a percentage 

of family income: 

$7,500 in 2000 

represented 75 

percent of income 

for the lowest 

income families.
with family income. For families whose income remained in the lowest 

category—$0 to $19,999—between 1990 and 2000, net price at a fouryear public college as a percentage of family income rose from over 50 

percent to over 70 percent.20 

Financial Concerns

The net prices that college-qualified high school graduates faced at fouryear public colleges in the 1990s had an impact on concerns about college 

costs and the availability of financial aid among both parents and students. 

At both levels of academic preparation, college-qualified high school 

graduates and their parents from low- and moderate-income families 

were much more concerned about college costs and the availability of 

financial aid than their middle- and high-income peers (Figure 7):

•	 Among parents, at least 80 percent of low-income and over 66 

percent of moderate-income were “very concerned” about college 

costs and financial aid, compared to 37 percent or less of their 

middle-income peers and 19 percent or less of their high-income 

peers.

•	 Among students, 71 percent of low-income and 59 percent of 

moderate-income were “very concerned” about college costs 

and aid, compared to less than 34 percent of their middle-income 

peers and 21 percent or less of their high-income peers.

Since parent and student concerns about college costs and financial 

aid translate directly into concerns about perceived net price, such 

concerns can undercut plans to attend a four-year college and actual 

enrollment.21 

1992 High School Graduates 

Who Took At Least Algebra II

Net prices and financial concerns about college costs and the availability of financial aid had a direct impact on the expectations, plans, and 

enrollment of 1992 college-qualified high school graduates who took 

at least Algebra II. 

Expectations, Plans, and Enrollment

The majority expected in 10th grade to finish college and planned in 12th

grade to attend a four-year college. However, 12th grade plans melted 

Parent and student 

concerns about 

college costs and 

financial aid 

translate directly 

into concerns 

about perceived 

net price.

Net prices and 

financial concerns 

had a direct 

impact on the 

expectations, plans, 

and enrollment 

patterns of 1992 

college-qualified 

high school 

graduates.

13
At both levels of academic preparation, 1992 college-qualified high school graduates and their parents from low- and moderate-income families were much more concerned about college costs and the availability of financial aid than their middle- and 

high-income peers. These financial concerns translate into concerns about perceived net price and intervene between students’ 

expectations and plans to enroll in a 4-year college and the level and timing of their actual enrollment. [Source: National Education 

Longitudinal Study of 1988/2000.]

Expectations and plans rose as family income increased. The majority of 1992 college-qualified high school graduates expected in 

10th grade to finish college and planned in 12th grade to attend a 4-year college. However, financial concerns about college costs 

and the availability of financial aid caused 12th grade plans to melt into lower enrollment levels, especially among students from 

low- and moderate-income families. [Source: National Education Longitudinal Study of 1988/2000.]

FIGURE 8: EXPECTATIONS, PLANS, AND 4-YEAR COLLEGE ENROLLMENT

OF 1992 COLLEGE-QUALIFIED HIGH SCHOOL GRADUATES

AT LEAST ALGEBRA II

79%

88%

92%

81%

92%

68%

84%

69%

76%

70%

54%

59%

Low-Income Moderate-Income Middle-Income High-Income

Expected in 10th Grade to Finish College

Planned in 12th Grade to Enroll in a 4-Year College

Enrolled in a 4-Year College within Two Years

23% Melt 22% Melt 16% Melt 9% Melt

FIGURE 7: CONCERNS ABOUT COLLEGE COSTS AND FINANCIAL AID AMONG

COLLEGE-QUALIFIED HIGH SCHOOL GRADUATES AND THEIR PARENTS

PERCENT "VERY CONCERNED"

80%

67%

36%

18%

71%

59%

33%

19%

81%

68%

37%

19%

71%

59%

34%

21%

Low-Income Moderate-Income Middle-Income High-Income

Parents

Students

At Least

Algebra II

At Least

Algebra II

At Least

Algebra II

At Least

Algebra II

At Least

Trig At Least

Trig

At Least

Trig

At Least

Trig
15

into lower enrollment for all groups, especially for those from low- and 

moderate-income families (Figure 8):

22

•	 Among those with low-income, 70 percent planned to enroll in a 

four-year college but only 54 percent did so, a 23 percent melt.

•	 Among those with moderate-income, 76 percent planned 

to enroll in a four-year college but only 59 percent did so, a 22 

percent melt.

•	 Among those with middle-income, 81 percent planned to 

enroll in a four-year college but only 68 percent did so, a 

16 percent melt.

•	 Among those with high-income, 92 percent planned to enroll in a four-year college but 84 percent did so, only a 

9 percent melt.

Concerns about college costs and the availability of financial aid in the 

1990s—perceived net price—had a strong inverse effect by family income on the melt between 12th grade plans and actual enrollment.

Also of special importance was the strong inverse relationship between 

family income and attending no college at all. Among 1992 collegequalified high school graduates from low-income families, 20 percent 

attended no college at all, compared to only 3 percent of their high-income peers (Figure 9).

Bachelor’s Degree Attainment

Bachelor’s degree attainment was strongly and positively related to 

family income among 1992 college-qualified high school graduates. 

For those who completed at least Algebra II, the following percentages 

had earned a bachelor’s degree by year 2000, by family income (Figure 

10):

•	 43 percent of low-income

•	 50 percent of moderate-income

•	 64 percent of middle-income 

•	 80 percent of high-income.

Also of interest, those who started at a four-year college earned a 

bachelor’s degree far more often than their peers who expected to earn 

the degree, but started at a two-year college (Figure 10): 

Among 1992 

college-qualified 

high school 

graduates from 

low-income 

families, 20 

percent attended 

no college at all, 

compared to only 

3 percent of their 

high-income peers.

Bachelor’s 

degree attainment 

was strongly and 

positively related 

to family income 

among 1992 

college-qualified 

high school 

graduates. 
FIGURE 10: BACHELOR'S DEGREE ATTAINMENT OF 1992

COLLEGE-QUALIFIED HIGH SCHOOL GRADUATES BY 2000

AT LEAST ALGEBRA II

43%

50%

64%

80%

62%

67%

78%

84%

20%

34%

44%

53%

Low-Income Moderate-Income Middle-Income High-Income

All Students

Students Starting at a 4-Year College

Students Starting at a 2-Year College*

FIGURE 9: ENROLLMENT PATTERNS* OF 1992

COLLEGE-QUALIFIED HIGH SCHOOL GRADUATES

AT LEAST ALGEBRA II

54%

59%

68%

84%

21% 24% 23%

11%

4% 3% 2% 1%

20%

14%

6%

3%

Low-Income Moderate-Income Middle-Income High-Income

4-Year College

2-Year College

Other**

No Postsecondary Education

Even among college-qualified high school graduates, enrollment in a 4-year college was strongly related to family income. Those 

from high-income families enrolled at a much higher rate than those from low-income families—84% vs. 54%. Over 20% of low-, 

moderate-, and middle-income students enrolled in a 2-year college. Also noteworthy, 20% and 14% of those with low- and moderate-income attended no college at all. [Source: National Education Longitudinal Study of 1988/2000.]

*First institution attended within two years of high school graduation.

**Includes for-profit institutions and less-than-2-year institutions.

Among college-qualified high school graduates, bachelor’s degree attainment is strongly related to family income—with students 

from high-income families earning the degree much more often than students from low-income families, 80% vs. 43%. Starting at 

a 4-year college increases the likelihood of earning a bachelor’s degree considerably—especially for students from low- and moderate-income families. [Source: National Education Longitudinal Study of 1988/2000.]

*Includes only those who expected to earn at least a bachelor’s degree.
•	 62 percent compared to 20 percent of low-income

•	 67 percent compared to 34 percent of moderate-income

•	 78 percent compared to 44 percent of middle-income

•	 84 percent compared to 53 percent of high-income.

Those with high income who started at a two-year college were more 

than twice as likely as their low-income peers to earn a bachelor’s degree.

This pattern likely reflected the negative impact of financial barriers on 

both the initial enrollment decision (four-year college versus two-year college) as well as the financial difficulty of transferring from a two-year college to a four-year college for those of low- and moderate-income.23 

1992 High School Graduates 

Who Took At Least Trigonometry

The impact of financial barriers on the expectations, plans, enrollment, 

and bachelor’s degree attainment of 1992 college-qualified high school 

graduates was also evident when the more rigorous measure of “at least 

Trigonometry” was used. Those from low- and moderate-income families 

were still less likely than those from middle- and high-income families 

to earn a bachelor’s degree.

Expectations, Plans, and Enrollment

As might be anticipated, 10th grade expectations, 12th grade plans, and 

college enrollment were all at higher levels for 1992 high school graduates who took at least Trigonometry, compared to their peers who took at 

least Algebra II. The vast majority expected in 10th grade to finish college 

and planned in 12th grade to attend a four-year college. However, even 

for these students who met the more rigorous measure, there was a melt 

between college plans and actual enrollment (Figure 11):

•	 Among those with low-income, 84 percent planned to enroll in a 

four-year college but only 73 percent did so, a 13 percent melt.

•	 Among those with moderate-income, 86 percent planned to enroll 

in a four-year college but only 72 percent did so, a 16 percent 

melt.

•	 Among those with middle-income, 88 percent planned to enroll 

in a four-year college but 81 percent did so, an 8 percent melt.

•	 Among those with high-income, 95 percent planned to enroll in a 

four-year college but 90 percent did so, only a 5 percent melt.

The imact of 

financial barriers 

on 1992 collegequalified high 

school graduates 

was also evident 

when the more 

rigorous measure 

of “at least 

Trigonometry” 

was used.

Even for these 

students who met 

the more rigorous 

measure, there was 

a melt between 

college plans and 

actual enrollment.

17
18

As in the case of their peers who took at least Algebra II, for 1992 high 

school graduates who took at least Trigonometry, concerns about college 

costs and the availability of financial aid likely had an inverse effect by 

family income on the melt between 12th grade plans and actual enrollment. 

Also, the inverse relationship between family income and attending no 

college was still evident, although at lower levels. Over 8 percent of those 

with low- and moderate-income attended no college at all, compared to 

only 1 percent of their high-income peers (Figure 12). 

Bachelor’s Degree Attainment 

As in the case of their peers who took at least Algebra II, bachelor’s 

degree attainment rates by 2000 of 1992 high school graduates who 

completed at least Trigonometry were also positively related to family 

income (Figure 13):

•	 55 percent of low-income

•	 63 percent of moderate-income

•	 78 percent of middle-income 

•	 85 percent of high-income.

By family income, higher percentages of students who started at a fouryear college earned a bachelor’s degree when compared to those who 

started at a two-year college with the expectation of earning at least a 

bachelor’s degree: 

•	 69 percent compared to 19 percent of low-income

•	 73 percent compared to 45 percent of moderate-income

•	 83 percent compared to 64 percent of middle-income

•	 88 percent compared to 49 percent of high-income.24

Those with high income who started at a two-year college were more 

than twice as likely as their low-income peers to earn a bachelor’s degree. 

This pattern likely reflects the negative impact of financial barriers on 

both the initial enrollment decision (four-year college versus two-year 

college) as well as the financial difficulty of transferring from a two-year 

college to a four-year college even for those of low- and moderate-income 

who were better prepared.

Bachelor’s Degree Losses Among 1992 

College-Qualified High School Graduates 

Whether the measure of “at least Algebra II” or “at least Trigonometry” 

is used, large losses of bachelor’s degrees occurred among the 1992 

cohort, by family income (Figure 14):

Those with high 

income who 

started at a twoyear college were 

more than twice as 

likely as their lowincome peers to 

earn a bachelor’s 

degree, likely 

reflecting the 

negative impact of 

financial barriers.

Whether the 

measure of “at 

least Algebra 

II” or “at least 

Trigonometry” 

is used, large 

losses of bachelor 

degrees occurred 

among the 1992 

cohort, by family 

income.
FIGURE 12: ENROLLMENT PATTERNS* OF 1992

COLLEGE-QUALIFIED HIGH SCHOOL GRADUATES

AT LEAST TRIGONOMETRY

73% 72%

81%

90%

17% 16% 15%

8%

2% 2% 1% 1%

8% 9%

3% 1%

Low-Income Moderate-Income Middle-Income High-Income

4-Year College

2-Year College

Other**

No Postsecondary Education

For those college-qualified high school graduates who took at least Trigonometry, 10th grade expectations and 12th grade plans 

were understandably higher than for those who had taken at least Algebra II, and, likewise, rose with family income. However, 

even for these better prepared high school graduates, 12th grade plans melted into lower actual 4-year college enrollment, especially among those of low- and moderate-income. [Source: National Education Longitudinal Study of 1988/2000.]

Even among college-qualified high school graduates who completed at least Trigonometry, 4-year college enrollment is related to 

family income. Students from high-income families enroll at higher rates than students from low-income families—90% vs. 73%. 

Also, over 15% of those with low- and moderate-income enroll in a 2-year college. [Source: National Education Longitudinal Study of 

1988/2000.]

*First institution attended within two years of high school graduation.

**Includes for-profit institutions and less-than-2-year institutions.

FIGURE 11: EXPECTATIONS, PLANS, AND 4-YEAR COLLEGE ENROLLMENT

OF 1992 COLLEGE-QUALIFIED HIGH SCHOOL GRADUATES

AT LEAST TRIGONOMETRY

84% 87%

95% 98%

84% 86% 88%

95%

73% 72%

81%

90%

Low-Income Moderate-Income Middle-Income High-Income

Expected in 10th Grade to Finish College

Planned in 12th Grade to Enroll in a 4-Year College

Enrolled in a 4-Year College within Two Years

13% Melt 16% Melt 8% Melt 5% Melt
•	 77,000 to 211,000 of low-income

•	 108,000 to 280,000 of moderate-income

•	 51,000 to 143,000 of middle-income

•	 31,000 to 59,000 of high-income.

Because 1992 was early in the decade, and both net prices and the number of high school graduates increased throughout the 1990s, cumulative 

losses across the decade were at least ten times higher. 

Attributing Bachelor’s Degree

Losses to Financial Barriers

Since not all college-qualified high school graduates at any income level 

earn a bachelor’s degree, total losses of bachelor’s degrees must be adjusted downward to include only those that can be reasonably attributed 

to financial barriers. Two methods are used in this report:

•	 Method #1: Includes only losses among low-, moderate-, and 

middle-income students adjusted downward by the rate at which 

their high-income peers did not earn the degree.

