The Commonwealth of Virginia provides more than $220 million annually to fund the Commonwealth Award and Virginia Guaranteed Assistance Program (VGAP). These two need-based financial aid programs address affordability and access for in-state undergraduates attending public institutions. As higher education costs continue to increase and the Commonwealth expects the demand for workers with degrees or credentials to grow, it is imperative that state financial aid programs function efficiently and effectively.

Tuition revenue used for financial aid is another important tool that addresses student affordability and access and helps institutions meet enrollment goals. This program redirects a portion of tuition revenue paid by students in order to create grants and scholarships. Legislators have expressed concern about the rapid expansion of this nongeneral fund program over the past 10 to 15 years.

As a result, the 2019 session of the Virginia General Assembly charged the Council to undertake a review of the Commonwealth’s primary state financial aid programs. On November 1, 2019, SCHEV released the Review of Financial Aid Funding Formulas and Awarding Practices. SCHEV also proposed to further develop the recommendations and draft associated legislative amendments. The 2020 session authorized this follow-up review as follows:

2020 Act of Assembly, Chapter 1289, Item 152:

O 1. The State Council of Higher Education for Virginia, in consultation with staff from the House Appropriations and Senate Finance and Appropriations Committee, Department of Planning and Budget, Secretary of Finance and Secretary of Education, as well as representatives of public higher education institutions, shall review financial aid awarding practices and tuition discounting strategies.

2. The Council shall review current state financial aid awarding policies and make recommendations to: (1) appropriately prioritize and address affordability for low- and middle-income students; (2) increase program efficiency and effectiveness in meeting state goals that align with The Virginia Plan; and (3) simplify communication and improve student understanding of eligibility criteria. The review shall also: (1) assess financial aid by income level and the utilization and reporting of tuition revenue used for financial aid and unfunded scholarships; and (2) consider the pros and cons of authorizing remittance of tuition and fees for merit scholarships for students of high academic achievement.

3. By November 1, 2020, the Council shall submit a report and any related recommendations to the Governor and the Chairs of the House Appropriations and Senate Finance and Appropriations Committees.

The onset of the 2020 pandemic resulted in time constraints and communication challenges for all personnel involved in this report and prevented SCHEV from completing a set of legislative proposals. Staff continued its work with institution representatives and this report updates the recommendations and proposes that in 2021, staff expand its work with legislative representatives and their staff and advocates to implement legislative changes for consideration during the 2022 General Assembly session.