Despite drastic cuts to their budgets, most states managed to protect cuts the grant aid they give state residents to attend college.

According to the annual survey, which was performed by the National Association of State Student Grant and Aid Programs, state spending on need-based and non-need-based grant aid for undergraduates rose by 5.6 percent the 2008-9 fiscal year.

Although the overall increase was less than in the several preceding years it exceeded the expectations of officials at the state aid association, who had feared that the recent upturn in state spending on financial aid would reverse itself given the general economic woes.

“States know that even with the economic difficulties they face, they need to continue to invest in the education of the work force,” said Lois Hollis, special assistant to the deputy commissioner of the Texas Higher Education Coordinating Board and president of the association of state aid programs.

It’s not all good news, though.

This was the first time in at least a decade that there was essentially no increase in state-based grant aid in current (inflation-adjusted) dollars. With the inflation rate running at 5.6 percent the aid that states meted out just kept pace with students’ rising costs.

Worse, in-state tuition rates at four-year public colleges rose by an average of 6.4 percent during that same time period which means many students may have lost ground when it came to their state financial aid.

Most states increased the amount of aid they awarded over all while Oregon and North Carolina sharply increased the amount of need-based financial aid they awarded, both as part of carefully crafted statewide strategies.

Next year’s report probably won't be as favorable because state budgets took a bigger hit in the 2009-10 academic year than they did in 2008-9 when they likely used federal stimulus dollars to ward off big cuts in student financial aid.

Source Article: Inside Higher Ed