•	 Method #2: Includes, more conservatively, only losses among 

low- and moderate-income students adjusted downward by the 

rate at which their middle-income peers did not earn the degree.

For example, among 1992 college-qualified high school graduates who 

had taken at least Trigonometry, the percent not attaining a bachelor’s 

degree, by family income, can be derived from the attainment rates 

(Figure 13):

•	 45 percent of low-income

•	 37 percent of moderate-income

•	 22 percent of middle-income

•	 15 percent of high-income.

Method #1, which adjusts for the rate at which those with high-income 

did not attain the degree, reduces all rates by 15 percentage points to 

yield adjusted loss rates of 30 percent, 22 percent, and 7 percent for low-, 

moderate-, and middle-income students, respectively. These loss rates are 

then used to generate the number of losses in these three income bands 

using the estimated income distribution of 1992 high school graduates. 

Method #2, which adjusts for the rate at which those with middle-income 

did not attain the degree, reduces all rates by 22 percentage points to yield 

20

Total losses of 

bachelor’s degrees 

must be adjusted 

downward to 

include only 

those that can 

be reasonably 

attributed to 

financial barriers. 

Method #1 

adjusts for the 

rate at which those 

with high-income

did not attain the 

degree; Method 

#2 adjusts for the 

rate at which those 

with middle-income

did not attain the 

degree.
FIGURE 13: BACHELOR'S DEGREE ATTAINMENT OF 1992

COLLEGE-QUALIFIED HIGH SCHOOL GRADUATES BY 2000

AT LEAST TRIGONOMETRY

55%

63%

78%

85%

69%

73%

83%

88%

19%

45%

64%

49%

Low-Income Moderate-Income Middle-Income High-Income

All Students

Students Starting at a 4-Year College

Students Starting at a 2-Year College*

FIGURE 14: BACHELOR'S DEGREE LOSSES AMONG

1992 COLLEGE-QUALIFIED HIGH SCHOOL GRADUATES

TOTAL NOT ATTAINING THE DEGREE BY YEAR 2000

BY FAMILY INCOME

77,000

108,000

51,000 31,000

267,000

211,000

280,000

143,000

59,000

693,000

Under $25,000 $25,000 - $49,999 $50,000-$74,999 Over $75,000 Total

At Least Trigonometry

At Least Algebra II

Among college-qualified high school graduates who have taken at least Trigonometry, bachelor’s degree attainment is strongly 

related to family income—with those from high-income families earning the degree more often than students from low-income 

families, 85% vs. 55%. Starting at a 4-year college increases the likelihood of earning a bachelor’s degree—especially for those of 

low- and moderate-income. [Source: National Education Longitudinal Study of 1988/2000.]

*Includes only those who expected to earn at least a bachelor’s degree.

Whether an index of “at least Algebra II” or “at least Trigonometry” is used, large losses of bachelor’s degrees occurred among 

1992 college-qualified high school graduates. Between 185,000 (77,000 + 108,000) and 491,000 (211,000 + 280,000) bachelor’s 

degrees were lost among those with low- and moderate-income. Between 51,000 and 143,000 were lost among those with middleincome as well. Because 1992 was early in the decade, and net prices increased as the number of high school graduates rose, total 

bachelor’s degree losses for the decade were likely at least ten times larger—2.67 million to 6.93 million. [Source: Calculations based 

on analyses of the National Education Longitudinal Study of 1988/2000.]
22

adjusted loss rates of 23 percent and 15 percent for low- and moderateincome students, respectively. These loss rates are used to generate losses 

in these two income bands.

1992 Bachelor’s Degree Losses Under Method # 1

Using this method of attribution produces the following loss estimate 

ranges for the 1992 high school class, by family income (Figure 15):

•	 51,000 to 137,000 of low-income

•	 64,000 to 168,000 of moderate-income 

•	 16,000 to 63,000 of middle-income.

The 1992 class was just one cohort; decade-wide losses were likely at 

least ten times higher.

1992 Bachelor’s Degree Losses Under Method #2 

Using the more conservative method of attribution produces the following loss estimate ranges for the 1992 high school class, by family income 

(Figure 16):

•	 39,000 to 78,000 of low-income

•	 44,000 to 78,000 of moderate-income.

Decade-wide losses were likely at least ten times higher.

Once again, these ranges exclude a large portion of 1988 8th graders from 

low- and moderate-income families who did not graduate from high 

school by 1992, or did not graduate college-qualified under one or both 

measures of college qualification. 

The Current Decade

Data and lessons learned from the 1992 NELS cohort can be used in conjunction with recent data on 2004 12th graders in the ELS cohort to project 

the number of bachelor’s degrees that are likely to be lost if financial 

barriers facing low- and moderate-income students are not reduced. 

Net Prices of Four-Year Public Colleges

 

Between 2000 and 2004, net prices (work and loan burden) at four-year 

public colleges in NPSAS remained at record levels (Figure 17): 

Loss estimate 

ranges for the 1992 

high school class 

by family income 

are: 39,000 to 

78,000 of lowincome, and 

44,000 to 78,000 

of moderateincome—decadewide losses were 

likely at least ten 

times higher.

The 1992 NELS 

cohort can be used 

in conjunction 

with recent data on 

2004 12thgraders in 

the ELS cohort to 

project the number 

of bachelor’s 

degrees that are 

likely to be lost.
FIGURE 15: BACHELOR'S DEGREE LOSSES AMONG 1992 COLLEGE-QUALIFIED

HIGH SCHOOL GRADUATES ATTRIBUTABLE TO FINANCIAL BARRIERS

METHOD #1: ADJUSTED DOWNWARD BY THE RATE AT WHICH THOSE

WITH HIGH-INCOME DID NOT ATTAIN THE DEGREE BY 2000

BY FAMILY INCOME

51,000 64,000

16,000

131,000 137,000

168,000

63,000

368,000

Under $25,000 $25,000 - $49,999 $50,000-$74,999 Total

At Least Trigonometry

At Least Algebra II

FIGURE 16: BACHELOR'S DEGREE LOSSES AMONG 1992 COLLEGE-QUALIFIED

HIGH SCHOOL GRADUATES ATTRIBUTABLE TO FINANCIAL BARRIERS

METHOD #2: ADJUSTED DOWNWARD BY THE RATE AT WHICH THOSE

WITH MIDDLE-INCOME DID NOT ATTAIN THE DEGREE BY 2000

BY FAMILY INCOME

39,000 44,000

83,000 78,000 78,000

156,000

Under $25,000 $25,000 - $49,999 Total

At Least Trigonometry

At Least Algebra II

The first method for attributing bachelor’s degree losses among 1992 college-qualified high school graduates to financial barriers 

includes losses only among those with low-, moderate-, and middle-income and adjusts the losses downward by the rate at which 

those with high-income did not attain the degree. Between 131,000 and 368,000 bachelor’s degrees were lost. Because net prices 

and the number of high school graduates rose in the 1990s, decade-wide losses were likely at least ten times higher—1.31 million 

to 3.68 million. [Source: Calculations based on analyses of the National Education Longitudinal Study of 1988/2000.]

The second, more conservative method of attributing bachelor’s degree losses among 1992 college-qualified high school graduates 

to financial barriers is to include losses only among those with low- and moderate-income and to adjust the losses downward by the 

rate at which middle-income students did not earn the degree. Between 83,000 and 156,000 bachelor’s degrees were lost. Because 

net prices and the number of high school graduates rose in the 1990s, decade-wide losses were at least ten times higher—830,000 

to 1.56 million. [Source: Calculations based on analyses of the National Education Longitudinal Study of 1988/2000.]
24

•	 $7,500 in 2000 and $8,719 in 2004 for family incomes less than 

$20,000.

•	 $8,958 in 2000 and $10,090 in 2004 for family incomes between 

$20,000 and $39,999.

•	 $10,645 in 2000 and $12,572 in 2004 for family incomes between 

$40,000 and $59,999.

•	 $11,664 in 2000 and $13,374 in 2004 for family incomes between 

$60,000 and $79,999.

In constant dollars, between 2000 and 2004, net prices at four-year public 

colleges increased for low- and moderate-income families.25

Net Price as Percent of Family Income

For families whose income remained in the lowest category—$0 to 

$19,999—between 2000 and 2004, net price at a four-year public college 

as a percentage of family income rose from 75 percent to 87 percent for 

those earning $10,000. Once again, there was little reason for these families to change their college enrollment decisions as student aid increases 

were largely offset by price increases. 

Financial Aid Packages

A publication of the American Council on Education, “What Every Student Should Know About Student Aid,” corroborates data on net prices 

from NPSAS by providing sample financial aid award packages for the 

lowest income students by type of college.26 A sample financial aid package for a low-income, high need resident student at a four-year public 

college (total expenses of $14,500) includes the following (Figure 18):

•	 $7,300 in need-based grant aid (federal and state)

•	 $5,100 in federal student loans

•	 $2,100 in federal work-study. 

This package implies a cumulative loan burden between $20,000 and 

$30,000, depending on length of time to degree completion. A sample 

financial aid package for a low-income, high need resident student at a 

four-year public university (total expenses $17,000) includes the following (Figure 19):

In constant dollars, 

between 2000 and 

2004, net prices at 

four-year public 

colleges increased 

for low- and 

moderate-income 

families.

Sample financial 

aid award 

packages for the 

lowest income 

students imply a 

cumulative loan 

burden between 

$20,000 and 

$50,000, depending 

on type of public 

institution and 

length of time to 

degree 

completion.
Between 2000 and 2004, net prices at 4-year public colleges—defined as total cost of attendance minus grant aid from all sources, 

or work and loan burden for the family—rose even when adjusted for inflation. During this period, increases in student aid at 4-year 

public colleges were again outpaced by price increases. Increases in total student aid did not induce increases in 4-year college 

enrollment. [Source: National Postsecondary Student Aid Study; calculations by Tom Mortenson.]

Today, at 4-year public colleges, the lowest income high school graduates can face a work and loan burden of over $7,000 after 

grant aid from all sources is deducted, and a cumulative loan burden of at least $20,000, assuming completion in four years. Only 

by working more hours can cumulative loan burden be reduced. [Source: American Council on Education (2005), What Every Student 

Should Know About Federal Aid.]

FIGURE 17: NET PRICES (WORK AND LOAN BURDEN) FACING LOWAND MODERATE-INCOME FAMILIES AT 4-YEAR PUBLIC COLLEGES

FROM 2000 TO 2004

BY FAMILY INCOME

$7,500

$8,719 $8,958

$10,090 $10,645

$12,572

$11,664

$13,374

2000 2004

$0-$19,999

$20,000-$39,999

$40,000-$59,999

$60,000-$79,999

In 2000 Dollars

$7,948 $9,198 $11,461 $12,192

FIGURE 18: SAMPLE FINANCIAL AID PACKAGE

STATE COLLEGE, RESIDENT STUDENT

$2,500

Federal

Perkins Loan

$2,600

Federal

Direct/FFELP

$2,100

Federal

Work Study

$5,300

Federal

Need-Based

Grant Aid

$2,000

State

Need-Based

Grant Aid

Total Expenses............................$14,500

Need-Based Grant Aid....................$7,300

Federal..............................$5,300

State.................................$2,000

Work and Loan Burden...................$7,200

Federal Work Study.............$2,100

Federal Direct/FFELP Loan..$2,600

Federal Perkins Loan..........$2,500

Resulting Cumulative Loan Burden

Four Years..........................Approx. $20,000

Five Years...........................Approx. $25,000

Six Years.............................Approx. $30,000

Note: The actual work and loan burden facing students

may exceed the amounts above because of lower state

need-based aid and Federal Perkins loan amounts.

Loan
26

•	 $6,800 in need-based grant aid (federal and state)

•	 $7,900 in federal loans

•	 $2,300 in federal work-study. 

This package implies a cumulative loan burden between $30,000 and 

$50,000, depending on length of time to degree completion.

Improvements in Academic 

Preparation between 1992 and 2004

Between 1992 and 2004, the percentage of college-qualified students 

increased as measured by their course-taking, especially among students 

of low- and moderate-income. The increases measured by the percentage taking at least Algebra II were as follows, by family income (Figure 

20):

•	 52 percent to 66 percent of low-income

•	 65 percent to 75 percent of moderate-income

•	 73 percent to 84 percent of middle-income

•	 86 percent to 90 percent of high-income. 

The increases measured by the percentage of students taking at least 

Trigonometry were as follows, by family income:

•	 24 percent to 32 percent of low-income

•	 34 percent to 44 percent of moderate-income

•	 43 percent to 56 percent of middle-income

•	 60 percent to 67 percent of high-income.

The class of 2004 appeared to be better prepared to attend a four-year 

college, at least as indicated by these two measures.

2004 High School Graduates 

Who Took at Least Algebra II

Complete enrollment data are not yet available on the ELS cohort of 

2004 high school graduates. However, data on their course-taking, 10th

grade expectations, and 12th grade plans are available. Using the known 

enrollment and persistence patterns of the 1992 class, these preliminary 

data can be used to estimate the enrollment pattern and project the likely

persistence patterns of 2004 college-qualified high school graduates. 

Between 1992 

and 2004, the 

percentage of 

college-qualified 

students increased 

as measured by 

their coursetaking, especially 

among students of 

low- and moderateincome. 

The class of 2004 

appeared to be 

better prepared to 

attend a four-year 

college, at least as 

indicated by these 

two measures: 

Algebra II and 

Triogonmetry.
Today, at 4-year public universities, the lowest income high school graduates can face a work and loan burden of $10,200 after 

grant aid from all sources is deducted, and a cumulative loan burden of at least $30,000, assuming completion in four years. Only 

by working more hours can loan burden be reduced. [Source: American Council on Education (2005), What Every Student Should Know 

About Federal Aid.]

Between 1992 and 2004, the percentage of high school graduates taking at least Algebra II and at least Trigonometry increased, 

especially among those from families with low- and moderate-income. The high school class of 2004 appeared better prepared to 

attend a 4-year college, as indicated by these two measures. [Source: National Education Longitudinal Study of 1988/2000 and Education 

Longitudinal Study of 2002/2004.]

