State higher-education staff brief Senate subcommittee on financial aid trends, TAG reserves and Pell initiative

Lee Andes, director of the finance policy and financial aid unit at Chev, told the Senate Finance and Appropriations Committeeeducation subcommittee on Wednesday that Virginiahas substantially increased need-based financial aid but still faces growing unmet student need driven largely by non-tuition costs.

Andes said the Student Financial Assistance Program (appropriations routed through program 108) funds the Virginia Commonwealth Award and the Virginia Guaranteed Assistance Program and that the Commonwealth saw a single-year increase of about $175,000,000 to need-based aid, bringing the current-year total near $468,000,000 with an additional $15,000,000 included in the introductory budget. "It's a $175,000,000 bump in that one year alone," Andes said.

The program-level context matters because Andes said unmet needdefined as cost of attendance less gift aid less the family contributionrose in 2023-24. He attributed the increase primarily to higher housing and meal allowances, books, transportation and personal expenses rather than tuition, which the Commonwealth has largely mitigated. "Housing and meals ... is about 40% of the total cost of attendance," Andes said, adding that these non-tuition categories grew faster than tuition and have a larger effect on unmet need.

Andes also discussed administrative complexity arising from two longstanding need-based programs. He said simplification could make awards easier for institutions to administer and for students to understand, citing a 2019 CHEV review and a subsequent JLARC study that reached similar conclusions.

On the selective service requirement for state aid, Andes explained that the federal government removed its enforcement tied to FAFSA in a recent FAFSA-simplification change and that the selective-service compliance check is no longer automatically enforced by the federal student aid system. Because state law still requires selective-service compliance for state financial aid, "the institutions have to go back and manually review each student one by one to verify compliance," he said, recommending that the General Assembly consider amending state law to remove a nonacademic barrier.

Andes addressed the Virginia Tuition Assistance Grant (TAG), which helps Virginia residents attending private, nonprofit, regionally accredited institutions. He said about 28 institutions participate and roughly 23,000 students receive TAG annually. After a decade of flat or declining participation, FY2024 produced a 6.3% increase in TAG participation, which Andes attributed to moving the application deadline from July 31 to Sept. 15 and to enhanced institutional outreach.

Those participation increases have drawn down a carryforward reserve that had accumulated to roughly $15.4 million after several years of lower demand. Andes said current appropriations for TAG were approximately $112.3 million while estimated spending this year could be near $118 million, and he projected the reserves could be exhausted next year, creating a structural pressure of about $6.3 million for FY27 under current assumptions. He offered a rule of thumb for lawmakers weighing award changes: a $50 increase in the average TAG award adds about $968,000 in annual cost.

The council that advises the program is recommending a $50-per-year increase to the maximum TAG award (from $5,250 to $5,300 in FY27 and to $5,350 the following year), and Andes described targeted bonus awards previously authorized for two historically Black colleges and universities (up to an additional $7,500) and a $2,000 bonus for a Hispanic-Serving Institution.

Andes also reviewed the Virginia military survivors tuition-waiver program, which provides tuition waivers to certain dependents of veterans; he said the programadministered primarily through the Department of Veterans Serviceshas grown substantially in recent years and is not separately funded as an appropriation but results in lost tuition revenue for institutions. "In 2018-19 the program was $12,000,000. Just seven years later, it's $150,000,000," Andes said.

On the Pell Initiative of Virginia, Andes described the program's aim to improve enrollment and retention of Pell-eligible students and to close equity gaps. He said the state average Pell enrollment share is about 26% and that nearly all public institutions have room to improve either enrollment or retention or both. The initiative is now in its third year of funding; CHEV moved from four-year escrowed activity funding to an annual disbursement model so institutions request and spend funds each year and CHEV performs annual progress reviews.

A requirement of the initiative is an institution-wide barrier review; Andes said all public institutions had completed those reviews by mid-December and that CHEV staff are analyzing the findings. Common barriers reported by institutions include internal fragmentation among financial aid, admissions, advising and student services, and proposals commonly include emergency grants, housing supports and faculty training to better serve low-income students. "These were activities that are going to take place over a four-year period," Andes said, but CHEV now requires that proposed activities tie back to the barrier-review findings.

Committee members asked several clarifying questions, including why graduate TAG participation declined previously (Andes attributed the drop to a policy change restricting graduate eligibility to health-professional programs) and whether the Pell Initiative has a specific statewide numeric target (Andes said CHEV has focused on institution-level goals rather than a single statewide goal but said staff can work on statewide target options).

Andes closed by noting early signs of improvement but cautioned that retention changes require multi-year observation. The chair thanked presenters and said the subcommittee would continue discussing these issues; the panel set its next meeting for Thursday at 3:00 p.m. in the same room.