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entitled 'Federal Student Aid: Expanding Eligibility for Less Than 
Halftime Students Could Increase Program Costs, But Benefits Uncertain' 
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Report to Congressional Requesters:

United States General Accounting Office:

GAO:

September 2003:

Federal Student Aid:

Expanding Eligibility for Less Than Halftime Students Could Increase 
Program Costs, But Benefits Uncertain:

GAO-03-905:

GAO Highlights:

Highlights of GAO-03-905, a report to the Chairman, Committee on 
Education and the Workforce, and Chairman, Subcommittee on 21st 
Century Competitiveness, Committee on Education and the Workforce, 
House of Representatives

Why GAO Did This Study:

Despite the availability of federal, state, and other sources of 
student aid, concerns have been raised that adult undergraduates—those 
24 and older—receive inadequate assistance in meeting the costs of 
postsecondary education, particularly those adults who take one to 
five credits per term (or less than halftime). These concerns have 
been raised because less-than-halftime adult students are unable to 
participate in the largest federal student loan programs, the Stafford 
Loan programs, and they are eligible to receive only one of the two 
federal higher education tax credits, the Lifetime Learning tax 
credit.

To better understand the needs of these adult students, GAO was asked 
to identify (1) the extent to which adults enroll less than halftime, 
the characteristics and factors associated with less-than- halftime 
enrollment, and the rates of completion among these students; (2) the 
extent to which adult students enrolled less than halftime receive 
federal, state, and other assistance to help them meet the cost of 
postsecondary education; and (3) the implications, including the 
budgetary impact, of changing the Pell Grant Program to allow less-
than-halftime students to count room and board costs and personal 
expenses in their application for federal financial aid, and changing 
the Stafford loan programs to permit participation by less-than-
halftime students.

What GAO Found:

In the 1999-2000 school year, 2.3 million adults enrolled in 
undergraduate education on a less-than-halftime basis, many seeking to 
balance school with other responsibilities. Compared with other adult 
students, the typical less-than-halftime adult student was more likely 
to work fulltime, be married, and have a household income over 
$30,000. Though 3 out of 4 less-than-halftime adult students expect to 
complete a degree or certificate program when they begin their 
education, most leave school without completing one.

Household Income of Adult Undergraduate Students, 1999-2000

[See PDF for image]

[End of figure]

About 70 percent of less-than-halftime adult students received some 
assistance—about 44 percent of their schooling costs—typically from 
sources other than federal or state student aid. The sources of 
assistance they received varied by household income: lower-income 
adult students enrolled less than halftime relied primarily upon 
student financial aid in meeting school costs, while higher-income 
households were assisted primarily by work-related sources such as the 
Lifetime Learning tax credit or employer assistance.

We estimate that proposed changes to the Pell Grant programs would 
cost the federal government a minimum of $25 million for the 2003-2004 
school year. Allowing less-than-halftime students to participate in 
the Stafford Loan programs would cost about $113 million per year. 
College administrators expressed reservations about expanding Stafford 
Loan eligibility due to concerns about increasing default rates.

In commenting on our draft report, Education noted that they found it 
to be thorough and useful.

www.gao.gov/cgi-bin/getrpt?GAO-03-905.

To view the full product, including the scope and methodology, click 
on the link above. For more information, contact Cornelia Ashby at 
(202) 512-8403 or ashbyc@gao.gov.

[End of section]

Contents:

Letter:

Results In Brief:

Background:

Most of the 2.3 Million Adult Undergraduate Students Who Enrolled Less 
Than Halftime Needed to Balance School and Other Responsibilities, and 
Many Were Unable to Complete Their Programs:

Most Less-Than-Halftime Adult Students Received Some Assistance with 
Postsecondary Costs, Typically from Work-Related Sources:

Changing the Pell and Stafford Programs Would Provide More Students 
With Additional Aid, but Result in Increased Federal Budget Costs and, 
Potentially, Undesirable Effects for Students and Institutions:

Concluding Observations:

Agency Comments:

Appendix I: Objectives, Scope, and Methodology:

Appendix II: Estimates and Associated Confidence Intervals:

Appendix III: Budgetary Impact of Possible Behavioral Response to Cost 
of Attendance Changes in the Pell Program:

Appendix IV: Comments from the Department of Education:

Appendix V: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Staff Acknowledgments:

Tables:

Table 1: Differences Between Students Under 24 Years of Age and Age 24 
And Older:

Table 2: Elements Included in Cost of Attendance for Pell Awards:

Table 3: Differences Between Less-than-Halftime Adult Students and 
Other Adult Students:

Table 4: Estimated Effects of Changes to Pell Grant Program:

Table 5: Estimated Effects of Changes to Stafford Loan Programs:

Table 6: Site Visit States and Institutions Contacted:

Table 7: Age of All Undergraduate Students, 1999-2000:

Table 8: Age of All Adult Undergraduate Students, 1999-2000:

Table 9: Differences Between Students 18-23 and Adult Students (24 or 
older) 1999-2000:

Table 10: Type of Institution Attended by Adult Students, 1999-2000:

Table 11: Type of Degree Sought by Adult Undergraduates, 1999-2000:

Table 12: Amount of Assistance Received by All Adult Students, 1999-
2000:

Table 13: Enrollment Intensity among Adult Undergraduates, 1999-2000:

Table 14: Differences between Less Than Halftime, Halftime, and 
Fulltime Adult Students:

Table 15: Type of Institution At Which Adult Students Enrolled, 1999-
2000:

Table 16: Estimated Costs for Less Than Halftime Adult Students, 1999-
2000:

Table 17: Percent of Costs Covered by All Sources of Assistance, 1999-
2000:

Table 18: Mean Assistance Received by Less Than Halftime Students, 
1999-2000:

Table 19: Mean Amount of Assistance Received by Less Than Halftime 
Students, By Source, 1999-2000:

Table 20: Type of Aid Received by Less Than Halftime Students, 1999-
2000:

Table 21: Percent Receiving Pell Grants, by Income, 1999-2000:

Table 22: Percent Receiving State Aid, by Income, 1999-2000:

Table 23: Percent Receiving Employer Aid, by Income, 1999-2000:

Table 24: Percent Receiving Lifetime Learning Tax Credit, By Income, 
1999-2000:

Table 25: Percent Receiving Institutional Aid, by Income, 1999-2000:

Table 26: Percent Receiving Other Aid, by Income, 1999-2000:

Table 27: Percent of Less Than Halftime Adults below 150 Percent of 
1998 Federal Poverty Guideline, 1999-2000:

Table 28: Type of Aid Received by Less Than Halftime Students, by 
Income, 1999-2000:

Table 29: Average Costs and Amount of Aid Received by Less Than Half-
time Students, by Income, 1999-2000:

Table 30: Grade Point Average of Adult Undergraduates, 1999-2000:

Table 31: Degree Or Certificate Expectation Among Adults Who Enrolled 
Less Than Halftime During First Year:

Table 32: National 6-Year Completion Rate Among Adult Undergraduates 
With A Degree Or Certificate Expectation:

Table 33: Household Income Distribution of Adult Students, 1999-2000:

Figures:

Figure 1: Enrollment Distribution of All 7.1 Million Adult 
Undergraduate Students, 1999-2000:

Figure 2: Income Levels of Adult Students--Comparison between Those 
Attending Less-Than-Halftime and Other Adult Students:

Figure 3: Terms of Less-Than-Halftime Enrollment among Students Who 
Began as Adults and Completed Baccalaureate Degrees at Selected 4-Year 
Institutions in 2001-2002:

Figure 4: Terms of Less-Than-Halftime Enrollment among Students Who 
Began as Adults and Completed Associate Degrees at Selected 2-Year 
Institutions, 2001-2002.

Figure 5: Percent of Less-Than-Halftime Students Receiving Each Type of 
Assistance, 1999-2000:

Figure 6: Proportion of Less-Than-Halftime Adults Who Received 
Assistance, by Household Income, 1999-2000:

Abbreviations:

BPS: Beginning Postsecondary Students Longitudinal Study:

COA: cost of attendance:

EFC: expected family contribution:

FAFSA: Free Application for Federal Student Aid:

FDLP: Federal Direct Loan Program:

FFELP: Federal Family Education Loan Program:

FSA: Federal Student Aid:

GED: General Educational Development:

NCES: National Center for Education Statistics:

NPSAS: National Postsecondary Student Aid Study:

PRWORA: Personal Responsibility and Work Opportunity Reconciliation 
Act:

TANF: Temporary Assistance to Needy Families:

WIA: Workforce Investment Act:

United States General Accounting Office:

Washington, DC 20548:

September 10, 2003:

The Honorable John A. Boehner 
Chairman, Committee on Education and the Workforce 
House of Representatives:

The Honorable Howard P. "Buck" McKeon 
Chairman, Subcommittee on 21st Century Competitiveness 
Committee on Education and the Workforce 
House of Representatives:

To help them meet the costs of higher education, the nation's 
postsecondary students received approximately $85 billion in grant and 
loan assistance from federal student aid programs, state student aid 
programs, and postsecondary institutions in academic year 2001-2002. 
Additional assistance in meeting the costs of postsecondary education 
was available from work-related sources of support, such as the 
Lifetime Learning tax credit and employer assistance. Despite these 
sources of assistance, some suggest that nontraditional students--
particularly adult students--receive inadequate support to help them 
meet the costs of undergraduate postsecondary education. There is 
particular concern about low-income adult students, who may be enrolled 
with the hope of improving their prospects for higher wages and career 
advancement.

Advocates for adult students note that many adults enroll on a less-
than-halftime basis and are consequently disadvantaged in obtaining 
financial support. For example, less-than-halftime students, those 
taking one to five credits, are not eligible to participate in the 
federal Stafford student loan programs.[Footnote 1] Moreover, though 
they are eligible to participate in the largest federal student grant 
program, the Pell Grant program, no allowances are made for their room, 
board, and miscellaneous personal expenses in the calculation of grant 
amounts, as is done for students enrolled halftime or more. 
Furthermore, less-than-halftime students who are tax filers may reduce 
their federal income tax liability through the use of the Lifetime 
Learning tax credit, but they are ineligible to claim the other federal 
higher education tax credit, the HOPE credit. And, although less-than-
halftime students are eligible to participate in the federal campus-
based aid programs--Supplemental Educational Opportunity grants, 
Perkins loans, and federal work-study aid--the institutions they most 
often attend receive a small share of these funds. Finally, advocates 
suggest, the Workforce Investment Act (WIA) of 1998 and the Temporary 
Assistance to Needy Families (TANF) program authorized by the Personal 
Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 
chiefly focus on immediate employment or short-term training and, 
therefore, provide little assistance to adults who seek to obtain a 
postsecondary credential.