FIGURE 20: IMPROVEMENTS IN ACADEMIC PREPARATION FROM 1992 TO 2004

PERCENT OF HIGH SCHOOL GRADUATES COLLEGE-QUALIFIED

52%

65%

73%

86%

66%

75%

84%

90%

24%

34%

43%

60%

44%

56%

67%

32%

Low-Income Moderate-Income Middle-Income High-Income

1992 High School Graduates

2004 High School Graduates

At Least

Algebra II

At Least

Trig

At Least

Algebra II

At Least

Algebra II

At Least

Algebra II

At Least

Trig

At Least

Trig

At Least

Trig

FIGURE 19: SAMPLE FINANCIAL AID PACKAGE

STATE UNIVERSITY, RESIDENT STUDENT

$2,300

Federal

Work Study

$2,000

State NeedBased Grant

Aid

$4,800

Federal

Need-Based

Grant Aid

$2,800

Federal

Plus Loan

$2,500

Federal

Perkins Loan

$2,600 Federal Direct/

FFELP Loan

Total Expenses............................$17,000

Need-Based Grant Aid....................$6,800

Federal..............................$4,800

State.................................$2,000

Work and Loan............................$10,200

Federal Work Study..............$2,300

Federal Direct/FFELP Loan...$2,600

Federal Perkins Loan...........$2,500

Federal Plus Loan....................$2,800

Resulting Cumulative Loan Burden

Four Years...........................Approx. $30,000

Five Years............................Approx. $40,000

Six Years..............................Approx. $50,000

Note: The actual work and loan burden facing students

may exceed the amounts above because of lower state

need-based aid and Federal Perkins loan amounts.
28

Expectations and Plans

A comparison of expectations and plans of the 1992 cohort and 2004 

cohort shows that, while expectations in 10th grade increased among 

college-qualified high school graduates from low- and moderate-income 

families, plans in 12th grade to enroll in a four-year college decreased for 

most income groups (Figure 21):

•	 Among those with low-income, expectations to earn a bachelor’s 

degree increased from 69 percent to 76 percent, but plans to enroll in a four-year college fell to 66 percent—4 percentage points 

below the plans of the class of 1992.

•	 Among those with moderate-income, expectations increased from 

79 percent to 84 percent, but plans to enroll fell to 75 percent—1 

percentage point below the plans of the class of 1992.

•	 Among those with middle-income, expectations and plans remained steady between cohorts at 88 percent and 81 percent, 

respectively.

•	 Among those with high-income, expectations remained steady 

between cohorts at 92 percent, while plans to enroll fell to 89 

percent—3 percentage points below the plans of the class of 

1992.

Thus, the 10th grade expectations and 12th grade plans of college-qualified 

2004 high school graduates who took at least Algebra II strongly suggest 

that their college enrollment patterns, at best, will mirror those of the 

class of 1992. It appears that the improvementsin academic preparation 

as measured by increases in the percentage of students taking at least 

Algebra II and at least Trigonometry will not lead to increases in the rate 

of enrollment in four-year colleges by family income. 

College Enrollment

If the melt between 12th grade plans and actual enrollment in a four-year 

college in the 1992 cohort is used to project the enrollment of 2004 college-qualified high school graduates (for which data are not yet available), 

a comparable but slightly lower distribution by family income results 

(Figure 22): 27

•	 Down 4 percentage points from 54 percent to 50 percent for lowincome.

A comparison of 

expectations and 

plans of the 1992 

cohort and 2004 

cohort shows that 

plans in 12th grade 

to enroll in a fouryear college 

decreased for most 

income groups.

The 10th grade 

expectations and 

12th grade plans of 

college-qualified 

2004 high school 

graduates who 

took at least 

Algebra II 

strongly suggest 

that their college 

enrollment 

patterns, at best, 

will mirror those of 

the class of 1992. 
A comparison of expectations and plans of the class of 1992 and 2004 shows that, while expectations in 10th grade increased among 

college-qualified high school graduates from low- and moderate-income families, plans in 12th grade to enroll in a 4-year college 

were at the same level or lower. Increases in academic preparation appear not to have increased plans to enroll in a 4-year college. 

[Source: National Education Longitudinal Study of 1988/2000 and Education Longitudinal Study of 2002/2004.]

If the pattern of plans versus actual 4-year college enrollment (the melt) in 1992 is used as a basis for projecting the actual 4-year 

college enrollment of the class of 2004 (for which data are not yet available), an equal or lower percentage of college-qualified high 

school graduates from low- and moderate-income families will enroll in a 4-year college, despite increases in academic preparation 

between 1992 and 2004. [Source: National Education Longitudinal Study of 1988/2000 and Education Longitudinal Study of 2002/2004.]

*Projected

FIGURE 22: PLANS AND 4-YEAR ENROLLMENT OF COLLEGEQUALIFIED HIGH SCHOOL GRADUATES IN 1992 AND 2004

AT LEAST ALGEBRA II

70%

76%

81%

92%

54%

59%

68%

84%

66%

75%

81%

89%

82%

68%

57%

50%

Low-Income Moderate-Income Middle-Income High-Income

12th Grade Plans to Enroll in a 4-Year College

Enrollment in a 4-Year College*

HighS

1992 2004 1992 2004 1992 2004 1992 2004

FIGURE 21: EXPECTATIONS AND PLANS OF COLLEGEQUALIFIED HIGH SCHOOL GRADUATES IN 1992 AND 2004

AT LEAST ALGEBRA II

69%

79%

88%

92%

76%

84%

88%

92%

70%

76%

81%

92%

66%

75%

81%

89%

Low-Income Moderate-Income Middle-Income High-Income

High School Class of 1992

High School Class of 2004

10th Grade

Expectations

to Earn a

Bachelor’s

Degree

10th Grade

Expectations

to Earn a

Bachelor’s

Degree

10th Grade

Expectations

to Earn a

Bachelor’s

Degree

10th Grade

Expectations

to Earn a

Bachelor’s

12th Grade Degree

Plans to

Enroll in a

4-Year

College

12th Grade

Plans to

Enroll in a

4-Year

College

12th Grade

Plans to

Enroll in a

4-Year

College

12th Grade

Plans to

Enroll in a

4-Year

College
•	 Down 2 percentage points from 59 percent to 57 percent for 

moderate-income.

•	 Constant at 68 percent for middle-income.

•	 Down 2 percentage points from 84 percent to 82 percent for highincome.

This suggests that the enrollment pattern of the 1992 cohort who took at 

least Algebra II can be used as a conservative estimate of the enrollment 

pattern of their peers in the 2004 cohort. 

2004 High School Graduates 

Who Took at Least Trigonometry

For those 2004 high school graduates who completed at least Trigonometry, 10th grade expectations and 12th grade plans were again comparable 

to those of their 1992 peers (Figure 23):

•	 Among those with low-income, expectations to earn a bachelor’s 

degree remained steady at 84 percent, but plans to enroll in a 

four-year college fell to 78 percent—6 percentage points below 

the plans of the class of 1992.

•	 Among those with moderate-income, expectations increased from 

87 percent to 88 percent, but plans fell to 84 percent—2 percentage points below the plans of the class of 1992.

•	 Among those with middle-income, expectations decreased from 95 

percent to 93 percent, but plans rose to 89 percent—1 percentage 

point above the plans of the class of 1992.

•	 Among those with high-income, expectations decreased from 

98 percent to 94 percent, but plans fell to 93 percent—2 percentage points below the plans of the class of 1992.

The 10th grade expectations and 12th grade plans of college-qualified 

2004 high school graduates who took at least Trigonometry suggest that 

their college enrollment patterns will, at best, be comparable to that of 

the class of 1992. It appears that improvement in academic preparation 

as measured by increases in the percentage of students taking at least 

Trigonometry will not lead to increases by family income in the rate of 

enrollment in four-year colleges. 

For those 2004 

high school 

graduates who 

completed at least 

Trigonometry, 10th

grade expectations 

and 12th grade 

plans were again 

comparable to 

those of their 1992 

peers.

It appears that 

improvement 

in academic 

preparation 

will not lead to 

increases in the 

rate of enrollment 

in four-year 

colleges by family 

income. 

30
For college-qualified high school graduates who took at least Trigonometry, 10th grade expectations were comparable, but 12th 

grade plans to enroll in a 4-year college declined among those with low- and moderate-income from 84% to 78% and from 86% 

to 84%, respectively. Like their peers in 1992 who took at least Algebra II, a lower percentage of those from low- and moderateincome families in 2004 are likely to have enrolled in a 4-year college. Increases in academic preparation did not increase 4-year 

college enrollment. [Source: National Education Longitudinal Study of 1988/2000 and Education Longitudinal Study of 2002/2004.]

If the pattern of plans versus actual 4-year-college enrollment (the melt) among 1992 college-qualified high school graduates who 

took at least Trigonometry is used to project the 4-year college enrollment of the class of 2004 (for which data are not yet available), 

a lower percentage of college-qualified high school graduates from low- and moderate-income families in 2004 are likely to have 

enrolled in a 4-year college than in 1992. [Source: National Education Longitudinal Study of 1988/2000 and Education Longitudinal Study 

of 2002/2004.]

*Projected

FIGURE 24: PLANS AND 4-YEAR ENROLLMENT OF COLLEGEQUALIFIED HIGH SCHOOL GRADUATES IN 1992 AND 2004

AT LEAST TRIGONOMETRY

84% 86% 88%

95%

73% 72%

81%

90%

78%

84%

89%

93%

89%

82%

66% 70%

Low-Income Moderate-Income Middle-Income High-Income

12th Grade Plans to Enroll in a 4-Year College

Enrollment in a 4-Year College*

1992 2004 1992 2004 1992 2004 1992 2004

FIGURE 23: EXPECTATIONS AND PLANS OF COLLEGEQUALIFIED HIGH SCHOOL GRADUATES IN 1992 AND 2004

AT LEAST TRIGONOMETRY

84% 87%

95% 98%

84%

88%

93% 94%

84% 86% 88%

95%

78%

84%

89%

93%

Low-Income Moderate-Income Middle-Income High-Income

High School Class of 1992

High School Class of 2004

12th Grade

Plans to

Enroll in a

4-Year

College

10th Grade

Expectations

to Earn a

Bachelor’s

Degree

10th Grade

Expectations

to Earn a

Bachelor’s

Degree

10th Grade

Expectations

to Earn a

Bachelor’s

Degree

10th Grade

Expectations

to Earn a

Bachelor’s

Degree

12th Grade

Plans to

Enroll in a

4-Year

College

12th Grade

Plans to

Enroll in a

4-Year

College

12th Grade

Plans to

Enroll in a

4-Year

College
This suggests that 

the enrollment 

pattern of the 1992 

cohort who took at 

least Trigonometry 

can be used as a 

conservative 

estimate of the 

enrollment pattern 

of their peers in the 

2004 cohort.

Because the 

number of high 

school graduates 

will peak in 2008 

and net prices are 

likely to increase, 

cumulative losses 

across the decade 

are likely to be 

at least ten times 

higher than those 

of the 2004 cohort.

32

College Enrollment

If the melt between 12th grade plans and actual enrollment in a four-year 

college in the 1992 cohort is used to project the enrollment of 2004 college-qualified high school graduates (for which data are not yet available) a comparable but slightly lower distribution by family income is 

the result (Figure 24):

•	 Down 7 percentage points from 73 percent to 66 percent for 

low-income.

•	 Down 2 percentage points from 72 percent to 70 percent for 

moderate-income.

•	 Up 1 percentage point from 81 percent to 82 percent for middle-income.

•	 Down 1 percentage point from 90 percent to 89 percent for 

high-income.

This suggests that the enrollment pattern of the 1992 cohort who took at 

least Trigonometry can be used as a conservative estimate of the enrollment pattern of their peers in the 2004 cohort. 

Bachelor’s Degree Losses Among 2004

College-Qualified High School Graduates 

Whether the measure of “at least Algebra II” or “at Least Trigonometry” 

is used, large total losses of bachelor’s degrees can be projected to occur 

among the 2004 cohort (Figure 25):

•	 130,000 to 338,000 of low-income

•	 176,000 to 407,000 of moderate-income

•	 84,000 to 206,000 of middle-income

•	 44,000 to 78,000 of high-income.

Because the number of high school graduates will peak in 2008 and net 

prices are likely to increase, cumulative losses across the decade are likely 

to be at least ten times higher than those of the 2004 cohort.

Attributing 2004 Bachelor’s Degree

Losses to Financial Barriers

Using the same two loss methods explained on page 20, it is possible to 

identify those attributable to financial barriers. 
FIGURE 25: PROJECTED BACHELOR'S DEGREE LOSSES

AMONG 2004 COLLEGE-QUALIFIED HIGH SCHOOL GRADUATES

TOTAL PROJECTED NOT TO ATTAIN THE DEGREE BY YEAR 2012

BY FAMILY INCOME

130,000

176,000

84,000 44,000

434,000

338,000

407,000

206,000

78,000

1,029,000

Under $35,000 $35,000-$74,999 $75,000-$99,999 Over $100,000 Total

At Least Trigonometry

At Least Algebra II

FIGURE 26: PROJECTED BACHELOR'S DEGREE LOSSES AMONG 2004 COLLEGEQUALIFIED HIGH SCHOOL GRADUATES ATTRIBUTABLE TO FINANCIAL BARRIERS

METHOD #1: ADJUSTED DOWNWARD BY THE RATE AT WHICH THOSE

WITH HIGH-INCOME LIKELY WILL NOT ATTAIN THE DEGREE BY 2012

86,000 105,000

27,000

219,000 218,000

244,000

92,000

555,000

Under $35,000 $35,000-$74,999 $75,000-$99,999 Total

At Least Trigonometry

At Least Algebra II

BY FAMILY INCOME

If the enrollment and persistence pattern of the 1992 class is used to project bachelor’s degree attainment for the 2004 class, large 

losses can be expected to occur by 2012—between 434,000 and 1.029 million. This includes 306,000 (130,000 + 176,000) and 

745,000 (338,000 + 407,000) among those from low- and moderate-income families. Because net prices are likely to remain high 

and the number of high school graduates increase, decade-wide losses are likely to be at least ten times higher—between 4.34 million and 10.29 million. [Source: Calculations based on analyses of the National Education Longitudinal Study of 1988/2000 and the Education 

Longitudinal Study of 2002/2004.]

The first method for attributing bachelor’s degree losses among 2004 college-qualified high school graduates to financial barriers 

includes only the losses among those with low-, moderate-, and middle-income and adjusts downward by the rate at which their 

high-income peers are likely not to attain the degree. Doing so yields losses between 218,000 and 555,000 bachelor’s degrees 

among those with low-, moderate-, and middle-income. Because net prices are likely to remain high and the number of high school 

graduates increase, total decade-wide losses are likely to be at least ten times larger—2.18 million to 5.55 million. [Source: Calculations based on analyses of the National Education Longitudinal Study of 1988/2000 and the Education Longitudinal Study of 2002/2004.]
2004 Bachelor’s Degree Losses Under Method #1 

The following are the bachelor’s degree losses among only collegequalified high school graduates from low-, moderate-, and middle-income 

families adjusted downward by the rate at which their high-income peers 

did not attain the degree (Figure 26):

•	 86,000 to 219,000 of low-income

•	 105,000 to 244,000 of moderate-income

•	 27,000 to 92,000 of middle-income.

