Each year millions of adults participate in organized learning in the United States, in a wide range of venues. In 1999, an estimated 90 million persons 16 and older reported that they had participated in some sort of formal learning activity, ranging from personal development courses—such as family genealogy or cooking classes—to apprenticeship and advanced degree programs. Much of this learning takes place outside of formal credential programs that confer a certificate or degree—-most often in the workplace, where employers offer classes for job-specific skills, or in the many courses offered by postsecondary institutions that are not part of a credential program, such as a continuing education class. Enrolling in a certificate or degree program at a postsecondary institution is an important opportunity, however, for millions of adults who seek personal growth, or advancement in their working lives. In the 1999-2000 academic year, an estimated 7.1 million adults were enrolled as undergraduates in the nation’s postsecondary institutions, comprising about 40 percent of all undergraduate students. About three- quarters of these adult undergraduates were between the ages of 24 to 40, while about one-quarter were 41 or older. Compared with undergraduate students under the age of 24, adult students enrolled in 1999-2000 were more likely to be working full time (35 or more hours per week), to be married, to have dependents, and to lack a conventional high school diploma. (See table 1.) While the majority of undergraduates under the age of 24 were enrolled in baccalaureate programs, adult undergraduate students were primarily enrolled in certificate or associate programs in 1999-2000. Most adult students (55 percent) were enrolled at 2-year public institutions, while another 22 percent were enrolled in a public 4-year institution, and 10 percent were enrolled in private 4-year institutions. The remaining adult students were enrolled at proprietary schools, such as culinary or beauty schools, or a combination of different types of institutions. A range of public and private funding sources is available to adults to assist them in meeting the costs sometimes associated with formal learning, including employer-provided educational assistance, federal student aid programs authorized under Title IV of the Higher Education Act, higher education tax credits, and federal WIA and TANF funds. In the 1999-2000 academic year, adult students received about $3.3 billion in grant assistance and $8.5 billion in loan assistance from programs authorized under Title IV of the Higher Education Act. To receive federal financial aid, students must meet several eligibility requirements, including being enrolled in a degree or certificate program, and maintaining satisfactory academic progress. Institutions are required to establish qualitative and quantitative criteria of satisfactory progress, and to monitor student progress. Taken together, these requirements help to ensure that Title IV funds are used in ways that benefit both students and the larger public, rather than purely recreational or leisure activities. Postsecondary institutions must also meet eligibility requirements to participate in Title IV programs, including legal authorization by the state in which they offer postsecondary education, accreditation by a nationally recognized accrediting agency, and limiting regular admission to individuals with a high school diploma or its recognized equivalent.Institutional eligibility requirements help to ensure that participating institutions provide students with quality education or training. Programs authorized under Title IV include Pell Grants for low-income students and Stafford Loans. Stafford loans may be either subsidized or unsubsidized. If the loan is subsidized, the federal government pays the interest cost of the loan for the time a student is enrolled in school. If the loan is unsubsidized, the borrower is responsible for paying interest during the life of the loan. Title IV also authorizes programs funded by the federal government and administered by participating higher education institutions, commonly known as campus-based aid—Supplemental Educational Opportunity grants, Perkins loans, and federal work-study aid. Students who apply for Title IV aid must do so using the Free Application for Federal Student Aid (FAFSA). Information from the FAFSA is used to determine the amount of money that the adult student is expected to contribute to his or her own education, called the expected family contribution (EFC). Statutory definitions establish the criteria that students must meet to be considered independent of their parents for purposes of financial aid, and statutory formulas establish the share of income and assets that are expected to be available for the student’s education. Once the EFC is established, it is compared to the cost of attendance at the institution chosen by the student. As table 2 indicates, the elements included in the student’s cost of attendance for the purpose of calculating the Pell Grant award vary according to the extent of their enrollment. If the EFC is greater than the cost of attendance, the student is not considered to have financial need for federal Title IV aid programs. If the cost of attendance is greater than the EFC, then the student is considered to have financial need. Pell Grant awards are calculated by subtracting the student’s EFC from the maximum Pell Grant award. Maximum Pell Grant awards are prorated by the student’s enrollment intensity: students attending less than halftime are eligible to receive one-quarter of the maximum Pell Grant award. In 1999-2000, the maximum Pell Grant award was $3,125 for fulltime students, while the maximum award for a less-than- halftime student was $781. The maximum subsidized Stafford loan award is equal to the student’s calculated financial need, subject to statutory limits on annual and cumulative borrowing. The maximum unsubsidized Stafford loan award is equal to the student’s cost of attendance, subject to statutory limits on annual and cumulative borrowing. Adult students also received financial aid from states, postsecondary institutions, and other federal sources. In 1999-2000, states awarded a total of $975 million to adult students enrolled in undergraduate education, typically on the basis of estimated financial need. However, about half of the states did not have aid programs in which adults enrolled less than halftime were eligible to participate. Postsecondary institutions awarded $941 million in aid to adult undergraduate students in 1999-2000, often on the basis of considerations other than financial need. Sources of federal assistance other than Title IV aid were available to adult undergraduates, the largest of which was Montgomery GI Bill assistance. About $1 billion was available to the nation’s veterans and eligible service members through the Montgomery GI Bill. Financial assistance was also available to adult students from work- related sources—through two federal higher education tax credits and from employer-provided educational assistance. Employers may pay postsecondary educational expenses directly, or indirectly through employee