In preparation for the upcoming reauthorization of the Higher Education 
Act of 1965, you asked us to examine issues concerning adult students, 
which, for the purposes of this report, are those who are 24 years or 
older. In particular, you asked us to determine (1) the extent to which 
adults enroll less than halftime, the characteristics and factors 
associated with less-than-halftime enrollment, and the rates of 
completion among these students; (2) the extent to which adult students 
enrolled less than halftime receive federal, state, and other 
assistance to help them meet the costs of postsecondary education; and 
(3) the implications, including the budgetary impact, of changing the 
Pell Grant program to allow room and board and miscellaneous personal 
expenses to be considered in the calculation of grant amounts for less-
than-halftime students, and changing the Stafford loan programs to 
permit participation by less-than-halftime students.

To answer question one, we analyzed two datasets created by the 
Department of Education's National Center for Education Statistics: the 
1999-2000 National Postsecondary Student Aid Study (NPSAS), and the 
2001 Beginning Postsecondary Students Longitudinal Study (BPS). The two 
datasets contain a nationally representative sample of students 
enrolled at postsecondary institutions participating in federal student 
aid programs and provide information on financial assistance they 
received, hours they worked, and a wide range of other characteristics. 
We also interviewed administrators of 19 postsecondary institutions, 18 
of which we visited. These included both public and private 
institutions and 2-year and 4-year institutions located in four states: 
California, Maryland, Ohio, and Virginia. We met with a range of 
administrators at these institutions. We discussed with them the 
factors associated with less-than-halftime enrollment among adult 
students, and from 10 of these institutions we obtained data on less-
than-halftime enrollment and completion among adult students. To answer 
question two, we analyzed data from the NPSAS, surveyed states about 
financial aid for less-than-halftime students, and interviewed 
postsecondary administrators. To answer question three, we reviewed the 
Federal Student Aid Handbook, and used data from NPSAS. Education 
officials provided us with information on federal subsidy rates for 
Stafford loans and reviewed our estimation methodology. Appendix I 
provides details on the study's scope and methodology. Because NPSAS 
and BPS are samples, there is sampling error associated with estimates 
obtained from them. These sampling errors are reported in appendix II. 
We did our work from October 2002 to August 2003 in accordance with 
generally accepted government auditing standards.

Results In Brief:

In school year 1999-2000, most of the nation's 2.3 million adult 
undergraduates who enrolled less than halftime were fulltime workers 
needing to balance the demands of school with other responsibilities, 
and few who aimed to complete a certificate or degree could be expected 
to do so. Compared with other adult students, those enrolled less than 
halftime had higher family incomes, were more often full-time workers, 
and more likely to be married. Adults enrolled on a less-than-halftime 
basis chiefly attended 2-year public institutions and often used less-
than-halftime enrollment to balance school, work, and family. Less-
than-halftime enrollment may have also enabled adults to address other 
challenges they faced, including financial constraints, scheduling 
conflicts, and limited readiness for postsecondary education. For 
example, during site visits to postsecondary institutions, 
administrators said that adults who have been away from school find the 
prospect of returning to school intimidating, both socially and 
academically, and less-than-halftime enrollment may allow adult 
students to take the steps necessary to adjust to academic life. 
National data indicate that while most adults who enrolled on a less-
than-halftime basis during their first year of postsecondary education 
expected to complete a degree or certificate, few did. Moreover, data 
provided by postsecondary institutions indicate that few adults who 
completed a certificate or degree consistently enrolled on a less-than-
halftime basis.

In 1999-2000, about 7 in 10 of the nation's less-than-halftime adult 
students received an average of $462 in assistance with their school 
attendance costs of slightly more than $1,000, typically from sources 
other than federal or state student aid. Though less-than-halftime 
adult students had a range of household incomes, their school 
attendance costs and the amount of assistance they received did not 
vary widely. However, the sources of support they received did vary by 
household income. For the less-than-halftime adult students with a 
household income below 150 percent of the federal poverty 
guideline,[Footnote 2] student financial aid--rather than work-related 
sources of support--was the primary source of assistance. For the less-
than-halftime adult students with household incomes above this level, 
assistance was most often received from one of two work-related sources 
of support: the Lifetime Learning tax credit or employer-provided 
assistance. WIA and TANF may also provide assistance to less than 
halftime adult students. However, WIA block grant funds have generally 
been used by states to support employment-related assistance or skills 
training, and few less than halftime students received WIA assistance. 
Very few less-than-halftime adult students received TANF assistance, 
and NPSAS collected no data on the extent to which TANF assistance was 
used to meet their costs of postsecondary education.

Changing the Pell and Stafford programs could provide some less-than-
halftime students with additional aid, increase program costs for the 
federal government, and, potentially, pose loan default problems for 
some institutions and students. Permitting less-than-halftime students 
to include the same costs as other students in their aid calculations 
is estimated to provide 150,000 Pell recipients with additional grant 
aid averaging $110 per year, and another 13,000 less-than-halftime 
students who otherwise would not receive a Pell award with an average 
award of $630. The federal budget cost of this change in Pell Grant 
policy for less-than-halftime students would be, at a minimum, $25 
million for the 2003-2004 academic year.[Footnote 3] Permitting less-
than-halftime students to participate in the Stafford Loan programs 
would result in more than two million additional borrowers, according 
to our estimates. If federal costs per loan dollar remained the same, 
this change would cost roughly $113 million per year. Site visits to 
postsecondary institutions in four states revealed that college 
administrators are concerned about the potential disadvantages of 
permitting less-than-halftime students to participate in the Stafford 
Loan program. They anticipate that less-than-halftime students who 
borrow might be unlikely to complete their studies, and, as a 
consequence, more likely to default on their loans. Because 
institutional eligibility to participate in federal student aid 
programs is linked to an institution's cohort default rate,[Footnote 4] 
permitting borrowing by less-than-halftime students may have the 
unintended consequence of jeopardizing the eligibility of some 
institutions.

We provided Education with a copy of our draft report for review and 
comment. In written comments on our draft report, Education noted that 
they found our report to be thorough and useful. Education's written 
comments appear in appendix IV. Education also provided technical 
comments, which we incorporated where appropriate.

Background:

Each year millions of adults participate in organized learning in the 
United States, in a wide range of venues. In 1999, an estimated 90 
million persons 16 and older[Footnote 5] reported that they had 
participated in some sort of formal learning activity, ranging from 
personal development courses--such as family genealogy or cooking 
classes--to apprenticeship and advanced degree programs. Much of this 
learning takes place outside of formal credential programs that confer 
a certificate or degree---most often in the workplace, where employers 
offer classes for job-specific skills, or in the many courses offered 
by postsecondary institutions that are not part of a credential 
program, such as a continuing education class. Enrolling in a 
certificate or degree program at a postsecondary institution is an 
important opportunity, however, for millions of adults who seek 
personal growth, or advancement in their working lives.

Characteristics of Adult Undergraduate Students:

In the 1999-2000 academic year, an estimated 7.1 million adults were 
enrolled as undergraduates in the nation's postsecondary institutions, 
comprising about 40 percent of all undergraduate students. About three-
quarters of these adult undergraduates were between the ages of 24 to 
40, while about one-quarter were 41 or older. Compared with 
undergraduate students under the age of 24, adult students enrolled in 
1999-2000 were more likely to be working full time (35 or more hours 
per week), to be married, to have dependents, and to lack a 
conventional high school diploma. (See table 1.):

Table 1: Differences Between Students Under 24 Years of Age and Age 24 
And Older:

Numbers in percent.

Work fulltime; Numbers in percent: Students Under 24: 24; Numbers in 
percent: Students 24 and Older: 59.

Married; Numbers in percent: Students Under 24: 5; Numbers in percent: 
Students 24 and Older: 50.

Have dependents; Numbers in percent: Students Under 24: 8; Numbers in 
percent: Students 24 and Older: 54.

GED/No diploma; Numbers in percent: Students Under 24: 4; Numbers in 
percent: Students 24 and Older: 9.

Source: NPSAS 1999-2000.

Note: See appendix II for confidence intervals associated with these 
estimates.

[End of table]

While the majority of undergraduates under the age of 24 were enrolled 
in baccalaureate programs, adult undergraduate students were primarily 
enrolled in certificate or associate programs in 1999-2000. Most adult 
students (55 percent) were enrolled at 2-year public institutions, 
while another 22 percent were enrolled in a public 4-year institution, 
and 10 percent were enrolled in private 4-year institutions. The 
remaining adult students were enrolled at proprietary schools, such as 
culinary or beauty schools, or a combination of different types of 
institutions.

A Range Of Public And Private Funding Sources Assist Adults In Meeting 
Educational Costs:

A range of public and private funding sources is available to adults to 
assist them in meeting the costs sometimes associated with formal 
learning, including employer-provided educational assistance, federal 
student aid programs authorized under Title IV of the Higher Education 
Act, higher education tax credits, and federal WIA and TANF funds.

Federal Financial Aid Available to Adult Undergraduate Students under 
Title IV of the Higher Education Act:

In the 1999-2000 academic year, adult students received about $3.3 
billion in grant assistance and $8.5 billion in loan assistance from 
programs authorized under Title IV of the Higher Education Act. To 
receive federal financial aid, students must meet several eligibility 
requirements, including being enrolled in a degree or certificate 
program, and maintaining satisfactory academic progress. Institutions 
are required to establish qualitative and quantitative criteria of 
satisfactory progress, and to monitor student progress.[Footnote 6] 
Taken together, these requirements help to ensure that Title IV funds 
are used in ways that benefit both students and the larger public, 
rather than purely recreational or leisure activities. Postsecondary 
institutions must also meet eligibility requirements to participate in 
Title IV programs, including legal authorization by the state in which 
they offer postsecondary education, accreditation by a nationally 
recognized accrediting agency,[Footnote 7] and limiting regular 
admission to individuals with a high school diploma or its recognized 
equivalent.[Footnote 8] Institutional eligibility requirements help to 
ensure that participating institutions provide students with quality 
education or training.

Programs authorized under Title IV include Pell Grants for low-income 
students and Stafford Loans. Stafford loans may be either subsidized or 
unsubsidized. If the loan is subsidized, the federal government pays 
the interest cost of the loan for the time a student is enrolled in 
school. If the loan is unsubsidized, the borrower is responsible for 
paying interest during the life of the loan. Title IV also authorizes 
programs funded by the federal government and administered by 
participating higher education institutions, commonly known as campus-
based aid--Supplemental Educational Opportunity grants, Perkins loans, 
and federal work-study aid.