2004 Bachelor’s Degree Losses Under Method #2

The following are the bachelor’s degree losses occurring only among 

college-qualified high school graduates from low- and moderate-income 

families adjusted downward by the rate at which their middle-income 

peers did not attain the degree (Figure 27):

•	 66,000 to 125,000 of low-income

•	 72,000 to 114,000 of moderate-income.

Decade-wide losses under both methods are likely to be at least ten times 

higher.

Summary of Bachelor’s

Degree Losses by Decade

A summary of bachelor’s degree losses for the 1990s and current decade 

is provided (Figure 28). The lower bound of each range is defined by 

the “at least Trigonometry” measure, the upper bound by the “at least 

Algebra II” measure. 

Total loss ranges are as follows:

•	 4.3 million to 10.3 million for the current decade 

•	 2.7 million to 6.9 million for the decade of the 1990s.

Loss ranges among low-, moderate-, and middle-income students, adjusted downward by the rate at which their high-income peers will not 

attain the degree, are as follows: 

•	 2.2 million to 5.6 million for the current decade 

•	 1.3 million to 3.7 million for the decade of the 1990s. 

Bachelor’s degree 

losses occurring 

only among 2004 

college-qualified 

high school 

graduates from 

low- and moderateincome families 

will be 66,000 to 

125,000 and 72,000 

to 114,000, 

respectively.

Total loss ranges 

for the current 

decade are 

4.3 million to 

10.3 million.

34
FIGURE 27: PROJECTED BACHELOR'S DEGREE LOSSES AMONG 2004 COLLEGEQUALIFIED HIGH SCHOOL GRADUATES ATTRIBUTABLE TO FINANCIAL BARRIERS

METHOD #2: ADJUSTED DOWNWARD BY THE RATE AT WHICH THOSE

WITH MIDDLE-INCOME LIKELY WILL NOT ATTAIN THE DEGREE BY 2012

66,000 72,000

138,000

125,000 114,000

239,000

Under $35,000 $35,000-$74,999 Total

At Least Trigonometry

At Least Algebra II

BY FAMILY INCOME

The second method of attributing bachelor’s degree losses among 2004 college-qualified high school graduates to financial barriers 

is to include losses only among those with low- and moderate-income, and to adjust the losses by the rate at which their middleincome peers will not attain the degree. This yields between 138,000 and 239,000 losses and decade-wide losses of 1.38 million to 

2.39 million. [Source: Calculations based on analyses of the National Education Longitudinal Study of 1988/2000 and the Education Longitudinal 

Study of 2002/2004.]

Total bachelor’s degree losses among college-qualified high school graduates across all family income levels in the current decade 

will range from 4.3 million to 10.3 million, depending on the measure of college qualification used. Adjusted downward by the rate 

at which those with high-income do not earn the degree, the range is 2.2 million to 5.6 million. Adjusted downward again by the 

rate at which those with middle-income do not earn the degree, the range is 1.4 million to 2.4 million losses attributed to financial 

barriers. [Source: Calculations based on analyses of the National Education Longitudinal Study of 1988/2000 and the Education Longitudinal 

Study of 2002/2004.]

FIGURE 28: BACHELOR'S DEGREE LOSSES AMONG

COLLEGE-QUALIFIED HIGH SCHOOL GRADUATES

CURRENT DECADE VS. THE 1990S

10.3 (IN MILLIONS)

5.6

4.3

2.2

6.9

3.7

1.6

2.7

1.3

0.8

2.4

1.4

Current

Decade

At Least Algebra II

At Least Trigonometry

1990s

Current

Decade

1990s

Current

Decade 1990s

Across All Family

Income Levels

Among Low-, Moderate-,

and Middle-Income, Adjusted

Downward by the Rate at Which

High-Income Do Not Attain the Degree

Among Low- and ModerateIncome, Adjusted Downward

by the Rate at Which MiddleIncome Do Not Attain the Degree

Attributed to Financial Barriers
Loss ranges among low- and moderate-income students, adjusted downward by the rate at which their middle-income peers will not attain the 

degree, are as follows: 

•	 1.4 to 2.4 million for the current decade 

•	 0.8 to 1.6 million for the decade of the 1990s. 

For the purposes of this report, only the final set of losses among low- and 

moderate-income students is attributed to financial barriers.

Bachelor’s Degree Loss 

Estimates in Perspective

The bachelor’s degree losses attributed to financial barriers in this report 

are extremely conservative for three reasons:

•	 The probable effects of financial barriers on the likelihood of high 

school graduation and the level of academic preparation attained 

are not considered.

•	 The losses include only those among low- and moderate-income 

college-qualified high school graduates.

•	 Those losses are included only to the extent that their rate exceeds 

that of their middle-income peers. 

In considering the implications of these bachelor’s degree loss estimates, 

policymakers should bear in mind that financial barriers to college almost 

certainly affect both high school graduation rates and level of academic 

preparation. They should also keep in mind that the educational decisions of middle-income students and families are not immune to such 

barriers. 

To place these losses in better perspective, the complete bachelor’s degree 

pipeline for each of the 1992 and 2004 cohorts is presented. Among 

students from families with low income (under $25,000) in the 1992 

cohort (Table 1)28—

•	 292,000 who were 8th graders in 1988 did not graduate from high 

school,

•	 343,000 graduated from high school but were not college-qualified (had not taken at least Algebra II),

Losses attributed 

to financial 

barriers in 

this report are 

extremely 

conservative 

because their 

effects on 

high school 

graduation and 

level of academic 

preparation are 

not considered.

In considering 

the implications 

of these loss 

estimates, 

policymakers 

should bear in 

mind that financial 

barriers to college 

almost certainly 

affect both high 

school graduation 

rates and level of 

academic 

preparation. 

36
TABLE 1: 1992 HIGH SCHOOL GRADUATES

ATTAINING A BACHELOR’S DEGREE BY 2000

Graduated

College-Qualified

College-Qualified and

Earned a Bachelor’s

Degree by 2000

Attributed to

Financial Barriers

in This Report

1991

Family

Income

1992

High

School

Graduates

College

Qualification

Measure

At Least: Yes No Yes No Method

#1

Method

#2

Algebra II 371,000 343,000 160,000 211,000 137,000 78,000 Under

$25,000

714,000

(292,000)* Trigonometry 171,000 543,000 94,000 77,000 51,000 39,000

$25,000 Algebra II 560,000 302,000 280,000 280,000 168,000 78,000

to

$49,999

862,000

(164,000)* Trigonometry 293,000 569,000 185,000 108,000 64,000 44,000

$50,000 Algebra II 396,000 146,000 253,000 143,000 63,000

to

$74,999

542,000

(54,000)* Trigonometry 233,000 309,000 182,000 51,000 16,000

None

Algebra II 297,000 48,000 238,000 59,000 $75,000

and over

345,000

(18,000)* Trigonometry 207,000 138,000 176,000 31,000

None None

*Estimated number of 8th graders in 1988 who did not graduate from high school in 1992.

*Estimated number of 8th graders in 2000 who did not graduate from high school in 2004.

**Projected

[Source for both tables: Calculated using data from the National Education Longitudinal Study of 1988/2000 and the Education Longitudinal Study 

of 2002/2004.]

TABLE 2: 2004 HIGH SCHOOL GRADUATES PROJECTED

TO ATTAIN A BACHELOR’S DEGREE BY 2012

Graduated

College-Qualified**

College-Qualified and

Earned a Bachelor’s

Degree by 2000**

Attributed to

Financial Barriers

in This Report

2003

Family

Income

2004

High

School

Graduates

College

Qualification

Measure

At Least: Yes No Yes No Method

#1

Method

#2

Algebra II 593,000 306,000 255,000 338,000 219,000 125,000 Under

$35,000

899,000

(367,000)* Trigonometry 288,000 611,000 158,000 130,000 86,000 66,000

$35,000 Algebra II 814,000 271,000 407,000 407,000 244,000 114,000

to

$74,999

1,085,000

(207,000)* Trigonometry 477,000 608,000 301,000 176,000 105,000 72,000

$75,000 Algebra II 573,000 109,000 367,000 206,000 92,000

to

$99,999

682,000

(67,000)* Trigonometry 382,000 300,000 298,000 84,000 27,000

None

Algebra II 391,000 43,000 313,000 78,000 $100,000

and over

434,000

(23,000)* Trigonometry 291,000 143,000 247,000 44,000

None None
•	 211,000 graduated from high school college-qualified but did not 

earn a bachelor’s degree.

Total losses from the pipeline were 846,000 of 1.006 million low-income 

students. Of the 211,000 who graduated from high school college-qualified but did not earn the degree, this report attributes 78,000 to financial 

barriers. 

Among students from families with low-income (under $35,000) in the 

2004 cohort (Table 2)—

•	 367,000 who were 8th graders in 2000 did not graduate from high 

school,

•	 306,000 graduated from high school but were not college-qualified (had not taken at least Algebra II),

•	 338,000 graduated from high school college-qualified but are not 

likely to earn a bachelor’s degree.

Total losses from the pipeline among low-income students in the 2004 

cohort are likely to be 1.011 million out of a total of 1.266 million. Of 

the 388,000 who graduated from high school college-qualified but are 

not likely to earn the degree, this report attributes 125,000 to financial 

barriers. 

Assumptions Underpinning

Bachelor’s Degree Loss Estimates

The primary assumption in this report is that the enrollment and degree 

completion patterns of college-qualified high school graduates during the 

1990s, and projected for this decade, can be estimated using the known 

patterns of the 1992 class. This assumption is required because complete 

data on enrollment and degree attainment during the 1990s are available 

only for the class of 1992, and only data on the expectations and plans of 

the class of 2004 are now available. Enrollment data on the 2004 class 

will be available in 2007, and these estimates and projections can be 

updated as these data become available. Data for the 2004 class that are 

fully comparable to the 1992 data—including persistence patterns—will 

not be available until 2012.

The projection that bachelor’s degree losses among 2004 college-qualified high school graduates are likely to be higher than those of the 1992 

class is based on four key observations:

Total losses from 

the pipeline 

among low-income 

students in the 

2004 cohort are 

likely to be 1.011 

million out of 

a total of 1.266 

million. 

The primary 

assumption in this 

report is that the 

enrollment and 

degree completion 

patterns of 

college-qualified 

high school 

graduates during 

the 1990s, and 

during this decade, 

can be estimated 

using the known 

patterns of the 

1992 class. 

38
•	 Net prices (total cost of attendance minus all grant aid) at four-year 

public colleges facing low- and moderate-income students were 

higher in constant dollars in 2004 than in 1992 and are likely to 

remain at high levels.

•	 The number of high school graduates increased from 2.5 million 

to 3.1 million between 1992 and 2004 and will stay at higher 

levels throughout the decade. 

•	 Academic preparation at both levels used in this report—“at 

least Algebra II” and “at least Trigonometry”—appears to have 

improved from 1992 to 2004.

•	 The 12th grade plans of 2004 college-qualified high school graduates to attend a four-year college (a good predictor of the pattern 

of four-year college enrollment) show no increase over 1992, but 

rather a slight decrease.

However, losses of bachelor’s degrees among college-qualified high 

school graduates this decade could turn out to be lower than projected 

in this report if net prices fall significantly for the balance of the decade 

and/or improved academic preparation leads to higher rates of four-year 

college enrollment and bachelor’s degree completion. In the absence of 

either of these two developments, the projected bachelor’s degree loss 

estimates for the current decade are likely to be conservative.

 

Losses of 

bachelor’s degrees 

could turn out 

to be lower than 

projected in this 

report if net prices 

fall significantly 

and/or improved 

academic 

preparation leads 

to higher rates of 

bachelor’s degree 

completion.

39

FINDINGS AND 

POLICY IMPLICATIONS

Preliminary comparisons between the 1992 and 2004 cohorts of high 

school graduates yield greater insight into the interaction of factors 

determining academic success over time, particularly the role financial 

barriers play. Specifically, the data show the kind of student aid policy 

that appears necessary to stem the bachelor’s degree losses identified 

in this report. Between 1992 and 2004, among college-qualified high 

school graduates—

•	 academic preparation, as measured by course-taking, improved 

among those from low- and moderate-income families (Figure 

20);

•	 information, at least as reflected in 10th grade college expectations, increased among low- and moderate-income high school 

graduates who were college-qualified (Figure 21);

•	 aid application forms and processes were simplified to include 

one free form, one need analysis model, the automatic zero 

expected family contribution (EFC) for the lowest income applicants, and automatic re-application.

These are impressive gains made by K-12 educators, professionals in early 

intervention programs, states, colleges, Congress, and the Department of 

Education. Unfortunately, net prices increased throughout the period and 

appear to have undermined these improvements (Figures 6 and 17).

Based on the plans of college-qualified high school graduates in 2004, 

four-year college enrollment and completion rates by family income are 

likely to remain constant, at best, and bachelor’s degree losses are likely 

to increase. Despite successful efforts to increase access and persistence 

through improved academic preparation, heightened aspirations and 

expectations, and greater simplicity in the financial aid system, losses 

of bachelor’s degrees appear to be increasing. High and increasing 

financial barriers appear to nullify the positive effects of advances in 

these areas.

Preliminary 

comparisons 

between the 1992 

and 2004 cohorts 

of high school 

graduates yield 

greater insight into 

the kind of student 

aid policy that 

appears necessary 

to stem bachelor’s 

degree losses.

Four-year college 

enrollment and 

completion rates 

by family income 

are likely to remain 

constant, at best, 

and bachelor’s 

degree losses are 

likely to increase.
Lowering financial barriers by increasing need-based aid appears to be a 

necessary condition for stemming bachelor’s degree losses among college-qualified high school graduates. Without increases, grant aid will 

be stretched further across a wider population of students, and the net 

price facing every student will rise. 