reimbursement, and they are encouraged to do so by the federal tax code, which provides favorable tax treatment for these benefits. In 1999-2000, employers provided $1.28 billion in assistance to adult students enrolled in undergraduate postsecondary education, most often to those workers who were most likely to increase company productivity or profitability as a result of their education, such as high-skill, high-demand workers and managers.Employees were usually required by employers to meet a number of conditions to obtain this educational assistance— such as a minimum length of service—but were not obligated to enroll in degree or certificate programs, or to complete their studies. Assistance was also available to students through two federal higher education tax credits, the HOPE and Lifetime Learning tax credits. Tax filers on their own behalf, or on behalf of a spouse or dependent may claim both credits, and both are nonrefundable: if the filer has no tax liability, they cannot receive the credit. Eligibility for the HOPE credit is limited to students who are enrolled halftime or more in a degree or certificate program, and in their first 2 years of postsecondary education. In contrast to both the HOPE tax credit and the Stafford student loan programs, the Lifetime Learning tax credit may be used by tax filers who enroll for any number of credits, and for any course that aids in learning new or improving existing job skills, including those that are not part of a degree or certificate program. Additionally, tax filers may use the credit for as many years as they are enrolled, without regard to degree progress or completion. Tax filers use all qualified tuition and fees—minus any tax-free educational assistance received—to compute the credits. In 1999-2000, all of the first $1,000 and half of the next $1,000 of qualified education expenses per student could be used to compute the HOPE credit, for a maximum credit of $1,500. In 1999-2000, each tax filer could use 20 percent of the first $5,000 in qualified educational expenses to compute the Lifetime Learning credit for a maximum credit of $1,000. The Lifetime Learning credit permits tax filers to combine their own expenses and those of their spouse and dependents. For taxpayers filing jointly, both credits were initially phased out at $80,000 adjusted gross income, and fully phased out at $100,000. Federal programs authorized by WIA and PRWORA may also provide some adults with assistance in meeting the costs of postsecondary education. Under WIA, adults and dislocated workers may be eligible to receive job training after it is determined that they are unlikely to get a job leading to self-sufficiency without such training. WIA funds may be used for postsecondary training only for expenses remaining after the receipt of Pell Grant and other sources of assistance. Furthermore, state and local workforce investment boards are authorized to establish limits on the amount of time or the amount of WIA funds that may be used to meet training expenses. Under PRWORA, block grants are made to states, which may use these funds to assist TANF recipients in meeting costs associated with vocational training or education, including postsecondary education. These costs may include tuition and fees, childcare, and transportation. In 1999-2000, one-third of adult undergraduate students, about 2.3 million, enrolled less than halftime, and most worked fulltime and needed to balance the demands of school with other responsibilities. Most adults who enroll as less than halftime students intend to complete a degree or certificate, but few do. Compared with adult students enrolled halftime or more, the typical less-than-halftime adult student was older, more likely to be working and married, and had a higher household income. In addition, less-than-halftime students more often enrolled without being in a degree program, and less often pursued a baccalaureate degree. Although less- than-halftime enrollment may permit adults to complete one or two courses helpful to their employment prospects, such enrollment appears to be an ineffective long-term strategy for the majority of less-than- halftime adult students who intend to complete a degree. Of those adults who expected to complete a certificate or degree and enrolled on a less than halftime basis during their first year of school, most had not completed a degree or certificate, and were no longer enrolled in school. In 1999-2000, one-third, about 2.3 million, of adult undergraduate students were enrolled less than halftime. As shown in figure 1, other adult students were either enrolled fulltime (12 or more credits), half- or three-quarters time (6-11 credits), or were in a combination of different enrollment types (mixed). Compared with adult students enrolled halftime or more, less-than- halftime adult students were older, and more likely to be working fulltime, be married, and have dependents. In addition, less-than-halftime adult students more often enrolled in 2-year postsecondary institutions, and less often pursued a baccalaureate degree. Less-than-halftime adult students had, on average, higher household incomes than did other adult students. (See table 3.) A substantially larger proportion of adults who enrolled on a less-than- halftime basis had household incomes over $30,000 than did adults enrolled halftime or more. (see figure 2). An estimated 7 percent of all adult students enrolled less than halftime in 1999-2000 had household incomes at or below 100 percent of the federal poverty guideline, which for a three-person household in 1998 was $13,650. An estimated 14 percent had household incomes at or below 150 percent of the federal poverty guideline, or $20,475 for a three-person household. Adult students choose to enroll on a less-than-halftime basis for many reasons, the most important of which, most school administrators told us, is their need to balance school requirements with the competing demands of work and family. This closely reflects the findings of studies that examine postsecondary enrollment among adults. School administrators explained that the balancing act required of many adult students, in which they attempt simultaneously to meet family responsibilities and work obligations, left many adults with too little time to be a fulltime student. The routines of adult life—from caring for sick children to meeting unexpected job demands—compete with class attendance and the completion of course assignments, according to these administrators. Faced with this “juggling act” some adult students may have to pursue postsecondary education on a less-than-halftime basis. College administrators we contacted also identified several other significant reasons why adult students may enroll on a less-than-halftime basis, including the difficulty meeting the direct costs of school, scheduling conflicts, and students’ limited readiness for postsecondary education. Virtually all administrators identified these as important, but secondary, reasons. While many adult students receive some financial support towards postsecondary costs, most students pay the majority of school costs from their own resources. Because adult students may find it