Students who apply for Title IV aid must do so using the Free 
Application for Federal Student Aid (FAFSA). Information from the FAFSA 
is used to determine the amount of money that the adult student is 
expected to contribute to his or her own education, called the expected 
family contribution (EFC). Statutory definitions establish the criteria 
that students must meet to be considered independent of their parents 
for purposes of financial aid,[Footnote 9] and statutory formulas 
establish the share of income and assets that are expected to be 
available for the student's education. Once the EFC is established, it 
is compared to the cost of attendance at the institution chosen by the 
student. As table 2 indicates, the elements included in the student's 
cost of attendance for the purpose of calculating the Pell Grant award 
vary according to the extent of their enrollment.

Table 2: Elements Included in Cost of Attendance for Pell Awards:

Elements in cost of attendance: Tuition and fees; Fulltime or Halftime 
students (6 or more credits): Yes; Less-than-halftime students (1-5 
credits): Yes.

Elements in cost of attendance: Books and supplies; Fulltime or 
Halftime students (6 or more credits): Yes; Less-than-halftime students 
(1-5 credits): Yes.

Elements in cost of attendance: Transportation; Fulltime or Halftime 
students (6 or more credits): Yes; Less-than-halftime students (1-5 
credits): Yes.

Elements in cost of attendance: Miscellaneous personal expenses; 
Fulltime or Halftime students (6 or more credits): Yes; Less-than-
halftime students (1-5 credits): Not included.

Elements in cost of attendance: Room and board; Fulltime or Halftime 
students (6 or more credits): Yes; Less-than-halftime students (1-5 
credits): Not included.

Elements in cost of attendance: Child care; Fulltime or Halftime 
students (6 or more credits): Yes; Less-than-halftime students (1-5 
credits): Yes.

Elements in cost of attendance: Other expenses[A]; Fulltime or Halftime 
students (6 or more credits): Yes; Less-than-halftime students (1-5 
credits): Yes.

Source: 1999-2000 Student Financial Aid Handbook.

[A] Such as supportive services for disabled students.

[End of table]

If the EFC is greater than the cost of attendance, the student is not 
considered to have financial need for federal Title IV aid programs. If 
the cost of attendance is greater than the EFC, then the student is 
considered to have financial need. Pell Grant awards are calculated by 
subtracting the student's EFC from the maximum Pell Grant award. 
Maximum Pell Grant awards are prorated by the student's enrollment 
intensity: students attending less than halftime are eligible to 
receive one-quarter of the maximum Pell Grant award. In 1999-2000, the 
maximum Pell Grant award was $3,125 for fulltime students, while the 
maximum award for a less-than-halftime student was $781. The maximum 
subsidized Stafford loan award is equal to the student's calculated 
financial need, subject to statutory limits on annual and cumulative 
borrowing. The maximum unsubsidized Stafford loan award is equal to the 
student's cost of attendance, subject to statutory limits on annual and 
cumulative borrowing.

State, Institutional, and Other Federal Sources of Financial Assistance 
Available to Adult Undergraduate Students:

Adult students also received financial aid from states, postsecondary 
institutions, and other federal sources.[Footnote 10] In 1999-2000, 
states awarded a total of $975 million to adult students enrolled in 
undergraduate education, typically on the basis of estimated financial 
need. However, about half of the states did not have aid programs in 
which adults enrolled less than halftime were eligible to participate. 
Postsecondary institutions awarded $941 million in aid to adult 
undergraduate students in 1999-2000, often on the basis of 
considerations other than financial need. Sources of federal assistance 
other than Title IV aid were available to adult undergraduates, the 
largest of which was Montgomery GI Bill assistance. About $1 billion 
was available to the nation's veterans and eligible service members 
through the Montgomery GI Bill.

Work-Related Financial Assistance Available to Adult Undergraduate 
Students:

Financial assistance was also available to adult students from work-
related sources--through two federal higher education tax credits and 
from employer-provided educational assistance. Employers may pay 
postsecondary educational expenses directly, or indirectly through 
employee reimbursement, and they are encouraged to do so by the federal 
tax code, which provides favorable tax treatment for these benefits. In 
1999-2000, employers provided $1.28 billion in assistance to adult 
students enrolled in undergraduate postsecondary education, most often 
to those workers who were most likely to increase company productivity 
or profitability as a result of their education, such as high-skill, 
high-demand workers and managers.[Footnote 11] Employees were usually 
required by employers to meet a number of conditions to obtain this 
educational assistance--such as a minimum length of service--but were 
not obligated to enroll in degree or certificate programs, or to 
complete their studies.[Footnote 12] Assistance was also available to 
students through two federal higher education tax credits, the HOPE and 
Lifetime Learning tax credits.[Footnote 13] Tax filers on their own 
behalf, or on behalf of a spouse or dependent may claim both credits, 
and both are nonrefundable: if the filer has no tax liability, they 
cannot receive the credit. Eligibility for the HOPE credit is limited 
to students who are enrolled halftime or more in a degree or 
certificate program, and in their first 2 years of postsecondary 
education. In contrast to both the HOPE tax credit and the Stafford 
student loan programs, the Lifetime Learning tax credit may be used by 
tax filers who enroll for any number of credits, and for any course 
that aids in learning new or improving existing job skills, including 
those that are not part of a degree or certificate program. 
Additionally, tax filers may use the credit for as many years as they 
are enrolled, without regard to degree progress or completion. Tax 
filers use all qualified tuition and fees--minus any tax-free 
educational assistance[Footnote 14] received--to compute the credits. 
In 1999-2000, all of the first $1,000 and half of the next $1,000 of 
qualified education expenses per student could be used to compute the 
HOPE credit, for a maximum credit of $1,500. In 1999-2000, each tax 
filer could use 20 percent of the first $5,000 in qualified educational 
expenses to compute the Lifetime Learning credit for a maximum credit 
of $1,000. The Lifetime Learning credit permits tax filers to combine 
their own expenses and those of their spouse and dependents. For 
taxpayers filing jointly, both credits were initially phased out at 
$80,000 adjusted gross income,[Footnote 15] and fully phased out at 
$100,000.[Footnote 16]

Assistance to Adult Undergraduate Students Under WIA and PRWORA:

Federal programs authorized by WIA and PRWORA may also provide some 
adults with assistance in meeting the costs of postsecondary education. 
Under WIA, adults and dislocated workers may be eligible to receive job 
training after it is determined that they are unlikely to get a job 
leading to self-sufficiency without such training. WIA funds may be 
used for postsecondary training only for expenses remaining after the 
receipt of Pell Grant and other sources of assistance. Furthermore, 
state and local workforce investment boards are authorized to establish 
limits on the amount of time or the amount of WIA funds that may be 
used to meet training expenses. Under PRWORA, block grants are made to 
states, which may use these funds to assist TANF recipients in meeting 
costs associated with vocational training or education, including 
postsecondary education. These costs may include tuition and fees, 
childcare, and transportation.

Most of the 2.3 Million Adult Undergraduate Students Who Enrolled Less 
Than Halftime Needed to Balance School and Other Responsibilities, and 
Many Were Unable to Complete Their Programs:

In 1999-2000, one-third of adult undergraduate students, about 2.3 
million, enrolled less than halftime, and most worked fulltime and 
needed to balance the demands of school with other responsibilities. 
Most adults who enroll as less than halftime students intend to 
complete a degree or certificate, but few do. Compared with adult 
students enrolled halftime or more, the typical less-than-halftime 
adult student was older, more likely to be working and married, and had 
a higher household income. In addition, less-than-halftime students 
more often enrolled without being in a degree program, and less often 
pursued a baccalaureate degree. Although less-than-halftime enrollment 
may permit adults to complete one or two courses helpful to their 
employment prospects, such enrollment appears to be an ineffective 
long-term strategy for the majority of less-than-halftime adult 
students who intend to complete a degree. Of those adults who expected 
to complete a certificate or degree and enrolled on a less than 
halftime basis during their first year of school, most had not 
completed a degree or certificate, and were no longer enrolled in 
school.

One-Third of Adult Undergraduate Students Enrolled Less Than Halftime, 
and Those Who Did Differed from Other Adult Students:

In 1999-2000, one-third, about 2.3 million, of adult undergraduate 
students were enrolled less than halftime. As shown in figure 1, other 
adult students were either enrolled fulltime (12 or more credits), 
half-or three-quarters time (6-11 credits), or were in a combination of 
different enrollment types (mixed).

Figure 1: Enrollment Distribution of All 7.1 Million Adult 
Undergraduate Students, 1999-2000:

[See PDF for image]

Note: See appendix II for confidence intervals associated with these 
estimates.

[End of figure]

Compared with adult students enrolled halftime or more, less-than-
halftime adult students were older, and more likely to be working 
fulltime, be married, and have dependents. In addition, less-than-
halftime adult students more often enrolled in 2-year postsecondary 
institutions, and less often pursued a baccalaureate degree. Less-than-
halftime adult students had, on average, higher household incomes than 
did other adult students. (See table 3.):

Table 3: Differences Between Less-than-Halftime Adult Students and 
Other Adult Students:

Characteristics of adult students: Median age; Less than Halftime: 37; 
Halftime or Three-Quarter Time: 32; Fulltime: 28.

Characteristics of adult students: Percentage of students working 
fulltime; Less than Halftime: 77; Halftime or Three-Quarter Time: 70; 
Fulltime: 34.

Characteristics of adult students: Median household income (1998); Less 
than Halftime: $42,000; Halftime or Three-Quarter Time: $31,000; 
Fulltime: $18,000.

Characteristics of adult students: Percentage of students married; Less 
than Halftime: 57; Halftime or Three-Quarter Time: 50; Fulltime: 42.

Characteristics of adult students: Percentage of students having 
dependents; Less than Halftime: 57; Halftime or Three-Quarter Time: 55; 
Fulltime: 51.

Characteristics of adult students: Percentage of students enrolled at 
2-year institution; Less than Halftime: 73; Halftime or Three-Quarter 
Time: 58; Fulltime: 35.

Source: GAO calculations from NPSAS, 1999-2000.

Note: See appendix II for confidence intervals associated with these 
estimates.

[End of table]

A substantially larger proportion of adults who enrolled on a less-
than-halftime basis had household incomes over $30,000 than did adults 
enrolled halftime or more. (see figure 2).

An estimated 7 percent of all adult students enrolled less than 
halftime in 1999-2000 had household incomes at or below 100 percent of 
the federal poverty guideline, which for a three-person household in 
1998 was $13,650. An estimated 14 percent had household incomes at or 
below 150 percent of the federal poverty guideline, or $20,475 for a 
three-person household.