The Role of Need-Based Aid in

Building the College-Qualified Pool

In addition to stimulating increases in bachelor’s degree attainment 

among today’s college-qualified high school graduates, lowering financial barriers through increased need-based aid will increase tomorrow’s 

pool of college-qualified high school graduates. Reducing net prices of 

four-year public colleges confronting low- and moderate-income students 

would strengthen incentives to prepare, maximize the impact of early 

intervention, and make further simplification of aid application forms 

and processes more effective. Ensuring that a growing number of middle 

and high school students will have the financial resources necessary to 

enroll and persist in a four-year college will improve the supply of human 

capital and make the nation more competitive.

Increasing Incentives to Prepare

Data from NELS (Figure 10) show that low- and moderate-income college-qualified high school graduates have a 43 percent and 50 percent 

chance, respectively, of earning a bachelor’s degree within eight years of 

high school graduation. These discouraging odds are often overlooked 

in policy discussions about the high rate of return to earning a bachelor’s 

degree, and debates about the level of loans that such students should be 

willing to assume. If a student’s perception of his or her chance of completing a bachelor’s degree mirrors the actual chances shown in national 

longitudinal data, there is a strong and rational reason for the student to 

question the desirability of preparing academically and assuming large 

amounts of debt. Indeed, there is recent evidence from ACT that only 

one-third of 8th grade students plan to take all the courses necessary for 

college readiness.29 Student perception of high net prices can be a strong 

deterrent to adequate academic preparation (Figure 7). Lowering financial barriers will increase incentives to prepare academically.30 

Strengthening Early Intervention

A primary purpose of early intervention programs is to enhance student 

awareness of the importance of college and the returns to attaining a bachelor’s degree. The effectiveness of early intervention programs depends 

Lowering financial 

barriers appears to 

be a necessary 

condition for 

stemming 

bachelor’s degree 

losses among 

college-qualified 

high school 

graduates. 

Lowering financial 

barriers through 

increased needbased aid will 

increase 

tomorrow’s pool 

of college-qualified 

high school 

graduates. 

42
on a series of sequential successes: greater knowledge and information 

precipitate higher aspirations, which in turn create a greater incentive to 

prepare academically; which then leads to higher expectations, specific 

plans, and eventual enrollment. Data from NELS and ELS (Figures 

8, 11, and 24) show how this chain breaks down for college-qualified 

low- and moderate-income high school graduates. Despite higher 10th

grade expectations, 12th grade plans melt into lower levels of actual 

enrollment because of concerns about college costs and availability of 

financial aid. 

To prevent such breakdowns anywhere along the chain of desired outcomes—knowledge, aspirations, academic preparation, expectations, 

plans, and enrollment—the most effective early intervention programs 

lower expected net price through an assurance of adequate need-based 

aid. Without an assurance that lowers financial barriers early in the access 

process, breakdowns are not only likely to occur but are probable.

In addition, an early assurance of financial access solves the dilemma of 

how to provide middle school families with information about financial 

aid that is both accurate and encouraging when the net prices facing their 

older peers are at record levels. 

Maximizing 

Simplification Efforts

Student aid delivery has been greatly simplified since 1992. Today, most 

low-income students complete FAFSA on the Web to apply for all forms 

of federal, state, and institutional aid. Recently enacted and proposed 

changes in HEA will further reduce complexity in applying for aid. An 

EZ FAFSA with far fewer questions and data elements will likely replace 

the long paper form.31 Although the Department of Education can make 

further improvements to simplify the application process, the process is 

no longer the obstacle to obtaining financial aid it once was.32 Additional 

efforts include ensuring that low-income students have early information 

about the financial aid that is available to them from all sources, expanding the income threshold for an automatic zero EFC, and eliminating or 

reducing the “student work penalty.”33 

The federal government needs to take the lead to ensure that these initiatives maximize college access. However, these simplification improvements alone will not stem the large losses in bachelor’s degree 

attainment. For example, 12th grade college plans and enrollment projections for low- and moderate-income students in the 2004 cohort have 

remained flat, at best, compared to the 1992 cohort (Figures 21-24). In 

An early assurance 

of financial access 

solves the dilemma 

of how to provide 

middle school 

families with 

information about 

financial aid that is 

both accurate and

encouraging.

The federal 

government 

needs to take the 

lead to ensure 

simplification 

initiatives 

maximize 

college access by 

accompanying 

them with 

adequate increases 

in need-based aid 

to reduce financial 

barriers.

43
The bachelor’s 

degree loss 

estimates and 

findings argue for 

six policy actions 

aimed directly 

at increasing the 

bachelor’s degree 

attainment of lowand moderateincome high school 

graduates who are 

college-qualified.

This partnership 

would link the 

federal 

government, states, 

colleges, early 

intervention 

programs, K-12 

schools, and the 

private sector to 

make measurable 

gains in bachelor’s 

degree completion. 

order to see real gains in plans, enrollment, and bachelor’s degree attainment rates, simplification efforts must be accompanied by adequate 

increases in need-based aid in order to reduce financial barriers. 

Policy Implications

The bachelor’s degree loss estimates and findings above argue for six 

broad policy initiatives:

	 •	 Reinvigorate the access and persistence partnership to increase 

need-based aid from all sources.

	 •	 Restrain increases in the price of college and offset increases 

with need-based student aid.

	 •	 Moderate the trend—at all levels—toward merit-based aid and 

the increasing reliance on loans.

	 •	 Reduce financial barriers to transfer from two-year to four-year 

colleges.

	 •	 Strengthen early intervention programs for low- and moderateincome students.

	 •	 Invest in efficient and productive remediation.

These six policy actions are aimed directly at increasing the bachelor’s 

degree attainment of low- and moderate-income high school graduates 

who are college-qualified.

Reinvigorate the Public-Private Partnership 

to Increase Need-Based Aid from All Sources

In the current HEA reauthorization, the Advisory Committee has recommended reinvigorating the public-private partnership to increase needbased aid for college-qualified high school graduates and provide an early 

assurance of adequate need-based grant aid for middle school students. 

This partnership would link the federal government, states, colleges, early 

intervention programs, K-12 schools, and the private sector in order to 

implement the comprehensive access and persistence strategy needed to 

make measurable gains in bachelor’s degree completion. 

In practice, the partnership would involve a financial incentive from the federal government to encourage states to form partnerships with in-state insti

44
tutions, early intervention programs, businesses, and philanthropic organizations. Together, these state partners would commit financial resources to 

ensure that all low- and moderate-income students in the state have enough 

need-based grant aid to cover at least tuition and fees at a four-year public 

college. By matching the contributions of state partners, the federal government could leverage additional funds from public and private sources 

to provide low-income students with supplemental need-based grant aid 

and at least ensure financial access to a four-year public college. In addition to reducing work and loan burden through increased grant aid, the 

partnership would include a highly simplified aid application process.

The Senate HEA Reauthorization bill, S.1614, currently includes a program entitled Grants for Access and Persistence (GAP) that would be an 

important first step towards implementing our partnership recommendation as well as a comprehensive access and persistence strategy.35 

Restrain Increases in the Price of College and

Offset Increases with Need-Based Student Aid

There are two components of net price: total cost of attendance and total need-based grant aid. Increased operating costs and declining state 

support have forced many colleges to raise prices at a rate that exceeds 

increases in financial aid. This trend shows no sign of abating.36 The 

resulting increases take a heavy toll on the enrollment and persistence 

behavior of low- and moderate-income students. It is imperative that 

increases in the price of college be restrained to the extent possible, and 

that need-based student aid be set aside to protect these students against 

necessary price increases. Two public flagship universities, the University of North Carolina at Chapel Hill and the University of Virginia, do 

so with their programs, Carolina Covenant and Access UVa, which are 

committed to covering the full need of low-income students who meet 

admissions standards.37

Colleges with fewer resources can reduce college costs and limit price 

increases by joining consortia aimed at sharing best practices in these 

areas. For example, 299 private colleges comprise the Coalition for College Costs Savings (CCCS) which allows colleges to pool resources and 

participate in cost savings procurement services.38 These are essential 

strategies that can moderate price increases and help to increase bachelor’s 

degree attainment. Colleges can implement additional approaches that 

are tailored to their own resources and student population.

Increased 

operating costs and 

declining state 

support have 

forced many 

colleges to raise 

prices at a rate that 

exceeds increases 

in financial aid. 

It is imperative 

that increases in 

the price of 

college be 

restrained to the 

extent possible, 

and that needbased student aid 

be set aside to 

protect low- and 

moderate-income 

students against 

necessary price 

increases.

45
Moderate the Trend—At All Levels—Toward 

Merit-Based Aid and Increasing Reliance on Loans 

Declining support for need-based aid in favor of merit-based aid threatens 

to further raise net prices facing low- and moderate-income high school 

graduates and to increase their reliance on loans. Student aid based 

purely on merit—especially measures of merit that far surpass college 

admissions standards—is both unfair and inefficient. Such aid fails to 

account for the uneven playing field that faces low- and moderate-income 

students from middle school through high school, and further tends to 

subsidize high-income, high-ability students whose enrollment and persistence decisions are largely unaffected by the subsidy. To the extent 

that increases in pure merit-based aid—at the federal, state, or college 

level—come at the expense of need-based aid, disparities in bachelor’s 

degree attainment rates by family income could worsen. 

Merit-based aid can be fair and efficient if it is based also on need, targeted atstudents from low- and moderate-income families, and anchored 

by a definition of merit that parallels college admission standards and a 

student’s likelihood of academic success. Designed in this way, meritand need-based aid direct funds to those college-qualified high school 

graduates whose enrollment and persistence decisions are most likely to 

be positively affected by such aid. While Congress remains committed 

to need-based aid, the new Academic Competitiveness Grant (ACG) 

program is both merit-based and need-based.39 

The trend towards pure merit-based aid is much more pronounced at the 

state level. In 1983-1984, 9 percent of state grants were non-need based, 

compared to 27 percent in 2004-2005.40 At the college level, more than 

half of all grants are awarded without consideration of financial need.41

While several selective colleges have launched efforts to increase the 

amount of grant aid awarded to low- and moderate-income students, the 

small percentage of students who attend such colleges limits the impact 

of these efforts on overall bachelor’s degree attainment. 

The data used in this report show conclusively that the nation has a long 

way to go in equalizing educational opportunity (Figures 1 and 2). 

Increases in need-based aid, or, at a minimum, aid that is based on both 

merit and need, will lower work and loan burden, maximize bachelor’s 

degree attainment, and enhance the nation’s competitiveness in the global 

marketplace. Federal policies that encourage states and colleges to increase need-based aid should receive top priority. 

Declining support 

for need-based 

aid in favor of 

merit-based 

aid threatens to 

raise net prices 

facing low- and 

moderateincome high school 

graduates and to 

increase their 

reliance on loans. 

Federal policies 

that encourage 

states and colleges 

to increase needbased aid should 

receive top 

priority.

46
Reduce Financial Barriers to Transfer 

from Two-Year to Four-Year Colleges

Two-year colleges play a vital role in America’s higher education system. They serve as a local access point to higher education for countless 

residents in communities across the nation and provide a crucial gateway 

for many students en route to their bachelor’s degree. Unfortunately, 

numerous obstacles inhibit transfer from a two-year college to a fouryear college, including lack of information about required courses and 

unstructured articulation agreements between institutions.42 Data in 

this report (Figures 9 and 12) suggest that financial barriers also play a 

significant role in the transfer process—in particular, the large disparity 

in rates of bachelor’s degree attainment between low- and high-income 

students who appear equally college-qualified and start at a two-year 

college expecting to earn the degree (Figures 10 and 13). For two-year 

colleges to be a viable alternative for low- and moderate-income students 

pursuing a bachelor’s degree, barriers to transfer, including financial barriers, must be eliminated.

A Jack Kent Cooke Foundation study finds that less financial aid is available for transfer students than for students who first enroll at four-year 

colleges.43 Alleviating financial barriers to transfer will boost bachelor’s 

degree attainment among students already enrolled in higher education 

and aspiring to complete their degree. 

Strengthen Early Intervention Programs 

for Low- and Moderate-Income Students

The loss estimates in this report exclude a large portion of low- and 

moderate-income 8th graders who do not graduate from high school or 

graduate not fully prepared to attend a four-year college (Figure 4). 

The data make very clear that the largest pool of potential bachelor’s 

degrees is the population of low- and moderate-income youth who do 

not complete high school college-qualified. For example, only 8 percent 

of the underqualified (“less than Algebra II”) low-income 1992 cohort 

attained a bachelor’s degree (Figure 30). Clearly, removing financial 

barriers alone will not improve bachelor’s degree attainment rates among 

low- and moderate-income students. 

In conjunction with school reform efforts aimed at producing college-qualified students by improving the rigor of high school curricula, it is critical to strengthen programs that ensure low- and 

moderate-income middle school students receive the guidance and 

mentoring required to build aspirations, expectations, and plans to 

attend college. These programs, funded through local, state, federal, or 

For two-year 

colleges to be a 

viable alternative 

for low- and 

moderate-income 

students pursuing 

a bachelor’s 

degree, barriers to 

transfer, including 

financial barriers, 

must be 

eliminated.

The largest pool 

of potential 

bachelor’s degrees 

is the population of 

low- and moderateincome youth who 

do not complete 

high school collegequalified.

47
FIGURE 29: IMPACT OF ACADEMIC PREPARATION ON

THE ENROLLMENT OF 1992 HIGH SCHOOL GRADUATES

PERCENT ENROLLING IN A 4-YEAR COLLEGE

11% 14%

20%

38%

54%

59%

68%

84%

73% 72%

81%

90%

Low-Income Moderate-Income Middle-Income High-Income

Less Than Algebra II

At Least Algebra II

At Least Trigonometry

FIGURE 30: IMPACT OF ACADEMIC PREPARATION ON BACHELOR'S

DEGREE ATTAINMENT OF 1992 HIGH SCHOOL GRADUATES

PERCENT COMPLETING THE DEGREE BY YEAR 2000

8%

12%

24% 22%

43%

50%

64%

80%

55%

63%

78%

85%

Low-Income Moderate-Income Middle-Income High-Income

Less Than Algebra II

At Least Algebra II

At Least Trigonometry

Among 1992 high school graduates, the level of academic preparation was strongly related to enrollment in a 4-year college at all 

family income levels. Those with low-income who had taken at least Algebra II enrolled nearly five times as often as those who had 

not. Reflecting the impact of financial barriers, among those who took less than Algebra II, 11% of low-income enrolled compared 

to 38% of their high-income peers. [Source: National Education Longitudinal Study of 1988/2000.]