difficult to economize on housing costs by searching for less expensive accommodations or group housing, enrolling less than halftime can provides them with a way to reduce out-of-pocket costs associated with tuition and fees—as well as transportation, childcare, and books. Scheduling conflicts also played a role, according to college administrators, in influencing enrollment decisions. Officials noted that adult students, especially working students, may be unable to enroll on a halftime or fulltime basis due to the inflexibility of course and program options made available by postsecondary institutions, or a lack of flexibility in work schedules on the part of employers. While some postsecondary institutions offered the majority of their classes during nontraditional hours, such as evenings or weekends, others did not. For example, administrators at one 4-year school estimated that only 10 percent of the undergraduate courses were offered during evening hours. Adults may find it easier to plan and manage their schedules over 5 to 7 weeks than they do over longer time periods, such as a traditional 10 or 15- week semester. At another institution, administrators noted that 3,000 course sections were offered each semester, but only 10 were available to adults in a shorter 5 to 7 week format, owing to reluctance of faculty to teach in alternative times and formats. Administrators at one community college pointed to a lack of flexibility in employer work schedules, noting that adult students often withdraw from class when their employer changes their work schedule, preventing them from attending class. School administrators explained that some adults might not be ready— academically or socially—for postsecondary education, and that this may contribute to their decision to enroll less than halftime. Adult students often need to refresh or develop college-level skills, they noted, particularly in mathematics. Adult students may also lack confidence in themselves or their abilities, or feel out of place in a college setting. One administrator noted that some adult students at her institution experienced stress-related illnesses after they had begun their coursework and needed to leave mid-semester. National data indicate that adults enrolled on a less than halftime basis are more likely to be encountering academic difficulties than other adult students, as reflected in their lower grade point averages. National data indicate that most adults who enrolled on a less-than- halftime basis during their first year of postsecondary education expected to complete a degree or certificate, but six years later the majority had left school with no credential. Moreover, data provided by postsecondary institutions included in our review show that few adults who succeeded in completing a certificate or degree consistently enrolled on a less-than- halftime basis. Some adults who enroll in credit-bearing courses at postsecondary institutions may not intend to complete a degree or certificate; rather, they may choose to complete only a few courses, finding this sufficient to acquire the skills that help them gain employment, obtain a promotion, or find personal satisfaction. Data from Education’s 1995-1996 Beginning Postsecondary Students (BPS) study, which tracked the academic progress and degree completion of students over a 6-year period from 1995-1996 to 2001-2002, show that 25 percent of adults who enrolled on a less than halftime basis during their first year of postsecondary education did not expect to complete a degree or certificate. The remaining 75 percent, however, did. Most adults who intended to complete a degree or certificate and enrolled on a less-than-halftime basis during their first year of postsecondary education left school without completing a degree or certificate. Using the BPS study, we analyzed completion among those students who first enrolled at age 24 or older, who expected to complete a certificate, associate’s degree, or baccalaureate degree, and who enrolled on a less than halftime basis one or more times during their first year of postsecondary education. We estimate that about two-thirds (66 percent) of adults who began in 1995-1996 did not complete a certificate or degree by 2001-2002, and were no longer enrolled in postsecondary education. In comparison, only about 30 percent of adults who enrolled as halftime or fulltime students in their first year of school had left school without completing a degree or certificate. At those institutions that provided completion data to us, adult graduates’ reliance upon less than halftime enrollment varied with program length. Of the 1,830 baccalaureate graduates who completed their degrees in 2001- 2002 at four 4-year institutions we visited, and who when they first enrolled were age 24 or older, slightly more than one-half never enrolled on a less-than-halftime basis, and another 36 percent did so for only one or two terms. No graduates relied exclusively upon less-than-halftime enrollment to complete their degree. (See fig. 3.) Of the 1,927 students who completed an associate degree in 2001-2002 at four 2-year institutions we visited and who first enrolled at age 24 or older, almost one-half never enrolled as less-than-halftime students, or did so for one or two terms. Only 3 percent consistently enrolled on a less-than- halftime basis. (See fig. 4.) This pattern of enrollment was similar for the 348 students who completed a certificate program at three of the 2-year institutions we visited. In 1999-2000, about 7 in 10 of the nation’s less-than-halftime adult students received assistance equaling about 44 percent of their school costs, typically from sources other than federal and state student aid. Though less-than-halftime adult students had a range of household incomes, their school costs and the amount of assistance they received did not vary widely; however, the sources of assistance they received did vary by household income. Student financial aid from federal, state, and institutional sources comprised the majority of assistance received by lower-income adults, while most assistance received by higher- income households was provided by work-related sources. Very few adults enrolled on a less-than-halftime basis seldom received assistance from either federal WIA or TANF sources. In 1999-2000, most less-than-halftime adult students received some assistance with their postsecondary education or training costs, typically from sources other than student financial aid. An estimated 70 percent of less-than-halftime adults received assistance from federal, state, or other sources with their postsecondary education or training costs, which are estimated to have been, on average, $1,058 for all less-than-halftime adult students in 1999-2000. About one-half of these costs were comprised of tuition and fees ($480), while the remaining amount was comprised of books, equipment, childcare, and transportation costs. For those less-than-halftime adults who received assistance in 1999-2000, the average amount was $462, or approximately 44 percent of their school costs. Though the Lifetime Learning tax credit was the source of assistance most widely received by less-than-halftime adult