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Rethinking Financial Aid Amid a Changing Higher Ed Landscape

Feb 29, 2024

Financial wellness is a barrier to educational success for all learners. But the unique experience of juggling school and financial stress as a working adult is often overlooked — despite their sizable proportion in higher education. Adult learners, typically defined as students aged 25 or higher, make up around 40% of undergraduate enrollment. At Western Governors University (WGU), they make up 83% of our student base.  

Although many adult learners work to bring in income while they complete their degree, they are under particular financial strain because they have to cover additional expenses such as housing, childcare, transportation, food, and utilities.

In 2020, as the COVID-19 pandemic brought many daily activities to a screeching halt, the U.S. legislature passed three relief bills that included $77 billion for the Higher Education Emergency Relief Fund (HEERF I, II, and III). WGU launched the first of three waves of unrestricted emergency aid to students in June 2020, leveraging both institutional resources as well as HEERF II and HEERF III funds. We used a variety of allocation models to distribute the funding with aid packages ranging from $500 to $2,400.

Across the three waves of emergency funding, we were able to test the impact of aid on student success. Based on our findings — an 11.2% increase in graduation rates — we have proof that just-in-time funds can promote academic success, especially for working adult learners. And based on student feedback, we know that financial crises are a significant barrier to persistence, particularly for learners with fewer financial resources. 

What We Learned via HEERF

WGU’s financial aid department and Institutional Analytics team partnered with WGU Labs — the research and innovation arm of WGU — to analyze the impact of HEERF funding on students’ academic and financial outcomes. Among other findings (download the full report to see all of our research), we were able to develop a proof of concept on unencumbered financial aid.  

While financial aid exists for students, it is often subject to stringent stipulations and requires recipients to jump through hoops to receive support. Additionally, many students, especially working adults, have different financial needs not typically covered by student financial aid.  

When it comes to emergency financial aid, the current process is murky and slow-moving, lacks funds, only applies to current financial aid packages, and doesn’t contemplate the modern learner or learning environment. HEERF funds, on the other hand, were unrestricted given the unprecedented circumstances of the pandemic.  

By removing barriers and pushing out funds to students in a timely way, we were able to reduce financial stress for students living on limited income, in turn improving their sense of institutional belonging and graduation rates.  

One of our most interesting findings was that interventions don’t seem to matter. We initially believed that providing students access to an information hub to guide the use of their aid and/or distributing payments in installments to stretch out their aid would increase the overall benefit of receiving aid. However, we found that none of these approaches performed better than a simple lump sum payment.

What We’re Doing About It

At WGU we're taking the lessons of HEERF to heart and trying to figure out how we can both expand this kind of help and make it even more impactful. Here's what we're doing:

  • Shifting our legacy perspectives around poverty, financial aid, and student success: Our data, along with many other studies, show that helping students with non-education-related basic needs expenses like rent, food, and utilities is directly tied to student success, especially for learners furthest from opportunity. We need to destigmatize asking for and providing support to students who need it. 
  • Modernizing the FinAid model: The existing legacy financial aid model was built for 18-25 year olds with the assumption that they receive support from their parents, learn exclusively in in-person environments, and don’t experience the day-to-day financial stress older adults face. Not much is known about the needs of adult online learners and their financial aid needs. Given that they are 83% of our student population, this must be studied and addressed. 
  • Putting our money where our mouth is: WGU is enacting a new rubric for vetting financial need, increasing the amount of aid we can provide per student, lowering barriers to accessing aid, and working toward establishing a mindset of trust. We are also augmenting an Emergency Relief Fund.

Of course, we’re not the only institution of higher education (IHE) that’s making a concerted effort to improve the way we distribute aid. A new program at CUNY involves an investment of about $2,000 a year per student, paired with simple strategies like giving students money for transportation. The average graduation rate among the 88,000 students who have participated in the program since its founding was 53%, compared to 25% for a statistically matched comparison group, echoing our own findings from the HEERF distributions.

What Systemic Changes Are Still Needed

While there are actions we can take at the institutional level, systemic change is needed to maximize the impact of providing financial relief to students.  

To move toward a FinAid model that supports all learners — not just the 18 year-old population — we need to:

  • Support higher education completion, not just enrollment. While this is a business model already in place at WGU, most IHEs don’t prioritize their metrics the same way.
  • Shift aid to support students in continuing learning, not paying down educational debt. Most institutions require that balances be paid before a student can register for classes. This is not a learner-first mentality. 
  • Develop a holistic approach to FinAid that includes internet subsidies, financial wellness education, etc.
  • Adjust funding for students living on limited income. 
  • Support policy changes that reflect the reality of higher education today. Nontraditional institutions that provide distance education often aren’t considered, despite serving 28% of learners nationwide. 
  • Destigmatize emergency aid. The learners most in need are often those least likely to apply due to stigma, cultural norms, barriers, etc.
  • Get rid of all the paperwork. Keep it simple and help people make an informed decision, quickly. 

Ultimately, our research on the impact of HEERF on student success revealed that when it comes to financial aid, we need to get out of our own way. We know students need financial help (over 13,000 students at WGU qualified for HEERF). We know financial stress can undermine their academic performance. We know that their need is often episodic and unpredictable. And we know through HEERF that unencumbered aid that allows students with financial needs to cover expenses can improve their chance of success. The only thing we don’t know is: How can we do this better? At WGU, we intend to find out.


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