1992 high school graduates who took less than Alegebra II did attain bachelor’s degrees, although at lower levels than their better 

prepared peers. Once again, the impact of financial barriers is evident. Those with high income attained the degree far more often 

than their low- and moderate-income peers—22% vs. 8% and 12%, respectively. Low- and moderate-income high school graduates 

who fall short by only one or two courses constitute the largest pool from which to increase bachelor’s degrees. [Source: National 

Education Longitudinal Study of 1988/2000.]
nonprofit sources are predominantly successful. However, only onequarter of early intervention programs fully address five vital areas of 

development critical to overcoming the academic and informational 

barriers to college access and persistence.44 Increased support of early 

intervention programs will offset the disparity between the likelihood 

that poor and wealthy students can become college-qualified. Because 

reducing financial barriers and improving preparation work in tandem, 

increases in need-based aid for college-qualified high school graduates 

cannot come at the expense of these vital programs.

Invest in Efficient and

Productive Remediation

Recent efforts at school reform have made a positive impact on the 

preparation of high school students for college level work. As indicated 

previously, data from NELS and ELS show positive gains in academic 

preparation between the graduating high school classes of 1992 and 

2004. These efforts inevitably produce more high school students on 

the margin of college qualification, especially among low- and moderate-income high school graduates. Many students fall short by only one 

or two courses and represent a large pool of potential bachelor’s degrees. 

We must tap this pool through remediation at two-year and four-year 

colleges if we are to raise our nation’s levels of degree attainment. For 

example, raising students’ level of preparation in math up to Algebra II 

has an enormous effect on the rate of successful college enrollment and 

bachelor’s degree attainment far beyond the increase that improving 

preparation from Algebra II to Trigonometry provides (Figures 29 and 

30). This applies among students of all income levels. Providing college 

level remediation to students who are only marginally unqualified can 

dramatically increase bachelor’s degree attainment. 

There is additional evidence to support the effectiveness of this strategy. Recent research demonstrates that remedial education programs 

have positive impacts on degree attainments of students at the margin of 

requiring remediation at four-year colleges.45 As the data demonstrate, 

low- and moderate-income students beginning at four-year colleges 

have substantially higher bachelor’s degree attainment success than 

those with similar aspirations who begin at two-year colleges (Figures 

10 and 13). Effective four-year college remediation efforts can draw 

students into those schools initially and increase their chances of degree completion. Investing in remedial education programs to increase 

the degree attainment levels of high school students who are only marginally underqualified is not only necessary, but is also an effective use 

of federal, state, and institutional resources.

Because 

reducing financial 

barriers and 

improving 

preparation 

work in tandem, 

increases in needbased aid for 

college-qualified 

high school 

graduates cannot 

come at the 

expense of these 

vital early 

intervention 

programs.

Effective four-year 

college remediation 

efforts can draw 

students into those 

schools initially 

and increase their 

chances of degree 

completion.

49
America’s global competitiveness depends on the ability of low- and 

moderate-income high school graduates who are college-qualified to 

earn at least a bachelor’s degree. The nation must be willing to invest 

in sufficient need-based student aid to help them reach that goal. Taken 

collectively, the six policy actions recommended in this report will lower 

financial barriers, improve bachelor’s degree attainment rates, and greatly 

expand the pool of college-qualified high school graduates over time.

50
EPILOGUE:

THE CURRENT HEA REAUTHORIZATION

The current reauthorization of the Higher Education Act offers an opportunity for Congress to revisit 

the impact of financial barriers on access and persistence in light of the bachelor’s degree losses 

estimated in this report. In particular, five recommendations made by the Advisory Committee over 

the last three years merit consideration:

•	 Create a national partnership to increase need-based aid from all 

sources that links the federal government, states, colleges, and K-12 

schools across existing Title IV programs in pursuit of measurable 

gains in access and persistence for the nation’s neediest students who 

are academically qualified (Appendix A, page 61).

•	 Create a comprehensive system of early information on financial aid 

and college costs that provides middle school students, high school 

students, and adults with adequate and early information about financial aid, including early estimates of their potential eligibility for aid 

from multiple sources in the context of likely college costs. 

•	 Reduce further the penalty on student work in federal need analysis 

by increasing the Income Protection Allowance (IPA), or by lowering 

the assessment rate on student earnings. 

•	 Raise further the income threshold in federal need analysis for an 

auto-zero EFC.

•	 Phase out the full paper FAFSA, streamline FAFSA on the Web, and 

create a much simpler paper EZ FAFSA to protect low-income applicants. 

Taking these steps will improve access and persistence through bachelor’s degree attainment and 

expand the pool of college-qualified high school graduates. 

 51

Recommendations

for HEA

Reauthorization

ENDNOTES

Keeping America Competitive

1

 The National Academies note that the United States is currently a “net importer” of high-technology products. In 

2001, the U.S. had a $50 billion negative trade balance of high-technology imported goods compared to a positive trade 

balance of $54 billion in 1990. In addition, according to the OECD, China overtook the United States and became 

the world’s leading exporter of information and communications technology (ICT) goods in 2004, exporting $180 billion of ICT goods compared to $149 billion exported by the United States. For more information, see (The National 

Academies 2005); (Organization for Economic Co-operation and Development 2005). 

2

 (The National Academies 2005)

3

 (White House 2006)

4

 PISA is an international assessment of 15-year-olds administered every three years by the National Center for Education Statistics, and is designed to measure literacy in terms of reading, mathematics, and science. For more information, see Program for International Student Assessment: PISA 2003 Summary; http://nces.ed.gov/surveys/pisa/PISA2003Highlights.asp.

5

 (The National Academies 2005); see also (National Science Board 2004). 

6

 The Department of Education’s Office of Vocational and Adult Education estimated in 2003 that new job growth and 

retirements would produce a need for 18 million new bachelor’s degree holders by the year 2012. For more information, see OVAE Review: January 10, 2003; http://www.ed.gov/news/newsletters/ovaereview/orev011003.html.

7

 (Hecker D. 2001); see also http://www.bls.gov/opub/mlr/2001/11/art4full.pdf.

8

 One cause of the decline in these states is attributed to an increasing minority population with lower bachelor’s degree attainment rates as compared to a decreasing majority white population; for more information see (Coelen and 

Berger 2006). 

9 For more information on the relationship between higher education and America’s economic competitiveness, see 

(Douglass 2006); (Kolb 2006). 

10 For more information on the public and private benefits to higher education, see (Kelly 2005); (National Center for 

Higher Education and Public Policy 2005); (Institute for Higher Education Policy 2005). 

11 (The College Board 2005)

12 This report compares low-, moderate-, middle-, and high-income students in the 1992 (NELS) and 2004 (ELS) cohorts. 

Family income for the 1992 cohort is based on 1991 income; income for the 2004 cohort is based on 2003 income. 

The second column below shows 1991 income bands. The third column shows what those income bands would be in 

2003 using the Consumer Price Index (CPI) to adjust the 1991 income bands for inflation. Because ELS data for the 

2004 cohort were not collected in a manner that allowed such an update, the final column displays the income bands 

used in this report to closely approximate inflated 1991 income bands. The bachelor’s degree loss estimates and policy 

implications are largely unaffected by the slight variation in income bands.

1991 2003-inflation 2003

Low-Income Under $25,000 Under $33,750 Under $35,000

Moderate-Income (Low-Middle) $25,000-$49,999 $33,750-$67,499 $35,000-$74,999

Middle-Income (High-Middle) $50,000-$74,999 $67,500-$101,249 $75,000-$99,999

High-Income $75,000 and over $101,250 and over $100,000 and above

53
13 To project the number of 8th graders in 2000 who will likely attain a bachelor’s degree by the year 2012, by family 

income, the following calculation is used: (Percentage of 1992 High School Graduates * Percentage of Qualified Students with at least Algebra II in 2002 * Bachelor Degree Completion Rate in 1992). Because data are not yet available 

on the graduation rates and degree completion rates of the 2004 cohort, these estimates are based on 1992 graduation 

rates and degree attainment rates. College-qualification data on the ELS 2004 cohort is available and used in this 

analysis. Since complete data for the ELS cohort is not currently available, assumptions were made to arrive at the 

projections and loss estimates for the 2004 cohort. For more information about the assumptions underpinning this 

report, see page 39.

14 For many students, the unequal playing field becomes apparent earlier than 8th grade. However, the NELS:88 database only provides entries for students in 8th grade and beyond. For more information about challenges encountered 

earlier in the educational pipeline, see (Children’s Defense Fund 2005); (Wimberly and Noeth 2005). Although not 

directly addressing inequalities in preparation due to income, an AYPF forum did address the tremendous importance 

in middle school preparation, citing that the greatest percentage of high school dropouts occurs in 9th grade. For more 

information, see (Cohen and Yang 2006).

15 Early intervention programs that include financial aid have been shown to increase incentives for students to attend 

college; see (Blanco 2005). This report details how certain early intervention programs, known as early commitment 

financial aid programs, offer low-income students a guarantee of financial aid for college if they actively participate 

and fulfill the requirements of the program. Examples of such programs include I Have a Dream, Indiana’s Twenty-first 

Century Scholars Program, Project Grad, the Washington State Achievers Program, and Oklahoma’s Higher Learning 

Access Program.

The Impact of Financial Barriers on Bachelor’s Degree Attainment

16 For more information on the National Education Longitudinal Study of 1988, see http://nces.ed.gov/surveys/nels88. 

For more information on the Education Longitudinal Study of 2002, see http://nces.ed.gov/surveys/els2002/overview.

asp. For more information on the National Postsecondary Student Aid Survey, see http://www.nces.ed.gov/npsas/.

17 Several studies show that the level of high school math is a strong predictor of academic success in college. For more 

information, see (Adelman 1999); (Adelman 2006). As a result of these and other studies, this report uses mathematics 

coursework as a proxy for college-qualification. These college-qualification measures—“at least Algebra II” and “at 

least Trigonometry”—are self-reported data and do not take into account the quality or intensity of the coursework.

18 The college-qualification index used by NCES in 1997 is a composite measure that includes GPAs for cumulative 

academic coursework, senior class rank, NELS 1992 test scores, and SAT or ACT exam scores. For more information, 

see (Berkner and Chavez 1997). Because NCES has not replicated its college-qualification index for the ELS:2002 

database, this report uses “at least Algebra II,” which is comparable to the NCES measure in terms of the percentage 

of college-qualified students, and a more rigorous measure—“at least Trigonometry.”

19 When reviewing the report’s loss estimates, it is important to remember the conservative nature of these numbers. 

Not only are the estimates calculated in a conservative manner, they exclude large proportions of low- and moderate-income students who failed to become college-qualified high school graduates. For the 1992 cohort, when using 

the “at least Algebra II” measure, the estimates only include 37 percent and 55 percent of low- and moderate-income 

students, respectively; for the “at least Trigonometry” measure, the estimates only include 17 percent of low-income 

and 29 percent of moderate-income students. 

20 Studies that have found no relationship between Pell Grant recipients and four-year college enrollment often fail to 

take into consideration that net prices have risen steadily. 

21 The term “four-year college” is used to refer to all postsecondary institutions that award bachelor’s degrees, 

including both colleges and universities, and those that are public, not-for-profit, and for-profit institutions. How54

ever, this report focuses specifically on the financial barriers at four-year public colleges because the purpose of 
the federal and state financial aid programs has traditionally been to ensure financial access to at least a public institution.

22 The melt between 12th grade plans and college enrollment is calculated as: (12th grade plans – college enrollment) / 

12th grade plans.

23 Several states have implemented programs to aid transfer between two- and four-year institutions, such as the Massachusetts Tuition Advantage Program (TAP); Maryland Hope Community College Transfer Scholarship; Towards 

Excellence, Access, and Success (TEXAS) Grant; and the Virginia Transfer Grant Program. For more information, 

see (Long 2005). 

24 Fewer high-income students who begin at a two-year college expecting to earn a bachelor’s degree attain the degree 

than middle-income students. In fact, a comparable percentage of high-income and moderate-income students who 

follow this path attain a bachelor’s degree. This study reports these patterns, but does not further analyze the determinants of the behavior.

25 USA Today’s annual 50-state survey reports that financial aid for students attending public flagship universities 

increased from 2002 to 2005, but not at rates high enough to keep pace with tuition and fee increases. For more information, see (Specht 2006). 

26 (American Council on Education 2005) 

27 The college enrollment and bachelor’s degree attainment rates for the 2004 cohort are not yet available. NCES plans 

to release enrollment data for ELS:2002 in 2007. Comparable degree attainment data to NELS:88/2000 for the 2004 

cohort will not be available before 2012. As these data become available, the Advisory Committee plans to update its 

findings. For more information about scheduled releases for ELS:2002 data, see http://nces.ed.gov/surveys/els2002/

design.asp.

28 To estimate the number of students who began in the 1992 cohort (as 8th graders in 1988) and did not graduate from 

high school, the following calculation is used: Number of 1992 High School Graduates / Graduation Rate – Number 

of High School Graduates. For comparative purposes, this report shows the number of students who theoretically 

began in the 2004 cohort (as 8th graders in 2000) and did not graduate from high school. NCES first surveyed students 

in ELS:2002 in 2002, when they would have been in 10th grade. For comparability to NELS:88, the report shows the 

estimated number of 8th graders. Because ELS data on graduation rates are not yet available, these calculations are 

based on the 1992 high school graduation rates, by income.

Summary of Findings and Policy Implications

29 (ACT 2003) 

30 (Heller 2006a); (St. John 2004). For more information on the Indiana Twenty-first Century Scholars Program, see (St. 

John et al. 2002). For more information on the Washington State Achievers Program, see (St. John and Hu 2004). 

31 Pending HEA Reauthorization bills H.R.609 and S.1614 would implement (with appropriate field-testing) a highly 

simplified two-page paper EZ-FAFSA for students who are eligible for the automatic zero. See Section 471 of H.R.609 

and Section 483 of S.1614.

32 U.S. Department of Education’s Office of Federal Student Aid (FSA) processing statistics for January 1, 2006 through 

July 2, 2006 indicate a 9 percent increase in the number of electronic applications (8.5 million versus 7.8 million), 

compared to the same time during the previous processing cycle (05/06). See page 7 of the Summer 2006 edition of 

the Advisory Committee’s quarterly publication, Access and Persistence, for more information on these statistics. 