students, the average Lifetime Learning tax credit ($74) was significantly smaller than the average Pell Grant award ($465) or the average level of employer support ($784). Few adults who enrolled less-than-halftime in 1999-2000 had incomes below 150 percent of the federal poverty guideline, and those who did received the bulk of assistance with their school costs from student financial aid—in contrast to the majority of less-than-halftime adult students who had incomes well above federal poverty guidelines and who relied chiefly upon work-related sources of assistance to meet school costs. Although the sources of assistance received by lower- and higher- income students were different, both groups had about the same school costs and levels of assistance and, therefore, similar shares of their school costs met through federal, state, or work-related assistance. In 1999-2000, 15 percent of less-than-halftime adults had a household income below 150 percent of the 1998 federal poverty guideline, while the vast majority of these students had incomes above this level. Less-than-halftime adult students with household incomes below 150 percent of the 1998 federal poverty guideline had approximately 43 percent of their estimated $1,121 in school costs met through all forms of assistance, while those with incomes above 150 percent of the federal poverty guideline had approximately 44 percent of their estimated $1,048 in costs met through assistance. As figure 6 shows, a larger percentage of lower income less-than-halftime adult students received Pell Grants than did students with incomes above 150 percent of the federal poverty guideline, while a smaller proportion received work-related assistance, either from their employer or the Lifetime Learning tax credit. Among low-income, less-than-halftime adult students, educational costs averaged just over $1,100, and about 14 percent of these students received federal Pell Grants to assist them in meeting these costs. Adults who work part-time receive employer financial assistance for enrollment in credential programs less often than those who work fulltime. Compared with higher-income less-than-halftime adult students, fewer low-income students worked, and, if they worked, fewer were employed fulltime. Consequently, a smaller percentage of low-income students received employer assistance (9 percent) than did higher-income students (25 percent). Finally, about half of these low-income adult students had no federal income tax liability and were, therefore, ineligible to receive a Lifetime Learning tax credit. As a result, an estimated 29 percent of those below 150 percent of the federal poverty guideline received a Lifetime Learning tax credit. While lower-income adult students received about two-thirds of their assistance (66 percent) from federal, state, institutional, and other aid, the opposite was true of higher-income adult students, who received 71 percent of their support from work-related sources assistance. In 1999- 2000, most adult students (85 percent) had incomes above 150 percent of the federal poverty guideline. According to federal and state financial aid rules, these adult students typically had incomes and assets that were sufficient to meet their postsecondary costs and, therefore, only 1 percent received either federal or state student aid. Most who had incomes above this level were fulltime workers, and a larger share received both employer assistance and Lifetime Learning tax credits than did their lower-income counterparts. We estimate that less than 1 percent of all less-than-halftime adult students received either WIA or TANF assistance with the cost of postsecondary education in 1999-2000. The population of less-than-halftime adult students that received WIA funds for vocational training was too small to reliably estimate the average amount of assistance they received in 1999-2000. Very few less-than-halftime adult students received WIA assistance because the WIA program focuses on employment-related assistance or skills training, and generally does not support extended training of adult students pursuing a postsecondary credential. At some of our visits to postsecondary institutions, school officials informed us that they were unfamiliar with WIA. However, those familiar with the program reported that very few adult students were WIA recipients, and that the number of adult students enrolled with assistance from WIA was lower than the number enrolled with assistance under the previous federal workforce policy, the Job Training Partnership Act. The time and dollar limits established by local workforce investment boards may make it difficult for adult students to use WIA funds for the extended training that may be required for the completion of a postsecondary vocational credential, even for those who are enrolled on a fulltime basis. As officials at one 2-year postsecondary institution reported, many adult students entering certificate programs needed 1 year of remedial coursework before beginning their program and were, therefore, unable to complete their coursework within the 1-year time limit established by the local workforce investment board. Less than 1 percent of less-than-halftime adult students received TANF assistance in 1999-2000, and NPSAS collected no data on the extent to which TANF funds assisted these students in meeting costs associated with their training or education. Moreover, school officials at the institutions we visited were generally unaware of the extent to which adult students were TANF recipients. One school, however, had created a program to enable TANF recipients to attend school fulltime. In Maryland, the Baltimore City Community College and city and state officials established the School Counts Program, through which selected TANF recipients who enroll at the community college are provided with advising, assistance with transportation and childcare expenses, and federal work study assistance that permits them to maintain a full credit load throughout the entire calendar year. These supports permit a relatively large proportion of program participants to complete a certificate or degree. Changing how the Pell and Stafford programs treat less-than-halftime attendance would provide some less-than-halftime students with additional aid, but it would likely increase program costs for the federal government and administrative complexity for postsecondary institutions. Proposed changes to the Pell Grant program include allowing, for less- than-halftime students, the inclusion of room and board and miscellaneous personal expenses, as is done for fulltime students. Another proposed change would be to allow less-than-halftime students to participate in the Stafford Loan programs. Administrators of postsecondary institutions in the four states we visited expressed concern about potential negative consequences of the Stafford loan proposal. Allowing, for all less-than-halftime students , the inclusion of room and board and miscellaneous personal expenses in their cost of attendance, as is done for other students, would increase the number of less-than- halftime students who receive a Pell grant and increase Pell award amounts for those who