Small increases in tuition rates and generous financial aid have a positive impact on students

While Indiana has pledged to increase financial aid spending, higher education appropriations as a percentage of the state budget have declined over a decade and lags nearly $2,000 behind the national average. Higher education appropriations fund programs such as the operations of Indiana public institutions and state financial aid.

“Understanding the true costs of a college education has never been more important as college attendance rates in Indiana and nationally have continued to decline over the past few years,” Lubbers said. “We need to assure Hoosiers that higher education can be an affordable option.”

State aid keeps cost of higher education within reach of Hoosiers with financial need

Indiana ranks first in the Midwest and fifth in the nation for need-based aid, and these resources help bring college within reach of many low-income Hoosier students and families. After grants and scholarships, students from families with household incomes below $30,000 pay just over a quarter (30%) of the average tuition per year.

An example of Indiana’s needs-based aid is the 21st Century Fellowship. The program, which requires students to apply while in seventh or eighth grade, provides income-eligible Hoosiers with up to four years of paid tuition at a participating Indiana college or university.

“The 21st Century Scholars program eliminates the biggest cost of college — tuition — for low-income Hoosier students,” Lubbers said. “By reducing financial barriers, we’re seeing scholarship recipients go to college at higher rates than their peers, including students from higher-income households.”

Indiana’s results-based funding formula pays for what the state values

For nearly two decades, state policymakers have embraced a results-based funding formula for public institutions that rewards completion and places a premium on timely completion. The formula includes an on-time graduation rate measure that recognizes the value of 2- and 4-year institutions increasing students’ chances of success in graduating on time while reducing the overall cost per degree. Long-term completion results in unnecessary costs for students. Two extra years in college can cost $50,000 or more in lost wages, tuition, and related costs.

“The most cost-effective degree is a degree on time,” Lubbers said. “Indiana’s Results-Based Funding Formula awards dollars to colleges based on student achievement outcomes that ensure personal prosperity and economic mobility. The Board has reviewed and updated the formula over time to respond to and reflect ongoing changes for learners and for the needs of the state.

Recommendations

The Commission publishes recommendations with each of its reports, proposing strategies aligned with its strategic plan, Reach higher in a state of change, which calls for lowering the cost of a college education and reducing reliance on student debt to increase completion and promote lifelong success. Recommendations include:

  • Increasing college readiness with high school students encouraging greater access to dual credit opportunities and requiring all high school students to file the FAFSA (with built-in opt-out provisions)
  • Continue to make college more affordable urging public institutions in Indiana to adhere to the Commission’s non-binding recommendations on tuition and fees, continuing to incentivize students and institutions to complete on time through a funding formula based on results and encouraging institutions to use open educational resources to reduce costs
  • Supporting low-income and first-generation students advocating for all institutions to provide transparent information on financial aid opportunities available to first-generation students and explore options for offering financial support for socio-economic barriers such as food, transportation, housing, and childcare
  • Increase the financial literacy of students and families through partnerships with community organizations such as INVESTED who work directly with K-12 students to make informed and responsible borrowing decisions to limit excessive debt after college

Read the full college cost and financial aid report at che.in.gov. Data comes from the Indiana Commission on Higher Education, the Indiana State Budget Agency, the US Department of Education, and the Institute for College Access & Success.

Explore the resources available to help students plan, prepare and pay for their college education at www.LearnMoreIndiana.org.