33 Both pending HEA Reauthorization bills (H.R.609 and S.1614) would reinstate the early analysis process, directing 

the Secretary of Education to allow students to complete the FAFSA in years prior to enrollment in order to receive 

55
early estimates of their EFC, and allow students to update this information as needed using the reapplication process 

in order to apply for final award determination (see Section 471 of H.R.609 and Section 483 of S.1614). The student 

work penalty refers to the treatment in current need analysis of students who work to cover unmet need, but earn more 

than the Income Protection Allowance (IPA) per year. The IPA for dependent students is currently $3,000, or $6,050 

for independent students without dependents. Students who earn more than these amounts will have their eligibility 

for grant aid reduced the following year because any money above these limits is considered available for contribution 

to college costs. These levels were recently increased with the passage of the Higher Education Reconciliation Act 

of 2005 (see Section 8017 of S.1932). For more information on early financial aid information and the student work 

penalty, see (Advisory Committee on Student Financial Assistance 2005). The Advisory Committee recommended 

raising the IPA levels by a minimum of $1,000 for each group of students in The Student Aid Gauntlet (2005). 

34 The Higher Education Reconciliation Act of 2005 (S.1932) increased the income cap for eligibility for an automatic 

zero EFC to $20,000 from $16,000 (see Section 8018 of S.1932). The Advisory Committee recommended increasing 

it to $25,000; see (ACSFA 2005). The Higher Education Reconciliation Act of 2005 (S.1932) also increased the IPA 

levels, from $2,440 in 2005-2006 to $3,000 and from $5,560 in 05-06 to $6,050 for independent students without dependents (see Section 8017 of S.1932). The Advisory Committee recommended raising the IPA levels by a minimum 

of $1,000 for each group of students in The Student Aid Gauntlet (2005). 

35 Grants for Access and Persistence (GAP) would replace the Special Leveraging Educational Assistance Partnerships Program, or Special LEAP, as included in the pending Senate HEA Reauthorization Bill (see Section 415E of 

S.1614). Senator Jack Reed (D-RI) first introduced the legislation to create GAP in S.1029, the Accessing College 

through Comprehensive Early Outreach and State Partnerships Act (ACCESS Act). This legislation, which obtained 

bi-partisan co-sponsorship, would provide federal matching funds to states that implemented public-private partnerships in order to provide low-income students with supplemental need-based grant aid and an early assurance of the 

availability of such aid. 

36 A study by the National Center for Public Policy and Higher Education predicts budget shortfalls in all 50 states by 

the year 2013, and notes that these shortfalls are likely to result in increased pressure on state appropriations to higher 

education; see (Jones 2006). 

37 For more information about these programs, visit http://www.virginia.edu/accessuva for Access UVa and http://www.

unc.edu/carolinacovenant/ for the Carolina Covenant.

38 The Coalition for College Cost Savings (CCCS), a nonprofit organization, is dedicated to helping smaller independent 

colleges and universities improve business processes and contain costs through collaboration. For more information, 

see http://www.thecoalition.us/.

39 The Academic Competitiveness Grant Program (ACG) was created by the Higher Education Reconciliation Act 

of 2005 (see Section 8003). Academic Competitiveness Grants are available to students who are eligible for a Pell 

Grant and who have successfully completed a “rigorous” curriculum in high school and maintained a specific GPA in 

college. See http://studentaid.ed.gov/PORTALSWebApp/students/english/AcademicGrants.jsp for more information 

on ACG. 

40 (National Association of State Student Aid and Grant Programs 2006) 

41 (Heller 2006b) 

42 For more information on barriers to transfer and articulation between two- and four-year institutions, see (Long 

2005). 

43 (Dowd et al. 2006); for more information on the Jack Kent Cook Undergraduate Transfer Scholarship program, see 

http://www.jackkentcookefoundation.org/jkcf_web/content.aspx?page=UnderG.

56
44 (Perna and Swail 2002) 

45 (Bettinger and Long 2005) 

57

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62
APPENDIX A: ADVISORY COMMITTEE

2003 REAUTHORIZATION LETTER

ADVISORY COMMITTEE ON STUDENT FINANCIAL ASSISTANCE

 

May 22, 2003

The Honorable Judd Gregg 

Chairman

Senate Health, Education, Labor, and Pensions Committee

393 Senate Russell Office Building

Washington, DC 20510

Dear Senator Gregg:

The Advisory Committee on Student Financial Assistance (Advisory Committee) is pleased to transmit its major recommendation for reauthorization of the Higher Education Act (HEA). Created by the Higher Education Amendments of 

1986, the Advisory Committee is an independent source of advice and counsel to Congress and the Secretary of Education on student financial aid policy. The Committee’s most important legislative charge is to make recommendations 

that maintain and enhance access and persistence of low- and moderate-income students in postsecondary education.

The upcoming HEA reauthorization represents an important opportunity for Congress to make progress in solving the 

nation’s core college access and persistence problem. In a December 31, 2002 letter to the Honorable John A. Boehner, 

Chairman of the Committee on Education and the Workforce, the Advisory Committee identified three key dimensions 

for the nation’s neediest, low-income students:

•	 Those in middle school today do not—and cannot—know their total eligibility for federal, state, and institutional financial aid resources. And, even if they did know their total eligibility, it is insufficient to ensure 

financial access even to less expensive public colleges, even for those who are academically qualified.

•	 Nearing (and upon) graduation from high school, they face overly complex application forms, which inhibit 

their transition to college and inordinately high unmet need, the gap between student aid and college expenses. 

High unmet need causes students to undertake excessive levels of work and loan burden.

•	 Those who enter college, especially four-year colleges, against these financial odds must work far too many 

hours, which reduces their eligibility for grant aid, and accumulate far too much debt in meeting college expenses.

This unproductive pattern inevitably leads to diminished expectations and plans early on, low levels of enrollment 

upon high school graduation, and disappointing rates of persistence and degree completion in college. Breaking this 

pattern will require a major adjustment in the nation’s long run access and persistence strategy.

80 F Street, N.W., Suite 413, Washington, D.C. 20202-7582 • Tel: 202/219-2099 • Fax: 202/219-3032

An independent committee created by Congress to advise on higher education and student aid policy

63
The Honorable Judd Gregg

May 22, 2003

Page 2

A Practical and Promising Solution

Fortunately, the broad outline of a solution is already known and at least partially in place in states like Indiana, 

Oklahoma, and Washington. In those states, low-income middle school students and their families are assured of 

financial access to four-year public colleges. With such an assurance, they know that adequate financial resources 

will be there if they work hard to become academically prepared. They know that grant aid in particular will be sufficient to keep work and loan burden to manageable levels upon enrollment in college and through degree completion. 

The success of these state efforts in advancing access and persistence is proof that, when low-income students and their 

families are assured sufficient financial resources to be successful in college, their educational expectations and plans, 

academic preparation, level of enrollment, and rate of persistence dramatically improve. If combined with a highly 

simplified application for financial aid, and an improved, more transparent determination of eligibility that eliminates 

the current counterproductive penalty on work, then an early assurance of financial access and persistence will yield 

immediate and enduring progress toward equal educational opportunity.

The challenge in this reauthorization is for the federal government, in partnership with the states, colleges, and the 

private sector, to implement systemic and long-lasting solutions to the nation’s core college access and persistence 

problem. States that have already implemented such strategies must be encouraged to go further, broadening the 

coverage and improving the effectiveness of their programs. States that have yet to adopt such a strategy must be 

encouraged to implement one based on successful models. Colleges—both public and private—must also do their 

share, by increasing the amount of grant assistance and support services for needy students to ensure degree or certificate completion. Lastly, to the extent possible, the considerable resources of the private sector must also be brought 

to bear. If all existing public and private access and persistence resources and programs are pooled to work together, 

then significant progress can be made. 

A National Access and Persistence Partnership

The Advisory Committee recommends the creation of a national partnership that links the federal government, states, 

colleges, and K-12 schools across existing Title IV programs, in pursuit of measurable gains in access and persistence 

for the nation’s neediest students who are academically qualified. This partnership should be based on existing models 

that have been proven effective and should take full advantage of existing public and private resources. To be successful, the partnership must have the following components: 

•	 An Early Assurance of Financial Access. The partnership must integrate a financial assurance into existing public and private early intervention, academic preparation, mentoring, and counseling programs in the 

state. 

•	 Simplified Application and Adequate Grant Aid. The partnership must provide for easy application for 

financial aid and assure financial access to four-year colleges, for both first-time students and two-year college transfers, through a combination of existing funding sources and supplemental state grants.

•	 Enhanced Persistence. The partnership must provide continuing grant aid, adequate support services, and 

the elimination of existing penalties for work that lower eligibility for need-based grant aid.

To the extent possible, the partnership should promote institutional policies that ease student transfers and improve 

completion rates of low-income students. To be internally accountable, the partnership must hold participating lowincome students harmless against increases in tuition by increasing their financial aid as prices rise. Colleges should 

maintain policies that are flexible enough to accommodate the diverse needs of low-income students. Colleges must 

also be accountable; it is incumbent on private and public colleges and their partners to make every effort possible to 

64
The Honorable Judd Gregg

May 22, 2003

Page 3

control their costs. The partnership also must systematically generate data, capable of monitoring and measuring the 

partnerships’ impact on educational expectations and plans, enrollment, and persistence outcomes.

Lastly, there are several ways that such a partnership could be implemented. The partnership could take the form of a 

modification to one or more existing Title IV programs or a competitive grant program. In recognition of the fact that 

funding may not be available initially to meet the demands of all states that wish to participate, it could be phased in 

gradually, in a scalable manner. For example, initial priority could be given to a limited amount of states 

that, in conjunction with participating colleges, were able to develop innovative methods to provide a full assurance of 

financial access to a significant number of middle school students. Regardless of the specific form that the partnership 

takes, states and colleges should be encouraged to match federal funds to ensure that the additional grant aid necessary 

to make good on the promise of financial access and persistence is forthcoming.

Benefits to Students and the Nation

This reauthorization offers the opportunity to put into place a creative and efficient partnership that can stem the increase 

in the number of students for whom opportunity will be nothing more than an empty promise, and make considerable 

progress toward renewing the nation’s commitment to access to college and the opportunity to persist. The resulting 

statute could begin to insure that the hard work of the neediest Americans who will attempt to enroll in college over 

the next decade will be rewarded. 

While a problem several decades in the making cannot be solved overnight, a reinvigorated federal-state-institutional 

partnership with private sector support is both desirable and feasible. It would ensure that the nation confronts the 

serious college access and persistence problem head-on. It will also focus resources on a winning long-term strategy 

to increase the amount of need-based grant aid that low- and moderate-income high school graduates receive that will 

reduce the work hours and loan burden they currently face to a manageable level.

As always, the Advisory Committee members and staff would be pleased to discuss the proposal with you or provide 

any technical assistance that is necessary. Please contact our staff director, Dr. Brian Fitzgerald, if we can be of assistance. 

Sincerely,

Dr. Charles Terrell

Chairperson

Enclosure

cc: Advisory Committee members

The Honorable Edward M. Kennedy (Identical letter sent)

Members of the Committee on Health, Education, Labor and Pensions

Members of the Committee on Education and the Workforce

The Honorable Roderick R. Paige

The Honorable William D. Hansen

The Honorable Sally L. Stroup

65
Advisory Committee on Student Financial Assistance

Reauthorization Proposal:

A Federal Partnership for Access and Persistence

Summary: The proposal would forge a new partnership among the federal government, states, and 

colleges to create an assurance of access and persistence for low-income students. The proposal is 

necessary because college-qualified low-income students face financial and procedural barriers to 

enrollment throughout the education pipeline. The proposal would attack this systemic problem by 

encouraging states to offer low-income students an early assurance of financial access to college, 

a simplified financial application process, and adequate grant aid to enroll and persist to degree 

completion. The proposal would also encourage colleges to provide support services and additional 

persistence grants to low-income students. The most effective early intervention programs have 

demonstrated that an early assurance of financial access has generated remarkable benefits for lowincome students and their families: students who successfully complete early intervention programs 

are more likely to be academically prepared to attend college and more likely to enroll in college. 

Background: The Advisory Committee on Student Financial Assistance has outlined the access and 

persistence problems in its last two reports, Access Denied and Empty Promises. In summary, the 

Advisory Committee has found: (1) middle school students lack an assurance of adequate financial 

aid; (2) high school students face an overly complex financial aid application process and inordinately 

high unmet need; and (3) college students face an overwhelming level of work and loan burden in 

attempting to persist to degree completion. The Advisory Committee is convinced that progress 

is unlikely unless the Title IV access and persistence partnership among the federal government, 

states, colleges, and K-12 schools is boldly reinvigorated during this reauthorization. 

An effective access and persistence strategy must be multidimensional; it should contain three critical 

components: (1) An early assurance of financial access; (2) a simplified application and adequate 

grant aid; and (3) persistence grants and support services. An assurance of financial access to lowincome middle school students would create incentives for students to aspire to attend college, enroll 

in early intervention programs, and prepare academically to attend college. A simplified application 

form that is aligned with existing federal programs would make eligibility more transparent and 

application less encumbered for high school students. Additional grant aid and support services at 

college would reduce low-income students’ work and loan burden and improve the likelihood that 

they will enroll in college and persist to degree completion.

Proposal: Congress should create a partnership that offers matching grants to states and institutions 

to form partnerships that promote access and persistence for low-income students. Congress could 

appropriate funds to states, especially those states that have a demonstrated commitment to early 

intervention leading to college access. States could have the flexibility to decide which low-income 

students to target the additional grant aid to, but could be encouraged to give priority to low-income 

students who have participated in a federal, state, community, or private early intervention program. 

The partnership could encourage states to provide low-income middle school students with an 

early assurance of financial access to a four-year college; it could establish a streamlined application process that included automatic eligibility, enabling states to notify every 7th grade student of 

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his or her total drawing power on federal and state grant aid. The partnership would allow states 

to offer financial incentives, in the form of additional grant assistance, to high school students to 

participate in and complete early intervention programs. Participation in such programs will increase the likelihood that the targeted students will aspire to college and be academically prepared 

to enroll in college. The partnership could also encourage participating colleges to attract, retain, 

and graduate low-income students; institutions would receive matching funds to provide persistence 

grants and additional support services. Finally, the partnership could further reduce the work and 

loan burden of low-income college students by eliminating the student “work penalty,” whereby 

a student’s grants decrease the more (s)he works to cover unmet need, and thus ensuring adequate 

grant aid each year of college.

Key Features:

•	 The partnership could leverage additional federal funds with additional state and institutional 

grant aid through matching requirements. 

•	 It minimizes structural changes to existing federal programs and does not create new federal 

programs to compete with those that already exist.