already receive a grant. We estimate that about 13,000 less-than-halftime students who do not receive a Pell award under current law would receive an average award of $630 under this alternative in the 2003-2004 academic year. In addition, about 150,000 less-than- halftime students would receive a Pell Grant award increase of $111 per year in 2003-2004. (See table 4.) The total federal budget cost of changing Pell Grant policy for less-than-halftime students would be approximately $25 million for the 2003-2004 academic year. This cost estimate assumes that adults who are not enrolled in school will not choose to enroll in response to the policy change. If about 35,000 individuals who are not in school respond to this change in policy by enrolling less than halftime, an estimate implied, in part, by some research, there could be an additional federal budget cost of about $10 million in addition to the $25 million associated with already enrolled students. (See app. III.) While current law does not permit less-than-halftime students to participate in the Stafford loan programs, some have proposed that these students be allowed to participate. This change to the loan program would increase federal subsidy costs associated with the Stafford programs. Moreover, campus administrators anticipate that the change could have undesirable effects on postsecondary institutions and on students. Permitting all less-than-halftime students to participate in the Stafford loan programs would increase federal subsidy costs associated with the Stafford loan programs by approximately $113 million in fiscal year 2004. We estimate that the average unsubsidized Stafford loan taken out by adult students enrolled less-than-halftime would be approximately $680, while the average subsidized loan would be about $1,200. Federal subsidy costs in subsequent fiscal years would change depending upon the number of students enrolled at eligible institutions, loan amounts per student, and federal subsidy costs per loan dollar. While administrators pointed to several potential benefits of providing Stafford eligibility for less-than-halftime students, they far more often pointed to a larger set of disadvantages—for both postsecondary institutions and student borrowers—that might accompany this change. Discussing potential benefits of expanding eligibility to include less-than- halftime students, they noted that changing the Stafford loan program might permit less-than-halftime students to reduce their reliance on more costly types of borrowing, or to reduce the extent to which they work to finance their education. Additionally, some students might prefer—or better cope with—enrollment as a less-than-halftime student, but are encouraged by Stafford eligibility rules to take six or more credits. If eligibility for the program were extended to less-than-halftime students, this incentive for students to enroll for more credits would be removed. Administrators, particularly those at public 2-year postsecondary institutions, expressed the potential disadvantages associated with expanding eligibility. They observed that expanding eligibility to less-than- halftime students might increase their institution's cohort default rate. Students who do not complete a certificate or degree, research indicates, are especially likely to default on their loans. In light of the low rates of completion among less-than-halftime students, they reasoned, this population might be at particular risk of defaulting on Stafford loans. Institutional eligibility to participate in federal student aid programs is linked to an institution's cohort default rate, and permitting borrowing by less-than-halftime students could result in some institutions losing Title IV eligibility. In addition, changing Stafford eligibility to include borrowers enrolled less than halftime would, they anticipate, result in a large expansion in the number of students participating in the Stafford loan programs, increasing the administrative burden faced by campus financial aid offices. Furthermore, at some postsecondary institutions, policies on satisfactory academic progress may need to be revised in response to changing Stafford eligibility. Administrators also noted potential disadvantages to less-than-halftime student borrowers. They expressed concern that Stafford borrowing by lower-income adults enrolled less than halftime—few of whom might have a certificate or degree and higher earnings as a result of their enrollment— might burden these students with unmanageable debt. Allowing less-than- halftime students to borrow in the Stafford loan programs, they noted, may also increase the number of students who reach their overall borrowing limits before the completion of a degree. Finally, they indicated, changing program eligibility may encourage protracted less-than-halftime enrollment as a means by which to postpone repayment. Students with outstanding subsidized Stafford loans must now enter repayment if they enroll for fewer than six credits. However, if students were permitted to defer repayment while enrolled for one to five credits, some might choose to enroll for a few credits each term as a way to delay repayment. There are a variety of formal learning opportunities open to adults, and a range of funding sources that support participation in them. Some sources of funding available to adult learners, particularly work-related assistance provided by employers or the Lifetime Learning tax credit, permit short- term study that does not lead to the completion of a degree or certificate. Both employers and employees may benefit as skills, productivity, and earnings increase. In contrast to these funding streams, the federal student assistance programs authorized under Title IV of the Higher Education Act provide assistance for adult learning that takes place in eligible postsecondary institutions, and is intended to result in the completion of a postsecondary credential: a certificate, associate’s degree, or baccalaureate degree. The Higher Education Act’s provisions concerning institutional eligibility help to ensure billions of dollars in federal student assistance is available only to those institutions that provide students with quality education or training worth the time, energy, and money that they—and the nation’s taxpayers—invest. Requiring that students enroll in—and make progress toward—a postsecondary credential ensures that the federal investment in Title IV programs is used to support learning that is broadly beneficial to the public, rather than students’ recreational or leisure activities. Some adults who begin postsecondary education on a less than halftime basis do not intend to complete a degree, and many others expect to do so, but are unable to continue to completion. If less than halftime adults who do not complete a credential nonetheless benefit from completing a few postsecondary courses, then federal policy tools designed to support shorter-term and non-credential adult learning—such as tax incentives for employer-provided educational assistance and the Lifetime Learning tax credit—can better assist these learners than can Title IV programs. The potential costs—to the federal government, institutions, and