Figure 2: Income Levels of Adult Students--Comparison between Those 
Attending Less-Than-Halftime and Other Adult Students:

[See PDF for image]

Note: See appendix II for confidence intervals associated with these 
estimates.

[End of figure]

School Administrators Believe Students May Choose Less-Than-Halftime 
Enrollment for Many Reasons--Most Commonly to Balance Work, Family, and 
School:

Adult students choose to enroll on a less-than-halftime basis for many 
reasons, the most important of which, most school administrators told 
us, is their need to balance school requirements with the competing 
demands of work and family. This closely reflects the findings of 
studies that examine postsecondary enrollment among adults.[Footnote 
17] School administrators explained that the balancing act required of 
many adult students, in which they attempt simultaneously to meet 
family responsibilities and work obligations, left many adults with too 
little time to be a fulltime student. The routines of adult life--from 
caring for sick children to meeting unexpected job demands--compete 
with class attendance and the completion of course assignments, 
according to these administrators. Faced with this "juggling act" some 
adult students may have to pursue postsecondary education on a less-
than-halftime basis.

College administrators we contacted also identified several other 
significant reasons why adult students may enroll on a less-than-
halftime basis, including the difficulty meeting the direct costs of 
school, scheduling conflicts, and students' limited readiness for 
postsecondary education. Virtually all administrators identified these 
as important, but secondary, reasons. While many adult students receive 
some financial support towards postsecondary costs, most students pay 
the majority of school costs from their own resources. Because adult 
students may find it difficult to economize on housing costs by 
searching for less expensive accommodations or group housing, enrolling 
less than halftime can provides them with a way to reduce out-of-pocket 
costs associated with tuition and fees--as well as transportation, 
childcare, and books.

Scheduling conflicts also played a role, according to college 
administrators, in influencing enrollment decisions. Officials noted 
that adult students, especially working students, may be unable to 
enroll on a halftime or fulltime basis due to the inflexibility of 
course and program options made available by postsecondary 
institutions, or a lack of flexibility in work schedules on the part of 
employers. While some postsecondary institutions offered the majority 
of their classes during nontraditional hours, such as evenings or 
weekends, others did not. For example, administrators at one 4-year 
school estimated that only 10 percent of the undergraduate courses were 
offered during evening hours. Adults may find it easier to plan and 
manage their schedules over 5 to 7 weeks than they do over longer time 
periods, such as a traditional 10 or 15-week semester. At another 
institution, administrators noted that 3,000 course sections were 
offered each semester, but only 10 were available to adults in a 
shorter 5 to 7 week format, owing to reluctance of faculty to teach in 
alternative times and formats. Administrators at one community college 
pointed to a lack of flexibility in employer work schedules, noting 
that adult students often withdraw from class when their employer 
changes their work schedule, preventing them from attending class.

School administrators explained that some adults might not be ready--
academically or socially--for postsecondary education, and that this 
may contribute to their decision to enroll less than halftime. Adult 
students often need to refresh or develop college-level skills, they 
noted, particularly in mathematics. Adult students may also lack 
confidence in themselves or their abilities, or feel out of place in a 
college setting. One administrator noted that some adult students at 
her institution experienced stress-related illnesses after they had 
begun their coursework and needed to leave mid-semester. National data 
indicate that adults enrolled on a less than halftime basis are more 
likely to be encountering academic difficulties than other adult 
students, as reflected in their lower grade point averages.

Most Adults Who Enrolled as Less-Than-Halftime Students Expected to 
Complete a Certificate or Degree, But Did Not:

National data indicate that most adults who enrolled on a less-than-
halftime basis during their first year of postsecondary education 
expected to complete a degree or certificate, but six years later the 
majority had left school with no credential. Moreover, data provided by 
postsecondary institutions included in our review show that few adults 
who succeeded in completing a certificate or degree consistently 
enrolled on a less-than-halftime basis. Some adults who enroll in 
credit-bearing courses at postsecondary institutions may not intend to 
complete a degree or certificate; rather, they may choose to complete 
only a few courses, finding this sufficient to acquire the skills that 
help them gain employment, obtain a promotion, or find personal 
satisfaction. Data from Education's 1995-1996 Beginning Postsecondary 
Students (BPS) study, which tracked the academic progress and degree 
completion of students over a 6-year period from 1995-1996 to 2001-
2002, show that 25 percent of adults who enrolled on a less than 
halftime basis during their first year of postsecondary education did 
not expect to complete a degree or certificate. The remaining 75 
percent, however, did.

Most adults who intended to complete a degree or certificate and 
enrolled on a less-than-halftime basis during their first year of 
postsecondary education left school without completing a degree or 
certificate. Using the BPS study, we analyzed completion among those 
students who first enrolled at age 24 or older, who expected to 
complete a certificate, associate's degree, or baccalaureate degree, 
and who enrolled on a less than halftime basis one or more times during 
their first year of postsecondary education. We estimate that about 
two-thirds (66 percent) of adults who began in 1995-1996 did not 
complete a certificate or degree by 2001-2002, and were no longer 
enrolled in postsecondary education. In comparison, only about 30 
percent of adults who enrolled as halftime or fulltime students in 
their first year of school had left school without completing a degree 
or certificate.

At those institutions that provided completion data to us, adult 
graduates' reliance upon less than halftime enrollment varied with 
program length. Of the 1,830 baccalaureate graduates who completed 
their degrees in 2001-2002 at four 4-year institutions we visited, and 
who when they first enrolled were age 24 or older, slightly more than 
one-half never enrolled on a less-than-halftime basis, and another 36 
percent did so for only one or two terms. No graduates relied 
exclusively upon less-than-halftime enrollment to complete their 
degree. (See fig. 3.):

Figure 3: Terms of Less-Than-Halftime Enrollment among Students Who 
Began as Adults and Completed Baccalaureate Degrees at Selected 4-Year 
Institutions in 2001-2002:

[See PDF for image]

[End of figure]

Of the 1,927 students who completed an associate degree in 2001-2002 at 
four 2-year institutions we visited and who first enrolled at age 24 or 
older, almost one-half never enrolled as less-than-halftime students, 
or did so for one or two terms. Only 3 percent consistently enrolled on 
a less-than-halftime basis. (See fig. 4.) This pattern of enrollment 
was similar for the 348 students who completed a certificate program at 
three of the 2-year institutions we visited.

Figure 4: Terms of Less-Than-Halftime Enrollment among Students Who 
Began as Adults and Completed Associate Degrees at Selected 2-Year 
Institutions, 2001-2002.

[See PDF for image]

[End of figure]

Most Less-Than-Halftime Adult Students Received Some Assistance with 
Postsecondary Costs, Typically from Work-Related Sources:

In 1999-2000, about 7 in 10 of the nation's less-than-halftime adult 
students received assistance equaling about 44 percent of their school 
costs, typically from sources other than federal and state student aid. 
Though less-than-halftime adult students had a range of household 
incomes, their school costs and the amount of assistance they received 
did not vary widely; however, the sources of assistance they received 
did vary by household income. Student financial aid from federal, 
state, and institutional sources comprised the majority of assistance 
received by lower-income adults, while most assistance received by 
higher-income households was provided by work-related sources. Very few 
adults enrolled on a less-than-halftime basis seldom received 
assistance from either federal WIA or TANF sources.

Seven in 10 Less-Than-Halftime Adult Students Received Assistance for 
School Costs--Most Often from Lifetime Learning Tax Credit and Employer 
Assistance:

In 1999-2000, most less-than-halftime adult students received some 
assistance with their postsecondary education or training costs, 
typically from sources other than student financial aid. An estimated 
70 percent of less-than-halftime adults received assistance from 
federal, state, or other sources with their postsecondary education or 
training costs, which are estimated to have been, on average, $1,058 
for all less-than-halftime adult students in 1999-2000. About one-half 
of these costs were comprised of tuition and fees ($480), while the 
remaining amount was comprised of books, equipment, childcare, and 
transportation costs.

For those less-than-halftime adults who received assistance in 1999-
2000, the average amount was $462, or approximately 44 percent of their 
school costs. Though the Lifetime Learning tax credit was the source of 
assistance most widely received by less-than-halftime adult students, 
the average Lifetime Learning tax credit ($74) was significantly 
smaller than the average Pell Grant award ($465) or the average level 
of employer support ($784).

Figure 5: Percent of Less-Than-Halftime Students Receiving Each Type of 
Assistance, 1999-2000:

[See PDF for image]

Notes: Students may receive more than one source of assistance. Other 
aid consists chiefly of Montgomery GI Bill assistance. See appendix II 
for confidence intervals associated with these estimates.

[End of figure]

Sources of Assistance Received by Less-Than-Halftime Adults Varied by 
Household Income, but Their School Costs and Amount of Assistance Were 
Similar:

Few adults who enrolled less-than-halftime in 1999-2000 had incomes 
below 150 percent of the federal poverty guideline, and those who did 
received the bulk of assistance with their school costs from student 
financial aid--in contrast to the majority of less-than-halftime adult 
students who had incomes well above federal poverty guidelines and who 
relied chiefly upon work-related sources of assistance to meet school 
costs. Although the sources of assistance received by lower-and higher-
income students were different, both groups had about the same school 
costs and levels of assistance and, therefore, similar shares of their 
school costs met through federal, state, or work-related assistance. In 
1999-2000, 15 percent of less-than-halftime adults had a household 
income below 150 percent of the 1998 federal poverty guideline, while 
the vast majority of these students had incomes above this level. Less-
than-halftime adult students with household incomes below 150 percent 
of the 1998 federal poverty guideline had approximately 43 percent of 
their estimated $1,121 in school costs met through all forms of 
assistance, while those with incomes above 150 percent of the federal 
poverty guideline had approximately 44 percent of their estimated 
$1,048 in costs met through assistance.

As figure 6 shows, a larger percentage of lower income less-than-
halftime adult students received Pell Grants than did students with 
incomes above 150 percent of the federal poverty guideline, while a 
smaller proportion received work-related assistance, either from their 
employer or the Lifetime Learning tax credit.

Figure 6: Proportion of Less-Than-Halftime Adults Who Received 
Assistance, by Household Income, 1999-2000:

[See PDF for image]

Note: Sample sizes for state, institutional, and other aid do not 
permit reliable estimates. See appendix II for confidence intervals 
associated with these estimates.