•	 It could leverage existing Title IV programs like SEOG and Work-Study to lower unmet need 

and increase enrollment and persistence. 

•	 It could be scalable and data generating; the partnership could initially be implemented in a 

select group of states, or it could be gradually phased into every state.

•	 It could be internally accountable, holding participating students harmless against tuition 

increases and encouraging timely degree completion. 

•	 Students could use their grant assistance at public and private accredited colleges. 

•	 The federal government could encourage states to award available grant aid to students that 

participate in an early intervention program; programs that utilize strategies such as mentoring, counseling, academic support, providing financial information, involving parents, and 

visiting college campuses.

•	 The partnership could take advantage of existing early intervention programs such as TRIO, 

GEAR UP, I Have a Dream, and those operated by private (corporate and philanthropic) 

firms.

 

•	 The federal government could ensure consistency of grant aid each year of college by minimizing the current student “work penalty,” by which wages earned to cover unmet need 

reduce grant aid in subsequent years, as a means of encouraging persistence.

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•	 Colleges could encourage academically qualified low-income students to attend their school 

by offering matching grant aid, and by providing support services that help students persist to 

degree completion.

Benefits: The proposed partnership would allow the federal government to leverage existing Title 

IV programs to expand low-income students’ access to college; thus, allowing the nation to produce 

more skilled workers. The partnership provides states with the opportunity to strengthen their need 

based grant programs to offset the rising tide of college costs. The partnership would also provide 

colleges with additional funds for persistence grants and support services. States and colleges would 

benefit from a student population that was more motivated, by an early assurance of financial access, 

to prepare academically and to persist to degree completion. Students of low-income families would 

also benefit from an early assurance of financial access, as it would encourage them to have higher 

expectations to attend college and they would receive better information with which to make plans 

to attend college. Students would also benefit from the reduction of financial and procedural barriers to college access; students would receive a simpler financial application, a clearer articulation 

of the financial aid available, and consistent grant aid each year of college, through the elimination 

of the student “work penalty.” 

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RECOMMENDATION

Senate Bill

(S.1614)

House Bill

(H.R.609)

HERA 2005

(P.L.109-17)

1. Create a System of Early Financial Aid Information l  

2. Make Federal Need Analysis Transparent, Consistent, Fair   

3. Expand Existing Simplification to More Students   

4. Allow All Students to Apply for Financial Aid Earlier  

5. Make the FAFSA Relevant and Understandable   

6. Create a Simpler Paper Form for Low-Income Students l l

7. Phase Out Full Paper Form and Increase Use of Technology l 

8. Simplify and Streamline FAFSA on the Web l l

9. Simplify the Verification Process

10. Create a National Access and Persistence Partnership l

l = recommendation fully implemented;  = recommendation partially implemented

ADVISORY COMMITTEE RECOMMENDATIONS IN HEA REAUTHORIZATION BILLS

(H.R.609 and S.1614) AND HIGHER EDUCATION RECONCILIATION ACT (P.L.109-171)

APPENDIX B: ADVISORY COMMITTEE

SIMPLIFICATION RECOMMENDATIONS

Mr. Clare M. Cotton (Chairperson)

1272 Beacon Street - #8 

Brookline, Massachusetts 02446

Appointed by: 

The Honorable Robert C. Byrd (D-WV)

President Pro Tempore of the Senate

Ms. Judith N. Flink (Vice Chairperson)

Executive Director of University 

Student Financial Services 

The University of Illinois 

Appointed by:

The Honorable J. Dennis Hastert (R-IL)

Speaker of the House of Representatives

Mr. Don R. Bouc 

President Emeritus 

National Education Loan Network (Nelnet)

Appointed by:

The Honorable Roderick R. Paige (R-TX)

Secretary of Education

Dr. Lawrence W. Burt 

Associate Vice President for Student Affairs 

Director of Student Financial Services

The University of Texas at Austin

Appointed by:

The Honorable Margaret Spellings (R-TX)

Secretary of Education

Mr. René A. Drouin 

President and CEO 

New Hampshire Higher Education 

Assistance Foundation

Appointed by:

The Honorable Theodore Stevens (R-AK)

President Pro Tempore of the Senate

Ms. Norine Fuller 

Executive Director 

The Fashion Institute of Design 

and Merchandising

Appointed by:

The Honorable J. Dennis Hastert (R-IL)

Speaker of the House of Representatives

Mr. Darryl A. Marshall 

Director, Student Financial Aid 

Florida State University

Appointed by:

The Honorable Roderick R. Paige (R-TX)

Secretary of Education

Mr. Lawrence W. O’Toole 

Chairman and CEO 

America’s Charter School Finance Corporation

Appointed by:

The Honorable Roderick R. Paige (R-TX)

Secretary of Education

Dr. Claude O. Pressnell, Jr.

President

Tennessee Independent Colleges and 

Universities Association (TICUA)

Appointed by:

The Honorable Theodore Stevens (R-AK)

President Pro Tempore of the Senate

Mr. Robert M. Shireman 

Director 

The Institute for College Access & Success, Inc.

Appointed by:

The Honorable Nancy Pelosi (D-CA)

Minority Leader

U.S. House of Representatives

Student Member -Vacant

APPENDIX C: Advisory Committee Members

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APPENDIX D: Advisory Committee STAFF

William J. Goggin 

Executive Director

 

Nicole A. Barry 

Deputy Director

Michelle Asha Cooper 

Director of Policy Research

Erin B. Renner 

Director of Government Relations

Julie Johnson

Assistant Director

Brent J. Evans

Assistant Director

Jeneva Stone

Senior Writer

Lan Gao

Graduate Assistant

Hope M. Gray

Executive Officer

Tracy D. Jones

Administrative Assistant

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APPENDIX E: 

Authorizing Legislation

The Advisory Committee was established by an act of Congress in 1986. Section 491 of the Higher 

Education Act as amended contains the Committee’s Congressional mandate. A copy of this section 

as it appears in the law follows:

SEC. 491. ADVISORY COMMITTEE ON STUDENT FINANCIAL ASSISTANCE.

(a) ESTABLISHMENT AND PURPOSE.—(1) There is established in the Department an

independent Advisory Committee on Student Financial Assistance (hereafter in this section referred 

to as the “Advisory Committee”) which shall provide advice and counsel to the Congress and to the 

Secretary on student financial aid matters. (2) The purpose of the Advisory Committee is— (A) to 

provide extensive knowledge and understanding of the Federal, State, and institutional programs of 

postsecondary student assistance; (B) to provide technical expertise with regard to systems of needs 

analysis and application forms; and (C) to make recommendations that will result in the maintenance 

of access to post-secondary education for low- and middle-income students.

(b) INDEPENDENCE OF ADVISORY COMMITTEE.—In the exercise of its functions, powers, and duties, the Advisory Committee shall be independent of the Secretary and the other offices 

and officers of the Department. Notwithstanding Department of Education policies and regulations, 

the Advisory Committee shall exert independent control of its budget allocations, expenditures 

and staffing levels, personnel decisions and processes, procurements, and other administrative and 

management functions. The Advisory Committee’s administration and management shall be subject 

to the usual and customary Federal audit procedures. Reports, publications, and other documents of 

the Advisory Committee, including such reports, publications, and documents in electronic form, 

shall not be subject to review by the Secretary. The recommendations of the Committee shall not 

be subject to review or approval by any officer in the executive branch, but may be submitted to 

the Secretary for comment prior to submission to the Congress in accordance with subsection (f). 

The Secretary’s authority to terminate advisory committees of the Department pursuant to section 

448(b) of the General Education Provisions Act ceased to be effective on June 23, 1983.

(c) MEMBERSHIP.—(1) The Advisory Committee shall have 11 members of which— (A) 3 

members shall be appointed by the President pro tempore of the Senate upon the recommendation 

of the Majority Leader and the Minority Leader, (B) 3 members shall be appointed by the Speaker 

of the House of Representatives upon the recommendation of the Majority Leader and the Minority Leader, and (C) 5 members shall be appointed by the Secretary including, but not limited to 

representatives of States, institutions of higher education, secondary schools, credit institutions, 

students, and parents. (2) Not less than 7 members of the Advisory Committee shall be individuals 

who have been appointed on the basis of technical qualifications, professional standing and demonstrated knowledge in the fields of higher education and student aid administration, need analysis, 

financing postsecondary education, student aid delivery, and the operations and financing of student 

loan guarantee agencies.

(d) FUNCTIONS OF THE COMMITTEE.—The Advisory Committee shall—(1) develop, review, 

and comment annually upon the system of needs analysis established under part F of this title; (2) 

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monitor, apprise, and evaluate the effectiveness of student aid delivery and recommendimprovements; (3) recommend data collection needs and student information requirements which would 

improve access and choice for eligible students under this title and assist the Department of education in improving the delivery of student aid; (4) assess the impact of legislative and administrative 

policy proposals; (5) review and comment upon, prior to promulgation, all regulations affecting 

programs under this title, including proposed regulations; (6) recommend to the Congress and to the 

Secretary such studies, surveys, and analyses of student financial assistance programs, policies, and 

practices, including the special needs of low-income, disadvantaged, and nontraditional students, 

and the means by which the needs may be met, but nothing in this section shall authorize the committee to perform such studies, surveys, or analyses; (7) review and comment upon standards by 

which financial need is measured in determining eligibility for Federal student assistance programs; 

(8) appraise the adequacies and deficiencies of current student financial aid information resources 

and services and evaluate the effectiveness of current student aid information programs; and (9) 

make special efforts to advise Members of Congress and such Members’ staff of the findings and 

recommendations made pursuant to this paragraph.

(e) OPERATIONS OF THE COMMITTEE.—(1) Each member of the Advisory Committee 

shall be appointed for a term of 3 years, except that, of the members first appointed— (A) 4 shall 

be appointed for a term of 1 year; (B) 4 shall be appointed for a term of 2 years; and (C) 3 shall be 

appointed for a term of 3 years, as designated at the time of appointment by the Secretary. (2) Any 

member appointed to fill a vacancy occurring prior to the expiration of the term of a predecessor 

shall be appointed only for the remainder of such term. A member of the Advisory Committee shall, 

upon request, continue to serve after the expiration of a term until a successor has been appointed. A 

member of the Advisory Committee may be reappointed to successive terms on the Advisory Committee. (3) No officers or full-time employees of the Federal Government shall serve as members of 

the Advisory Committee. (4) The Advisory Committee shall elect a Chairman and a Vice Chairman 

from among its members. (5) Six members of the Advisory Committee shall constitute a quorum. 

(6) The Advisory Committee shall meet at the call of the Chairman or a majority of its members.

(f) SUBMISSION TO DEPARTMENT FOR COMMENT.—The Advisory Committee may 

submit its proposed recommendations to the Department of Education for comment for a period 

not to exceed 30 days in each instance.

(g) COMPENSATION AND EXPENSES.--(1) Members of the Advisory Committee may each 

receive reimbursement for travel expenses incident to attending Advisory Committee meetings, 

including per diem in lieu of subsistence, as authorized by section 5703 of title 5, United States

Code, for persons in the Government service employed intermittently.

(h) PERSONNEL AND RESOURCES.—(1) The Advisory Committee may appoint such personnel as may be necessary by the Chairman without regard to the provisions of title 5, United States 

Code, governing appointments in the competitive service, and may be paid without regard to the 

provisions of chapter 51 and subchapter III of chapter 53 of such title relating to classification and 

General Schedule pay rates, but no individual so appointed shall be paid in excess of the rate authorized for GS-18 of the General Schedule. The Advisory Committee may appoint not more than 

1 full-time equivalent, nonpermanent, consultant without regard to the provisions of title 5, United 

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States Code. The Advisory Committee shall not be required by the Secretary to reduce personnel 

to meet agency personnel reduction goals. (2) In carrying out its duties under the Act, the Advisory 

Committee shall consult with other Federal agencies, representatives of State and local governments, 

and private organizations to the extent feasible. (3)(A) The Advisory Committee is authorized to 

secure directly from any executive department, bureau, agency, board, commission, office, independent establishment, or instrumentality information, suggestions, estimates, and statistics for 

the purpose of this section and each such department, bureau, agency, board, commission, office, 

independent establishment, or instrumentality is authorized and directed, to the extent permitted 

by law, to furnish such information, suggestions, estimates, and statistics directly to the Advisory 

Committee, upon request made by the Chairman. (B) The Advisory Committee may enter into 

contracts for the acquisition of information, suggestions, estimates, and statistics for the purpose 

of this section. (4) The Advisory Committee is authorized to obtain the services of experts and consultants without regard to section 3109 of title 5, United States Code and to set pay in accordance 

with such section. (5) The head of each Federal agency shall, to the extent not prohibited by law, 

cooperate with the Advisory Committee in carrying out this section. (6) The Advisory Committee 

is authorized to utilize, with their consent, the services, personnel, information, and facilities of 

other Federal, State, local, and private agencies with or without reimbursement.

(i) AVAILABILITY OF FUNDS.—In each fiscal year not less than $800,000, shall be available 

from the amount appropriated for each such fiscal year from salaries and expenses of the Department for the costs of carrying out the provisions of this section.

(j) SPECIAL ANALYSES AND ACTIVITIES.—The Advisory Committee shall— (1) monitor 

and evaluate the modernization of student financial aid systems and delivery processes, including 

the implementation of a performance-based organization within the Department, and report to Congress regarding such modernization on not less than an annual basis, including recommendations 

for improvement; (2) assess the adequacy of current methods for disseminating information about 

programs under this title and recommend improvements, as appropriate, regarding early needs 

assessment and information for first-year secondary school students; (3) assess and make recommendations concerning the feasibility and degree of use of appropriate technology in the application 

for, and delivery and management of, financial assistance under this title, as well as policies that 

promote use of such technology to reduce cost and enhance service and program integrity, including 

electronic application and reapplication, just-in-time delivery of funds, reporting of disbursements 

and reconciliation; (4) assess the implications of distance education on student eligibility and other 

requirements for financial assistance under this title, and make recommendations that will enhance 

access to postsecondary education through distance education while maintaining access, through 

on-campus instruction at eligible institutions, and program integrity; and (5) make recommendations to the Secretary regarding redundant or outdated provisions of and regulations under this Act, 

consistent with the Secretary’s requirements under section 498B.

(k) TERM OF THE COMMITTEE—Not withstanding the sunset and charter provisions of the

Federal Advisory Committee Act (5 U.S.C. App. I) or any other statute or regulation, the Advisory 

Committee shall be authorized until October 1, 2004.

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