students—of proposed changes to the Pell Grant and Stafford Loan programs, particularly the latter, may outweigh their potential benefits for less-than- halftime adult students. Permitting less-than-halftime students to participate in the Stafford student loan programs would provide a new source of borrowing for these students, but it may be accompanied by unintended and unwanted consequences, including increasing the volume of loans at risk of default. Allowing less-than-halftime students to include room, board, and personal expenses in calculating their Pell Grant cost of attendance would most often assist less-than-halftime students who are currently receiving a Pell grant, providing them with an estimated $100 annual increase in assistance, rather than providing a widely available source of assistance to adults who are not currently receiving Pell Grants. In written comments on our draft report, Education stated that it appreciated our thorough review and examination of the financial, and other, impediments that are often unique to adult learners as they pursue postsecondary education and training opportunities and found useful the concerns raised by postsecondary institutions. In addition, Education noted that the report would complement a recent report of its own and that it would assist Education in achieving one of its departmental strategic goals. Education also provided technical comments, which we incorporated where appropriate. Education’s written comments appear in appendix IV. As agreed with your offices, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days from its date. At that time we will send copies to the Secretary of Education and other interested parties. We will also make copies available to others on request. In addition, the report will be available at no charge on the GAO Web site at http://www.gao.gov. If you or your staff have any questions or wish to discuss this material further, please call me at (202) 512-8403, or Jeff Appel at (202) 512-9915. Other contacts and staff acknowledgments are listed in appendix V. We were asked to determine: (1) the extent to which adults enroll less than halftime, the characteristics and factors associated with less-than- halftime enrollment, and the rates of completion among these students; (2) the extent to which adult students enrolled less than halftime receive federal, state, and other assistance to help them meet the costs of postsecondary education; and (3) the implications, including the budgetary impact, of changing the Pell Grant Program to allow room and board and miscellaneous personal expenses to be considered in the calculation of grant amounts for less-than-halftime students and changing the Stafford loan programs to permit participation by less-than-halftime students. For the purposes of this report, adult students are those who are 24 years or older. In designing our study, we reviewed data and literature pertaining to financial aid for adult students and part-time students, and we analyzed focus group findings examining the barriers to enrollment and persistence faced by low-income adults. We interviewed officials at the Department of Education, researchers, and representatives of higher education organizations, such as the American Association of Community Colleges and the National Association of Student Financial Administrators; and we interviewed administrators of two institutions of higher education not included in our four sample states: the City University of New York and Kaplan College. We also reviewed studies and surveys of employer- provided educational assistance. To determine the extent of less-than-halftime enrollment among adult students and the characteristics, completion rates, and financial support they received, we analyzed national data and visited selected postsecondary institutions. We analyzed two datasets created by the National Center for Education Statistics: the 1999-2000 National Postsecondary Student Aid Study (NPSAS), and the 2001 Beginning Postsecondary Students Study (BPS). Both datasets—NPSAS and BPS— contained a nationally representative sample of students enrolled at postsecondary institutions participating in federal student aid programs and provided information on financial assistance they received, hours they worked, and a wide range of other characteristics. We computed estimates of the Lifetime Learning credits received by less-than-halftime adult students using data from NPSAS. NPSAS data are collected at the individual student level, and cannot be aggregated into families or linked to tax filing status. Therefore, our analysis treated individual students as if they were credit claimants and recipients. To assess the reliability of the NPSAS and BPS sample data, we reviewed existing information about the sample, including the documentation produced by NCES, and performed electronic testing of the required data elements to detect obvious problems in accuracy and completeness. We determined that the NPSAS and BPS data were sufficiently reliable for this report. Because both surveys are samples of a larger student population, there is some sampling error associated with them. Sampling errors are often represented as a 95-percent confidence interval: an interval that 95 times out of 100 will contain the true population value. The upper and lower bounds of the 95-percent confidence intervals for each estimate are presented in the tables in appendix II. National datasets provide valuable but limited information. For example, NPSAS is a cross-sectional rather than longitudinal study, and it, therefore, cannot be used to identify the duration for which students enrolled on a less-than-halftime basis. Some student characteristics or factors that may be associated with less-than-halftime enrollment, such as course scheduling problems, are not contained in these datasets. Consequently, we augmented national datasets with information collected from postsecondary institutions. We interviewed school administrators from 19 postsecondary institutions, including public and private schools and 2-year and 4-year institutions. These institutions were located in four states—California, Maryland, Ohio, and Virginia—in which the costs for resident tuition and fees at public 2-year institutions and the amount of available state aid varied. For example, in California the cost for resident 2-year tuition was lower than for all other states ($330), but no state aid is available to students pursuing their postsecondary credentials on a less-than-halftime basis. Maryland ranked 9th among states in tuition and fees at public 2-year institutions ($2,564) and, like California, did not have state financial aid available to less-than-halftime students. Both Virginia and Ohio had state aid available for less-than-halftime students; however, Virginia’s 2-year tuition ($1,304) was lower than that of Ohio ($2,300). Within each state, we contacted three to six institutions (see table 1). Because most less-than-halftime adult students are enrolled at 2-year public institutions, we visited more of this type than other postsecondary schools. In addition, we selected institutions with large proportions of adult students in their