[End of figure]

Among low-income, less-than-halftime adult students, educational costs 
averaged just over $1,100, and about 14 percent of these students 
received federal Pell Grants to assist them in meeting these costs. 
Adults who work part-time receive employer financial assistance for 
enrollment in credential programs less often than those who work 
fulltime.[Footnote 18] Compared with higher-income less-than-halftime 
adult students, fewer low-income students worked, and, if they worked, 
fewer were employed fulltime. Consequently, a smaller percentage of 
low-income students received employer assistance (9 percent) than did 
higher-income students (25 percent). Finally, about half of these low-
income adult students had no federal income tax liability and were, 
therefore, ineligible to receive a Lifetime Learning tax credit. As a 
result, an estimated 29 percent of those below 150 percent of the 
federal poverty guideline received a Lifetime Learning tax credit.

While lower-income adult students received about two-thirds of their 
assistance (66 percent) from federal, state, institutional, and other 
aid, the opposite was true of higher-income adult students, who 
received 71 percent of their support from work-related sources 
assistance. In 1999-2000, most adult students (85 percent) had incomes 
above 150 percent of the federal poverty guideline. According to 
federal and state financial aid rules, these adult students typically 
had incomes and assets that were sufficient to meet their postsecondary 
costs and, therefore, only 1 percent received either federal or state 
student aid. Most who had incomes above this level were fulltime 
workers, and a larger share received both employer assistance and 
Lifetime Learning tax credits than did their lower-income counterparts.

WIA and TANF Assistance Was Rarely Received by Less-Than-Halftime 
Adults:

We estimate that less than 1 percent of all less-than-halftime adult 
students received either WIA or TANF assistance with the cost of 
postsecondary education in 1999-2000. The population of less-than-
halftime adult students that received WIA funds for vocational training 
was too small to reliably estimate the average amount of assistance 
they received in 1999-2000.

Very few less-than-halftime adult students received WIA assistance 
because the WIA program focuses on employment-related assistance or 
skills training, and generally does not support extended training of 
adult students pursuing a postsecondary credential. At some of our 
visits to postsecondary institutions, school officials informed us that 
they were unfamiliar with WIA. However, those familiar with the program 
reported that very few adult students were WIA recipients, and that the 
number of adult students enrolled with assistance from WIA was lower 
than the number enrolled with assistance under the previous federal 
workforce policy, the Job Training Partnership Act. The time and dollar 
limits established by local workforce investment boards may make it 
difficult for adult students to use WIA funds for the extended training 
that may be required for the completion of a postsecondary vocational 
credential, even for those who are enrolled on a fulltime basis. As 
officials at one 2-year postsecondary institution reported, many adult 
students entering certificate programs needed 1 year of remedial 
coursework before beginning their program and were, therefore, unable 
to complete their coursework within the 1-year time limit established 
by the local workforce investment board.

Less than 1 percent of less-than-halftime adult students received TANF 
assistance in 1999-2000, and NPSAS collected no data on the extent to 
which TANF funds assisted these students in meeting costs associated 
with their training or education. Moreover, school officials at the 
institutions we visited were generally unaware of the extent to which 
adult students were TANF recipients. One school, however, had created a 
program to enable TANF recipients to attend school fulltime. In 
Maryland, the Baltimore City Community College and city and state 
officials established the School Counts Program, through which selected 
TANF recipients who enroll at the community college are provided with 
advising, assistance with transportation and childcare expenses, and 
federal work study assistance that permits them to maintain a full 
credit load throughout the entire calendar year. These supports permit 
a relatively large proportion of program participants to complete a 
certificate or degree.[Footnote 19]

Changing the Pell and Stafford Programs Would Provide More Students 
With Additional Aid, but Result in Increased Federal Budget Costs and, 
Potentially, Undesirable Effects for Students and Institutions:

Changing how the Pell and Stafford programs treat less-than-halftime 
attendance would provide some less-than-halftime students with 
additional aid, but it would likely increase program costs for the 
federal government and administrative complexity for postsecondary 
institutions. Proposed changes to the Pell Grant program include 
allowing, for less-than-halftime students, the inclusion of room and 
board and miscellaneous personal expenses, as is done for fulltime 
students. Another proposed change would be to allow less-than-halftime 
students to participate in the Stafford Loan programs. Administrators 
of postsecondary institutions in the four states we visited expressed 
concern about potential negative consequences of the Stafford loan 
proposal.

Changes to the Pell Grant Program Will Increase Program Costs--Most 
Often Assisting Students Currently Receiving Pell Awards:

Allowing, for all less-than-halftime students,[Footnote 20] the 
inclusion of room and board and miscellaneous personal expenses in 
their cost of attendance, as is done for other students, would increase 
the number of less-than-halftime students who receive a Pell grant and 
increase Pell award amounts for those who already receive a grant. We 
estimate that about 13,000 less-than-halftime students who do not 
receive a Pell award under current law would receive an average award 
of $630 under this alternative in the 2003-2004 academic year. In 
addition, about 150,000 less-than-halftime students would receive a 
Pell Grant award increase of $111 per year in 2003-2004. (See table 4.) 
The total federal budget cost of changing Pell Grant policy for less-
than-halftime students would be approximately $25 million for the 2003-
2004 academic year. This cost estimate assumes that adults who are not 
enrolled in school will not choose to enroll in response to the policy 
change. If about 35,000 individuals who are not in school respond to 
this change in policy by enrolling less than halftime, an estimate 
implied, in part, by some research, there could be an additional 
federal budget cost of about $10 million in addition to the $25 million 
associated with already enrolled students. (See app. III.):

Table 4: Estimated Effects of Changes to Pell Grant Program:

Students affected: Currently enrolled and no Pell received, newly 
eligible; Number of students receiving new/larger award: 13,000; 
Estimated increase in Pell award under alternative law: $630; Estimated 
federal budgetary cost, 2003-2004: $8,190,000.

Students affected: Currently enrolled and receiving Pell, eligible for 
larger Pell; Number of students receiving new/larger award: 150,000; 
Estimated increase in Pell award under alternative law: $111; Estimated 
federal budgetary cost, 2003-2004: $16,650,000.

Total cost: $24,840,000.

Source: GAO analysis.

Note: Estimate assumes adults who are not in school will not enroll in 
response to the policy change and that cost of attendance elements for 
both dependent and independent students would be changed. See appendix 
I for estimation methodology.

[End of table]

Changes to the Stafford Loan Program Will Increase Program Costs and 
May Result in Disadvantages to Students and Institutions:

While current law does not permit less-than-halftime students to 
participate in the Stafford loan programs, some have proposed that 
these students be allowed to participate. This change to the loan 
program would increase federal subsidy costs[Footnote 21] associated 
with the Stafford programs. Moreover, campus administrators anticipate 
that the change could have undesirable effects on postsecondary 
institutions and on students.

Permitting all less-than-halftime students to participate in the 
Stafford loan programs would increase federal subsidy costs associated 
with the Stafford loan programs by approximately $113 million in fiscal 
year 2004.[Footnote 22] We estimate that the average unsubsidized 
Stafford loan[Footnote 23] taken out by adult students enrolled less-
than-halftime would be approximately $680, while the average subsidized 
loan would be about $1,200. Federal subsidy costs in subsequent fiscal 
years would change depending upon the number of students enrolled at 
eligible institutions, loan amounts per student, and federal subsidy 
costs per loan dollar.

Table 5: Estimated Effects of Changes to Stafford Loan Programs:

Stafford program: Unsubsidized Loan; Expected loan amount: $680; 
Estimated number of borrowers[A]: 550,000; Estimated federal subsidy 
cost, 2003-2004[B]: $34,000,000.

Stafford program: Subsidized Loan; Expected loan amount: $1,200; 
Estimated number of borrowers[A]: 1,900,000; Estimated federal subsidy 
cost, 2003-2004[B]: $79,000,000.

Stafford program: Total; Expected loan amount: Estimated number of 
borrowers[A]: Estimated federal subsidy cost, 2003-2004[B]: 
$113,000,000.

Source: GAO analysis.

[A] Estimate assumes that dependent and independent students are 
allowed to participate in the Stafford programs and that all who are 
eligible borrow. See appendix I for estimation methodology.

[B] Estimated federal subsidy cost is less than estimated loan volume 
(expected loan amount multiplied by estimated number of borrowers) 
because, unlike grants, borrowers must repay loans.

[End of table]

While administrators pointed to several potential benefits of providing 
Stafford eligibility for less-than-halftime students, they far more 
often pointed to a larger set of disadvantages--for both postsecondary 
institutions and student borrowers--that might accompany this change. 
Discussing potential benefits of expanding eligibility to include less-
than-halftime students, they noted that changing the Stafford loan 
program might permit less-than-halftime students to reduce their 
reliance on more costly types of borrowing, or to reduce the extent to 
which they work to finance their education. Additionally, some students 
might prefer--or better cope with--enrollment as a less-than-halftime 
student, but are encouraged by Stafford eligibility rules to take six 
or more credits. If eligibility for the program were extended to less-
than-halftime students, this incentive for students to enroll for more 
credits would be removed.

Administrators, particularly those at public 2-year postsecondary 
institutions, expressed the potential disadvantages associated with 
expanding eligibility. They observed that expanding eligibility to 
less-than-halftime students might increase their institution's cohort 
default rate. Students who do not complete a certificate or degree, 
research indicates, are especially likely to default on their 
loans.[Footnote 24] In light of the low rates of completion among less-
than-halftime students, they reasoned, this population might be at 
particular risk of defaulting on Stafford loans. Institutional 
eligibility to participate in federal student aid programs is linked to 
an institution's cohort default rate, and permitting borrowing by less-
than-halftime students could result in some institutions losing Title 
IV eligibility. In addition, changing Stafford eligibility to include 
borrowers enrolled less than halftime would, they anticipate, result in 
a large expansion in the number of students participating in the 
Stafford loan programs, increasing the administrative burden faced by 
campus financial aid offices. Furthermore, at some postsecondary 
institutions, policies on satisfactory academic progress may need to be 
revised in response to changing Stafford eligibility.

Administrators also noted potential disadvantages to less-than-
halftime student borrowers. They expressed concern that Stafford 
borrowing by lower-income adults enrolled less than halftime--few of 
whom might have a certificate or degree and higher earnings as a result 
of their enrollment--might burden these students with unmanageable 
debt. Allowing less-than-halftime students to borrow in the Stafford 
loan programs, they noted, may also increase the number of students who 
reach their overall borrowing limits before the completion of a degree. 
Finally, they indicated, changing program eligibility may encourage 
protracted less-than-halftime enrollment as a means by which to 
postpone repayment. Students with outstanding subsidized Stafford loans 
must now enter repayment if they enroll for fewer than six credits. 
However, if students were permitted to defer repayment while enrolled 
for one to five credits, some might choose to enroll for a few credits 
each term as a way to delay repayment.