overall student body. We met with a range of school administrators at these institutions, including financial aid officers, student affairs officers, directors of institutional research, and other administrative officers. We discussed with them their less-than-halftime adult student population and the implications of changing the Pell Grant and Stafford Loan Programs. We also collected institutional data on spells on less than halftime enrollment among students graduating from 10 of the 19 we visited. We solicited information from each institutional research officer about the reliability of these data and reviewed the data for obvious problems of accuracy and completeness. Because these are not samples of a larger student population, there are no confidence intervals associated with them. The following steps were taken to estimate the additional federal budget costs associated with permitting degree-seeking students enrolled less than halftime to include room, board, and miscellaneous personal expenses in calculating their cost of attendance (alternative COA) for the purpose of receiving a Pell Grant. Using the 1999-2000 National Postsecondary Student Aid Study, we estimated a Pell Grant for all students in the sample who were less-than- halftime students seeking a certificate or undergraduate degree. We estimated Pell Grant awards under the current law, and under an alternative COA for the 1999-2000 school year. The estimated total federal costs under current law and the alternative COA were calculated by summing the estimated individual grants. The federal cost associated with changing the Pell Grant policy was calculated as the difference between the estimated federal cost under current law and the estimated federal cost under the alternative COA. Federal costs for school year 1999-2000 were projected to school year 2003-04 by assuming that the ratio of these estimated federal costs to the total cost of the Pell grant program in school year 2003-04 were the same as in school year 1999-2000. To estimate the average Pell grant in school year 2003-04, we projected the estimated number of Pell grant recipients in school year 1999-2000 who are less than halftime students seeking a certificate or undergraduate degree to school year 2003-04. We did this by assuming that the proportion of this estimated number of recipients to the total number of recipients in school year 1999- 2000 equals this proportion in school year 2003-04. The average Pell Grant in school year 2003-04 equals the estimated federal cost in school year 2003-04 divided by the estimated number of recipients in school year 2003- 04. Federal costs other than the amounts of the Pell Grants were not considered in our analysis. Our estimate of students’ Pell Grant awards is based upon the federal needs analysis methodology for calculating the Pell Grant and the Regular Disbursement Schedule for Determining Less than Halftime Awards (FSA Handbook 1999-2000, Pell Reference). If the student did not apply for financial aid, or the institution they attended did not have any Pell recipients in 1999-2000, we assumed that the student’s estimated Pell Grant to be $0. The same steps were taken in estimating a student’s Pell Grant under the alternative COA except that the Pell cost of attendance was estimated to include room and board and personal expenses. To receive a Pell Grant under the alternative COA, the individual must have applied for financial aid. Inherent in this assumption is that an alternative Pell cost of attendance will not affect students’ decisions to apply for financial aid. We undertook the following analysis to estimate the federal subsidy cost of allowing degree-seeking students who enroll less than halftime to be eligible for subsidized and unsubsidized Stafford loans. Using the 1999-2000 National Postsecondary Student Aid Study, we estimated the Stafford subsidized and unsubsidized loans for all students in the sample who were less-than-halftime students seeking a certificate or undergraduate degree would receive if the law were changed to allow less than halftime students to receive these loans. The total loan volumes summed and weighted over all students by FFELP/FDLP, school type, and class year were projected from school year 1999-2000 to school year 2003-04 by assuming that the proportion of this estimated loan volume to the total loan volume in fiscal year 1999-2000 would equal the proportion of the estimated loan volume in school year 2003-04 to the total loan volume in FY 2003-04. The federal cost of this policy change equals the projected loan volume times the applicable subsidy rate in 2003-04, summed over FFELP/FDLP, school type, and class year. Federal costs other than the subsidy costs of the loans were not considered. To estimate the average loan awards in school year 2003-04, we projected the estimated number of Stafford subsidized and unsubsidized recipients in school year 1999-2000 who are less than halftime students seeking a certificate or undergraduate degree to school year 2003-04. We did this by assuming that the proportion of this estimated number of recipients to the total number of recipients in fiscal year 1999-2000 would equal the proportion of recipients in school year 2003-04 to the total number of recipients in fiscal year 2003-04. The average loan award in school year 2003-04 equals the estimated loan volume in school year 2003-04 divided by the estimated number of recipients in school year 2003-04. Our estimate of students’ subsidized loan awards is based upon the federal needs analysis methodology for subsidized Stafford loans. For each student we estimated a cost of attendance (minus room and board and personal expenses) for the period enrolled in school (loan COA). We calculated and prorated the expected family contribution for the number of months the student attended school. We also calculated each student’s estimated financial assistance, adding federal, state, private, and institutional aid. The estimated subsidized loan award was calculated as the loan COA, minus the prorated expected family contribution and estimated financial assistance. Estimated subsidized loans, if above the loan limit level, were set at the maximum amount allowed by law. For the students attending institutions for which no Stafford loan recipients were reported, we assumed that estimated subsidized loan was $0. For each student in the NPSAS sample, we also estimated an unsubsidized award. This amount was calculated as the prorated expected family contribution plus unmet need. Unmet need was estimated to be the loan COA, minus prorated expected family contribution and federal, state, private, and institutional aid. If the estimated unsubsidized award was greater than the loan limit minus the estimated subsidized award, we replaced the estimated unsubsidized award with the loan limit minus the estimated subsidized award. For the students attending institutions for which no Stafford loan recipients were reported, we assumed that estimated unsubsidized loans was $0. All students were assumed to borrow the Stafford loan amounts for which they qualify. Inherent in this assumption is that all students who are eligible will apply for Stafford loans. Education officials provided information on federal subsidy rates for Stafford loans, budget estimates for the Pell Grant program, and reviewed our estimation methodology. Tables 7-31 contain the sample-based estimates and associated confidence intervals for our reported results. The policy change in the Pell Grant Program we considered was changing the cost of attendance calculation for less-than-halftime students so that it does not exclude room, board and personal expenses. This policy change would increase the number of people who are qualified to receive an award, and it would increase the size of the award for those who are already qualified to receive an award under current law. This policy change may cause people to change their postsecondary enrollment behavior. Specifically, some people who are not enrolled in postsecondary education may choose to enroll less than halftime in response to the policy change. Students who are already enrolled less than halftime in postsecondary education are unlikely to change their enrollment in response to the policy change. As Seftor and Turner note, there is no consensus within the economic literature on the effect of Pell Grants on enrollment. For example, Hansenand Kane found that Pell Grants have no effect on enrollment. However, they found that Pell Grant Program does affect the enrollment behavior of older, nontraditional students. Since the policy changes we consider are specific to less-than-halftime students and over 80 percent of less-than- halftime students are independents, the Seftor and Turner findings appear to be more applicable to this analysis. Seftor and Turner estimated price elasticities that fall in the range of –0.34 to -0.14. To estimate the possible behavioral response to a change in Pell Grant policy, we applied a price elasticity in the middle of those identified by Seftor and Turner (–0.24) to the less than halftime Pell award amounts estimated in this study. We assumed that changes to the Pell Grant cost of attendance methodology, if adopted, would be applied to the cost of attendance for both dependent and independent students enrolled on a less than halftime basis. Therefore, in calculating the possible behavioral response we applied these estimated Pell Grant awards and price elasticities to the population of all persons 18-35 who were not enrolled in school and who had not earned a postsecondary credential.On this basis, we estimate that the Pell Grant policy change will cause about 35,000 people between the ages of 18 and 35 who are not currently enrolled in school and who do not currently have an undergraduate degree to enroll less than halftime. This conclusion was reached based upon the following calculations: We found that the Pell Grant policy change would increase the average Pell Grant award from $0 to $630 for 0.63 percent (12,679/2,007,542) of the less-than-halftime student population, increase the average Pell Grant award $111 for 7.46 percent (149,731/2,007,542) of the less-than-halftime student population, and have no effect on the Pell Grant award for the rest of the student population. Of the 33 million people aged 18-35 who are not enrolled in school and without a undergraduate degree, we assumed that only 18 percent of them would consider going to school less than halftime: the same proportion of the undergraduate population currently enrolled on a less than halftime basis. This is the population who may change their enrollment behavior because of the policy change. Of that population, we assumed that 0.63 percent of them would have an increase in their Pell Grant award of $630 and 7.5 percent of them would have an increase in their Pell Grant award of $111. Using the average cost of school when attending less than halftime of $500, this suggests that there would be an additional 35,053 people (+ [33,000,000 x 0.18 x 0.075 x 111/500 x 0.24]) enrolling in school less than halftime in response to the policy change. This enrollment response would cost the federal government $9,764,063 ( x $630+ [33,000,000 x 0.18 x 0.075 x 111/500 x 0.24] x $111). In addition to those named above, the following people made significant contributions to this report: Cedric Burton, Betty Clark, Cindy Decker, Gordon Mermin, John Mingus, Susan Conlon, and Corrina Nicolaou.

Summary: Despite the availability of federal, state, and other sources of student aid, concerns have been raised that adult undergraduates--those 24 and older--receive inadequate assistance in meeting the costs of postsecondary education, particularly those adults who take one to five credits per term (or less than halftime). These concerns have been raised because less-than halftime adult students are unable to participate in the largest federal student loan programs, the Stafford Loan programs, and they are eligible to receive only one of the two federal higher education tax credits, the Lifetime Learning tax credit. To better understand the needs of these adult students, GAO was asked to identify (1) the extent to which adults enroll less than halftime, the characteristics and factors associated with less-than- halftime enrollment, and the rates of completion among these students; (2) the extent to which adult students enrolled less than halftime receive federal, state, and other assistance to help them meet the cost of postsecondary education; and (3) the implications, including the budgetary impact, of changing the Pell Grant Program to allow less-than-halftime students to count room and board costs and personal expenses in their application for federal financial aid, and changing the Stafford loan programs to permit participation by less-than-halftime students. In the 1999-2000 school year, 2.3 million adults enrolled in undergraduate education on a less-than-halftime basis, many seeking to balance school with other responsibilities. Compared with other adult students, the typical less-than-halftime adult student was more likely to work fulltime, be married, and have a household income over $30,000. Though 3 out of 4 less-than-halftime adult students expect to complete a degree or certificate program when they begin their education, most leave school without completing one. About 70 percent of less-than halftime adult students received some assistance--about 44 percent of their schooling costs--typically from sources other than federal or state student aid. The sources of assistance they received varied by household income: lower-income adult students enrolled less than halftime relied primarily upon student financial aid in meeting school costs, while higher-income households were assisted primarily by work-related sources such as the Lifetime Learning tax credit or employer assistance. We estimate that proposed changes to the Pell Grant programs would cost the federal government a minimum of $25 million for the 2003-2004 school year. Allowing less-than-halftime students to participate in the Stafford Loan programs would cost about $113 million per year. College administrators expressed reservations about expanding Stafford Loan eligibility due to concerns about increasing default rates. In commenting on our draft report, Education noted that they found it to be thorough and useful.