Concluding Observations:

There are a variety of formal learning opportunities open to adults, 
and a range of funding sources that support participation in them. Some 
sources of funding available to adult learners, particularly work-
related assistance provided by employers or the Lifetime Learning tax 
credit, permit short-term study that does not lead to the completion of 
a degree or certificate. Both employers and employees may benefit as 
skills, productivity, and earnings increase. In contrast to these 
funding streams, the federal student assistance programs authorized 
under Title IV of the Higher Education Act provide assistance for adult 
learning that takes place in eligible postsecondary institutions, and 
is intended to result in the completion of a postsecondary credential: 
a certificate, associate's degree, or baccalaureate degree. The Higher 
Education Act's provisions concerning institutional eligibility help to 
ensure billions of dollars in federal student assistance is available 
only to those institutions that provide students with quality education 
or training worth the time, energy, and money that they--and the 
nation's taxpayers--invest.[Footnote 25] Requiring that students 
enroll in--and make progress toward--a postsecondary credential ensures 
that the federal investment in Title IV programs is used to support 
learning that is broadly beneficial to the public, rather than 
students' recreational or leisure activities.

Some adults who begin postsecondary education on a less than halftime 
basis do not intend to complete a degree, and many others expect to do 
so, but are unable to continue to completion. If less than halftime 
adults who do not complete a credential nonetheless benefit from 
completing a few postsecondary courses,[Footnote 26] then federal 
policy tools designed to support shorter-term and non-credential adult 
learning--such as tax incentives for employer-provided educational 
assistance and the Lifetime Learning tax credit--can better assist 
these learners than can Title IV programs. The potential costs--to the 
federal government, institutions, and students--of proposed changes to 
the Pell Grant and Stafford Loan programs, particularly the latter, may 
outweigh their potential benefits for less-than-halftime adult 
students. Permitting less-than-halftime students to participate in the 
Stafford student loan programs would provide a new source of borrowing 
for these students, but it may be accompanied by unintended and 
unwanted consequences, including increasing the volume of loans at risk 
of default. Allowing less-than-halftime students to include room, 
board, and personal expenses in calculating their Pell Grant cost of 
attendance would most often assist less-than-halftime students who are 
currently receiving a Pell grant, providing them with an estimated $100 
annual increase in assistance, rather than providing a widely available 
source of assistance to adults who are not currently receiving Pell 
Grants.

Agency Comments:

In written comments on our draft report, Education stated that it 
appreciated our thorough review and examination of the financial, and 
other, impediments that are often unique to adult learners as they 
pursue postsecondary education and training opportunities and found 
useful the concerns raised by postsecondary institutions. In addition, 
Education noted that the report would complement a recent report of its 
own and that it would assist Education in achieving one of its 
departmental strategic goals. Education also provided technical 
comments, which we incorporated where appropriate. Education's written 
comments appear in appendix IV.

As agreed with your offices, unless you publicly announce its contents 
earlier, we plan no further distribution of this report until 30 days 
from its date. At that time we will send copies to the Secretary of 
Education and other interested parties. We will also make copies 
available to others on request. In addition, the report will be 
available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions or wish to discuss this 
material further, please call me at (202) 512-8403, or Jeff Appel at 
(202) 512-9915. Other contacts and staff acknowledgments are listed in 
appendix V.

Cornelia M. Ashby 
Director, 
Education, Workforce, and Income Security Issues:

Signed by Cornelia M. Ashby: 

[End of section]

Appendix I: Objectives, Scope, and Methodology:

We were asked to determine: (1) the extent to which adults enroll less 
than halftime, the characteristics and factors associated with less-
than-halftime enrollment, and the rates of completion among these 
students; (2) the extent to which adult students enrolled less than 
halftime receive federal, state, and other assistance to help them meet 
the costs of postsecondary education; and (3) the implications, 
including the budgetary impact, of changing the Pell Grant Program to 
allow room and board and miscellaneous personal expenses to be 
considered in the calculation of grant amounts for less-than-halftime 
students and changing the Stafford loan programs to permit 
participation by less-than-halftime students. For the purposes of this 
report, adult students are those who are 24 years or older.

In designing our study, we reviewed data and literature pertaining to 
financial aid for adult students and part-time students, and we 
analyzed focus group findings examining the barriers to enrollment and 
persistence faced by low-income adults. We interviewed officials at the 
Department of Education, researchers, and representatives of higher 
education organizations, such as the American Association of Community 
Colleges and the National Association of Student Financial 
Administrators; and we interviewed administrators of two institutions 
of higher education not included in our four sample states: the City 
University of New York and Kaplan College. We also reviewed studies and 
surveys of employer-provided educational assistance.

To determine the extent of less-than-halftime enrollment among adult 
students and the characteristics, completion rates, and financial 
support they received, we analyzed national data and visited selected 
postsecondary institutions. We analyzed two datasets created by the 
National Center for Education Statistics: the 1999-2000 National 
Postsecondary Student Aid Study (NPSAS), and the 2001 Beginning 
Postsecondary Students Study (BPS). Both datasets--NPSAS and BPS--
contained a nationally representative sample of students enrolled at 
postsecondary institutions participating in federal student aid 
programs and provided information on financial assistance they 
received, hours they worked, and a wide range of other characteristics. 
We computed estimates of the Lifetime Learning credits received by 
less-than-halftime adult students using data from NPSAS. NPSAS data are 
collected at the individual student level, and cannot be aggregated 
into families or linked to tax filing status. Therefore, our analysis 
treated individual students as if they were credit claimants and 
recipients.[Footnote 27]

To assess the reliability of the NPSAS and BPS sample data, we reviewed 
existing information about the sample, including the documentation 
produced by NCES, and performed electronic testing of the required data 
elements to detect obvious problems in accuracy and completeness. We 
determined that the NPSAS and BPS data were sufficiently reliable for 
this report. Because both surveys are samples of a larger student 
population, there is some sampling error associated with them. Sampling 
errors are often represented as a 95-percent confidence interval: an 
interval that 95 times out of 100 will contain the true population 
value. The upper and lower bounds of the 95-percent confidence 
intervals for each estimate are presented in the tables in appendix II.

National datasets provide valuable but limited information. For 
example, NPSAS is a cross-sectional rather than longitudinal study, and 
it, therefore, cannot be used to identify the duration for which 
students enrolled on a less-than-halftime basis. Some student 
characteristics or factors that may be associated with less-than-
halftime enrollment, such as course scheduling problems, are not 
contained in these datasets. Consequently, we augmented national 
datasets with information collected from postsecondary institutions.

We interviewed school administrators from 19 postsecondary 
institutions, including public and private schools and 2-year and 4-
year institutions. These institutions were located in four states--
California, Maryland, Ohio, and Virginia--in which the costs for 
resident tuition and fees at public 2-year institutions and the amount 
of available state aid varied.[Footnote 28] For example, in California 
the cost for resident 2-year tuition was lower than for all other 
states ($330), but no state aid is available to students pursuing their 
postsecondary credentials on a less-than-halftime basis. Maryland 
ranked 9th among states in tuition and fees at public 2-year 
institutions ($2,564) and, like California, did not have state 
financial aid available to less-than-halftime students. Both Virginia 
and Ohio had state aid available for less-than-halftime students; 
however, Virginia's 2-year tuition ($1,304) was lower than that of Ohio 
($2,300).

Within each state, we contacted three to six institutions (see table 
1). Because most less-than-halftime adult students are enrolled at 2-
year public institutions, we visited more of this type than other 
postsecondary schools. In addition, we selected institutions with large 
proportions of adult students in their overall student body. We met 
with a range of school administrators at these institutions, including 
financial aid officers, student affairs officers, directors of 
institutional research, and other administrative officers. We discussed 
with them their less-than-halftime adult student population and the 
implications of changing the Pell Grant and Stafford Loan Programs. We 
also collected institutional data on spells on less than halftime 
enrollment among students graduating from 10 of the 19 we visited. We 
solicited information from each institutional research officer about 
the reliability of these data and reviewed the data for obvious 
problems of accuracy and completeness. Because these are not samples of 
a larger student population, there are no confidence intervals 
associated with them.

Table 6: Site Visit States and Institutions Contacted:

State: California; Name (type): City College of San Francisco, San 
Francisco (2-year public) Contra Costa College, San Pablo (2-year 
public) Holy Names College, Oakland (4-year private) Sierra College, 
Rocklin (2-year public) San Francisco State University, San Francisco 
(4-year public).

State: Maryland; Name (type): Allegany College, Cumberland (2-year 
public) Baltimore City Community College, Baltimore (2-year public) 
Montgomery College, Rockville (2-year public).

State: Ohio; Name (type): Capital University, Columbus (4-year private) 
Cleveland State University, Cleveland (4-year public) Columbus State 
Community College, Columbus (2-year public) Cuyahoga Community College, 
Highland Hills (2-year public) University of Akron Wayne College, 
Orrville (2-and 4-year public).

State: Virginia; Name (type): Germanna Community College, 
Fredericksburg (2-year public) Northern Virginia Community College, 
Annandale (2-year public) Old Dominion University, Norfolk (4-year 
public) Tidewater Community College, Norfolk (2-year public) Applied 
Career Training, Arlington (Proprietary) Stratford University, Falls 
Church (Proprietary).

Source: GAO.

[End of table]

Cost Estimation Methodology:

Pell Grant Analysis:

The following steps were taken to estimate the additional federal 
budget costs associated with permitting degree-seeking students 
enrolled less than halftime to include room, board, and miscellaneous 
personal expenses in calculating their cost of attendance (alternative 
COA) for the purpose of receiving a Pell Grant.

Using the 1999-2000 National Postsecondary Student Aid Study, we 
estimated a Pell Grant for all students in the sample who were less-
than-halftime students seeking a certificate or undergraduate degree. 
We estimated Pell Grant awards under the current law, and under an 
alternative COA for the 1999-2000 school year. The estimated total 
federal costs under current law and the alternative COA were calculated 
by summing the estimated individual grants. The federal cost associated 
with changing the Pell Grant policy was calculated as the difference 
between the estimated federal cost under current law and the estimated 
federal cost under the alternative COA. Federal costs for school year 
1999-2000 were projected to school year 2003-04 by assuming that the 
ratio of these estimated federal costs to the total cost of the Pell 
grant program in school year 2003-04 were the same as in school year 
1999-2000. To estimate the average Pell grant in school year 2003-04, 
we projected the estimated number of Pell grant recipients in school 
year 1999-2000 who are less than halftime students seeking a 
certificate or undergraduate degree to school year 2003-04. We did this 
by assuming that the proportion of this estimated number of recipients 
to the total number of recipients in school year 1999-2000 equals this 
proportion in school year 2003-04. The average Pell Grant in school 
year 2003-04 equals the estimated federal cost in school year 2003-04 
divided by the estimated number of recipients in school year 2003-04. 
Federal costs other than the amounts of the Pell Grants were not 
considered in our analysis.

Our estimate of students' Pell Grant awards is based upon the federal 
needs analysis methodology for calculating the Pell Grant and the 
Regular Disbursement Schedule for Determining Less than Halftime Awards 
(FSA Handbook 1999-2000, Pell Reference).[Footnote 29] If the student 
did not apply for financial aid, or the institution they attended did 
not have any Pell recipients in 1999-2000, we assumed that the 
student's estimated Pell Grant to be $0. The same steps were taken in 
estimating a student's Pell Grant under the alternative COA except that 
the Pell cost of attendance was estimated to include room and board and 
personal expenses. To receive a Pell Grant under the alternative COA, 
the individual must have applied for financial aid. Inherent in this 
assumption is that an alternative Pell cost of attendance will not 
affect students' decisions to apply for financial aid.

Stafford Loan Analysis:

We undertook the following analysis to estimate the federal subsidy 
cost of allowing degree-seeking students who enroll less than halftime 
to be eligible for subsidized and unsubsidized Stafford loans.

Using the 1999-2000 National Postsecondary Student Aid Study, we 
estimated the Stafford subsidized and unsubsidized loans for all 
students in the sample who were less-than-halftime students seeking a 
certificate or undergraduate degree would receive if the law were 
changed to allow less than halftime students to receive these loans. 
The total loan volumes summed and weighted over all students by FFELP/
FDLP, school type, and class year were projected from school year 1999-
2000 to school year 2003-04 by assuming that the proportion of this 
estimated loan volume to the total loan volume in fiscal year 1999-2000 
would equal the proportion of the estimated loan volume in school year 
2003-04 to the total loan volume in FY 2003-04. The federal cost of 
this policy change equals the projected loan volume times the 
applicable subsidy rate in 2003-04, summed over FFELP/FDLP, school 
type, and class year.[Footnote 30] Federal costs other than the subsidy 
costs of the loans were not considered.

To estimate the average loan awards in school year 2003-04, we 
projected the estimated number of Stafford subsidized and unsubsidized 
recipients in school year 1999-2000 who are less than halftime students 
seeking a certificate or undergraduate degree to school year 2003-04. 
We did this by assuming that the proportion of this estimated number of 
recipients to the total number of recipients in fiscal year 1999-2000 
would equal the proportion of recipients in school year 2003-04 to the 
total number of recipients in fiscal year 2003-04. The average loan 
award in school year 2003-04 equals the estimated loan volume in school 
year 2003-04 divided by the estimated number of recipients in school 
year 2003-04.

Our estimate of students' subsidized loan awards is based upon the 
federal needs analysis methodology for subsidized Stafford loans. For 
each student we estimated a cost of attendance (minus room and board 
and personal expenses) for the period enrolled in school (loan COA). We 
calculated and prorated the expected family contribution for the number 
of months the student attended school. We also calculated each 
student's estimated financial assistance, adding federal, state, 
private, and institutional aid. The estimated subsidized loan award was 
calculated as the loan COA, minus the prorated expected family 
contribution and estimated financial assistance. Estimated subsidized 
loans, if above the loan limit level, were set at the maximum amount 
allowed by law. For the students attending institutions for which no 
Stafford loan recipients were reported, we assumed that estimated 
subsidized loan was $0.

For each student in the NPSAS sample, we also estimated an unsubsidized 
award. This amount was calculated as the prorated expected family 
contribution plus unmet need. Unmet need was estimated to be the loan 
COA, minus prorated expected family contribution and federal, state, 
private, and institutional aid. If the estimated unsubsidized award was 
greater than the loan limit minus the estimated subsidized award, we 
replaced the estimated unsubsidized award with the loan limit minus the 
estimated subsidized award. For the students attending institutions for 
which no Stafford loan recipients were reported, we assumed that 
estimated unsubsidized loans was $0.

All students were assumed to borrow the Stafford loan amounts for which 
they qualify. Inherent in this assumption is that all students who are 
eligible will apply for Stafford loans.

Education officials provided information on federal subsidy rates for 
Stafford loans, budget estimates for the Pell Grant program, and 
reviewed our estimation methodology.

[End of section]

Appendix II: Estimates and Associated Confidence Intervals:

Tables 7-31 contain the sample-based estimates and associated 
confidence intervals for our reported results.

Table 7: Age of All Undergraduate Students, 1999-2000:

24 and older (adult); Percent: 42.87; Lower and upper bounds of 95 
percent confidence interval: 42.17-43.58.

23 and under (non-adult); Percent: 57.13; Lower and upper bounds of 95 
percent confidence interval: 56.42-57.83.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 8: Age of All Adult Undergraduate Students, 1999-2000:

24-30; Percent: 43.29; Lower and upper bounds of 95 percent confidence 
interval: 42.13-44.45.

31-40; Percent: 30.80; Lower and upper bounds of 95 percent confidence 
interval: 29.70-31.90.

41 and older; Percent: 25.91; Lower and upper bounds of 95 percent 
confidence interval: 24.86-26.97.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 9: Differences Between Students 18-23 and Adult Students (24 or 
older) 1999-2000:

Work fulltime; Adult students: 59.33; Lower and upper bounds of 95 
percent confidence interval: 58.18-60.48; Non-adult students: 24.12; 
Lower and upper bounds of 95 percent confidence interval: 23.26-24.98.

Married; Adult students: 49.68; Lower and upper bounds of 95 percent 
confidence interval: 48.51-50.86; Non-adult students: 4.53; Lower and 
upper bounds of 95 percent confidence interval: 4.14-4.94.

Have dependents; Adult students: 54.96; Lower and upper bounds of 95 
percent confidence interval: 53.76-56.15; Non-adult students: 7.87; 
Lower and upper bounds of 95 percent confidence interval: 7.33-8.43.

GED/no diploma; Adult students: 9.36; Lower and upper bounds of 95 
percent confidence interval: 8.66-10.09; Non-adult students: 3.60; 
Lower and upper bounds of 95 percent confidence interval: 3.21-4.02.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 10: Type of Institution Attended by Adult Students, 1999-2000:

Public 4-year; Percent: 22.44; Lower and upper bounds of 95 percent 
confidence interval: 21.78-23.10.

Private 4-year; Percent: 10.33; Lower and upper bounds of 95 percent 
confidence interval: 9.90-10.75.

Public 2 year; Percent: 55.51; Lower and upper bounds of 95 percent 
confidence interval: 54.62-56.40.

Private-for profit; Percent: 6.47; Lower and upper bounds of 95 percent 
confidence interval: 6.18-6.77.

Multiple institutions; Percent: 5.26; Lower and upper bounds of 95 
percent confidence interval: 4.90-5.64.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 11: Type of Degree Sought by Adult Undergraduates, 1999-2000:

Certificate; Percent: 13.77; Lower and upper bounds of 95 percent 
confidence interval: 13.01-14.52.

Associate; Percent: 39.80; Lower and upper bounds of 95 percent 
confidence interval: 38.69-40.92.

Bachelor; Percent: 27.97; Lower and upper bounds of 95 percent 
confidence interval: 27.21-28.68.

No degree; Percent: 6.97; Lower and upper bounds of 95 percent 
confidence interval: 6.32-7.67.

Transition; Percent: 11.52; Lower and upper bounds of 95 percent 
confidence interval: 10.77-12.26.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 12: Amount of Assistance Received by All Adult Students, 1999-
2000:

Federal title IV grants; Total dollars: $3,320,761,399; Lower and upper 
bounds of 95 percent confidence interval: $3,174,289,967-
$3,467,232,830.

Federal title IV loans; Total dollars: $8,526,918,039; Lower and upper 
bounds of 95 percent confidence interval: $8,181,580,018-
$8,872,256,059.

Employer assistance; Total dollars: $1,280,758,192; Lower and upper 
bounds of 95 percent confidence interval: $1,188,008,227-
$1,373,508,157.

State aid; Total dollars: $975,120,393; Lower and upper bounds of 95 
percent confidence interval: $900,963,408-$1,049,277,377.

Institutional aid; Total dollars: $940,596,062; Lower and upper bounds 
of 95 percent confidence interval: $855,535,763-$1,025,656,360.

Veterans assistance; Total dollars: $1,036,349,868; Lower and upper 
bounds of 95 percent confidence interval: $902,790,140-$1,169,909,595.

WIA; Total dollars: $274,756,812; Lower and upper bounds of 95 percent 
confidence interval: $221,029,425-$328,484,198.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 13: Enrollment Intensity among Adult Undergraduates, 1999-2000:

Less than halftime; Percent: 33.16; Lower and upper bounds of 95 
percent confidence interval: 32.01-34.30.

Halftime; Percent: 25.98; Lower and upper bounds of 95 percent 
confidence interval: 24.90-26.99.

Fulltime; Percent: 30.48; Lower and upper bounds of 95 percent 
confidence interval: 29.54-31.42.

Mixed; Percent: 9.90; Lower and upper bounds of 95 percent confidence 
interval: 9.22-10.60.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 14: Differences between Less Than Halftime, Halftime, and 
Fulltime Adult Students:

(Continued From Previous Page)

Median age; Less-than-halftime adult students: 37; Lower and upper 
bounds of 95 percent confidence interval: 36-38; One-half or three-
quarter-time adult students: 32; Lower and upper bounds of 95 percent 
confidence interval: 31-32; Fulltime adult students: 28.00; Lower and 
upper bounds of 95 percent confidence interval: 28.00-29.00.

Percent working fulltime; Less-than-halftime adult students: 77.22; 
Lower and upper bounds of 95 percent confidence interval: 75.25-79.19; 
One-half or three-quarter-time adult students: 69.52; Lower and upper 
bounds of 95 percent confidence interval: 67.31-71.72; Fulltime adult 
students: 33.76; Lower and upper bounds of 95 percent confidence 
interval: 32.05-35.48.

Median household income (dollars); Less-than-halftime adult students: 
42,000; Lower and upper bounds of 95 percent confidence interval: 
41,000-45,000; One-half or three-quarter-time adult students: 31,000; 
Lower and upper bounds of 95 percent confidence interval: 30,000-
33,000; Fulltime adult students: 18,000; Lower and upper bounds of 95 
percent confidence interval: 17,000-19,000.

Percent married; Less-than-halftime adult students: 57.42; Lower and 
upper bounds of 95 percent confidence interval: 55.12-59.72; One-half 
or three-quarter-time adult students: 50.23; Lower and upper bounds of 
95 percent confidence interval: 47.86-52.61; Fulltime adult students: 
42.10; Lower and upper bounds of 95 percent confidence interval: 40.33-
43.86.

Percent With dependent; Less-than-halftime adult students: 57.34; Lower 
and upper bounds of 95 percent confidence interval: 54.98-59.69; One-
half or three-quarter-time adult students: 56.95; Lower and upper 
bounds of 95 percent confidence interval: 54.55-59.34; Fulltime adult 
students: 52.04; Lower and upper bounds of 95 percent confidence 
interval: 50.21-53.86.

Percent at 2-year institution; Less-than-halftime adult students: 
73.43; Lower and upper bounds of 95 percent confidence interval: 71.89-
74.97; One-half or three-quarter-time adult students: 57.61; Lower and 
upper bounds of 95 percent confidence interval: 55.53-59.69; Fulltime 
adult students: 35.37; Lower and upper bounds of 95 percent confidence 
interval: 33.57-37.17.

Source: GAO calculations based upon NPSAS 1999-2000 data.


[End of table]

Table 15: Type of Institution At Which Adult Students Enrolled, 1999-
2000:

Public 4-year; Less-than-halftime adult students: 14.81; Lower and 
upper bounds of 95 percent confidence interval: 13.66-15.96; Halftime 
adult students: 23.03; Lower and upper bounds of 95 percent confidence 
interval: 21.43-24.62; Full-time adult students: 28.71; Lower and upper 
bounds of 95 percent confidence interval: 27.34-30.07.

Private 4-year; Less-than-halftime adult students: 7.24; Lower and 
upper bounds of 95 percent confidence interval: 6.47-8.07; Halftime 
adult students: 10.38; Lower and upper bounds of 95 percent confidence 
interval: 9.36-11.46; Full-time adult students: 13.36; Lower and upper 
bounds of 95 percent confidence interval: 12.45-14.26.

Public 2 year; Less-than-halftime adult students: 73.43; Lower and 
upper bounds of 95 percent confidence interval: 71.89-74.97; Halftime 
adult students: 57.61; Lower and upper bounds of 95 percent confidence 
interval: 55.53-59.69; Full-time adult students: 35.37; Lower and upper 
bounds of 95 percent confidence interval: 33.57-37.17.

Private-for profit; Less-than-halftime adult students: 1.01; Lower and 
upper bounds of 95 percent confidence interval: 0.80-1.26; Halftime 
adult students: 3.37; Lower and upper bounds of 95 percent confidence 
interval: 2.89-3.90; Full-time adult students: 16.09; Lower and upper 
bounds of 95 percent confidence interval: 15.18-17.01.

Multiple institutions; Less-than-halftime adult students: 3.51; Lower 
and upper bounds of 95 percent confidence interval: 2.95-4.14; Halftime 
adult students: 5.62; Lower and upper bounds of 95 percent confidence 
interval: 4.88-6.44; Full-time adult students: 6.47; Lower and upper 
bounds of 95 percent confidence interval: 5.81-7.19.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 16: Estimated Costs for Less Than Halftime Adult Students, 1999-
2000:

Total costs; Total dollars (mean): $1058.47; Lower and upper bounds of 
95 percent confidence interval: $997.02-$1119.93.

Tuition; Total dollars (mean): $480.19; Lower and upper bounds of 95 
percent confidence interval: $455.74-$504.65.

Books; Total dollars (mean): $225.17; Lower and upper bounds of 95 
percent confidence interval: $208.41-$241.92.

Other; Total dollars (mean): $227.10; Lower and upper bounds of 95 
percent confidence interval: $198.20-$256.01.

Child care; Total dollars (mean): $147.90; Lower and upper bounds of 95 
percent confidence interval: $107.80-$188.01.

Transportation; Total dollars (mean): $885.43; Lower and upper bounds 
of 95 percent confidence interval: $757.37-$1013.49.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 17: Percent of Costs Covered by All Sources of Assistance, 1999-
2000:

At or below 150 percent of the poverty guideline; Percent of costs 
covered by assistance, all sources: 42.93; Lower and upper bounds of 95 
percent confidence interval: 28.66-57.20.

Above 150 percent of the poverty guideline; Percent of costs covered by 
assistance, all sources: 43.04; Lower and upper bounds of 95 percent 
confidence interval: 37.57-48.51.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 18: Mean Assistance Received by Less Than Halftime Students, 
1999-2000:

Total aid; Mean amount: $462.12; Lower and upper bounds of 95 percent 
confidence interval: $411.53-512.71.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 19: Mean Amount of Assistance Received by Less Than Halftime 
Students, By Source, 1999-2000:

Pell; Mean Amount: $465.01; Lower and upper bounds of 95 percent 
confidence interval: $433.45-496.58.

State aid; Mean Amount: $474.72; Lower and upper bounds of 95 percent 
confidence interval: $330.01-619.43.

Employer aid; Mean Amount: $784.09; Lower and upper bounds of 95 
percent confidence interval: $695.50-872.68.

Lifetime Learning tax credit; Mean Amount: $73.79; Lower and upper 
bounds of 95 percent confidence interval: $67.97-79.61.

Institutional aid; Mean Amount: $631.77; Lower and upper bounds of 95 
percent confidence interval: $478.45-785.10.

Other Aid; Mean Amount: $1251.83; Lower and upper bounds of 95 percent 
confidence interval: $802.00-1701.66.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 20: Type of Aid Received by Less Than Halftime Students, 1999-
2000:

Pell; Percent: 3.20; Lower and upper bounds of 95 percent confidence 
interval: 2.49-4.04.

State aid; Percent: 1.73; Lower and upper bounds of 95 percent 
confidence interval: 1.13-2.54.

Employer aid; Percent: 23.08; Lower and upper bounds of 95 percent 
confidence interval: 21.20-24.95.

Lifetime Learning tax credit; Percent: 46.45; Lower and upper bounds of 
95 percent confidence interval: 44.13-48.77.

Institutional aid; Percent: 3.67; Lower and upper bounds of 95 percent 
confidence interval: 2.86-4.64.

Vocational aid; Percent: 0.37; Lower and upper bounds of 95 percent 
confidence interval: 0.13-0.84.

Other aid; Percent: 5.06; Lower and upper bounds of 95 percent 
confidence interval: 4.08-6.20.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 21: Percent Receiving Pell Grants, by Income, 1999-2000:

At or below 150 percent of the poverty guideline; Percent Received Pell 
Grant: 13.74; Lower and upper bounds of 95 percent confidence interval: 
9.94-18.32.

Above 150 percent of the poverty guideline; Percent Received Pell 
Grant: 1.41; Lower and upper bounds of 95 percent confidence interval: 
0.81-2.27.

Total; Percent Received Pell Grant: 3.20; Lower and upper bounds of 95 
percent confidence interval: 2.49-4.04.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 22: Percent Receiving State Aid, by Income, 1999-2000:

At or below 150 percent of the poverty guideline; Percent received 
state aid: 4.27; Lower and upper bounds of 95 percent confidence 
interval: 0.00-43.07.

Above 150 percent of the poverty guideline; Percent received state aid: 
1.30; Lower and upper bounds of 95 percent confidence interval: 0.72-
2.16.

Total; Percent received state aid: 1.73; Lower and upper bounds of 95 
percent confidence interval: 1.13-2.54.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 23: Percent Receiving Employer Aid, by Income, 1999-2000:

At or below 150 percent of the poverty guideline; Percent received 
employer aid: 9.43; Lower and upper bounds of 95 percent confidence 
interval: 0.04-53.11.

Above 150 percent of the poverty guideline; Percent received employer 
aid: 25.40; Lower and upper bounds of 95 percent confidence interval: 
23.30-27.49.

Total; Percent received employer aid: 23.08; Lower and upper bounds 
of 95 percent confidence interval: 21.20-24.95.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 24: Percent Receiving Lifetime Learning Tax Credit, By Income, 
1999-2000:

At or below 150 percent of the poverty guideline; Percent received 
Lifetime Learning tax credit: 29.38; Lower and upper bounds of 95 
percent confidence interval: 22.74-36.72.

Above 150 percent of the poverty guideline; Percent received Lifetime 
Learning tax credit: 49.35; Lower and upper bounds of 95 percent 
confidence interval: 46.85-51.86.

Total; Percent received Lifetime Learning tax credit: 46.45; Lower 
and upper bounds of 95 percent confidence interval: 44.13-48.77.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 25: Percent Receiving Institutional Aid, by Income, 1999-2000:

At or below 150 percent of the poverty guideline; Percent received 
institutional aid: 7.11; Lower and upper bounds of 95 percent 
confidence interval: 0.00-51.59.

Above 150 percent of the poverty guideline; Percent received 
institutional aid: 3.09; Lower and upper bounds of 95 percent 
confidence interval: 2.30-4.05.

Total; Percent received institutional aid: 3.67; Lower and upper 
bounds of 95 percent confidence interval: 2.86-4.64.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 26: Percent Receiving Other Aid, by Income, 1999-2000:

At or below 150 percent of the poverty guideline; Percent received 
other aid: 6.03; Lower and upper bounds of 95 percent confidence 
interval: 1.70-14.61.

Above 150 percent of the poverty guideline; Percent received other 
aid: 4.90; Lower and upper bounds of 95 percent confidence interval: 
3.83-6.16.

Total; Percent received other aid: 5.06; Lower and upper bounds of 95 
percent confidence interval: 4.08-6.20.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 27: Percent of Less Than Halftime Adults below 150 Percent of 
1998 Federal Poverty Guideline, 1999-2000:

Less-than-halftime adults; Percent at or below 150 percent of the 
poverty guideline: 14.52; Lower and upper bounds of 95 percent 
confidence interval: 12.90-16.26; Percent above 150 percent of the 
poverty guideline: 85.48; Lower and upper bounds of 95 percent 
confidence interval: 83.84-87.12.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 28: Type of Aid Received by Less Than Halftime Students, by 
Income, 1999-2000:

Pell; Percent at or below 150 percent of the poverty guideline: 13.74; 
Lower and upper bounds of 95 percent confidence interval: 9.94-18.32; 
Percent above 150 percent of the poverty guideline: 1.41; Lower and 
upper bounds of 95 percent confidence interval: 0.81-2.27.

State aid; Percent at or below 150 percent of the poverty guideline: 
4.27; Lower and upper bounds of 95 percent confidence interval: 0.00-
43.07; Percent above 150 percent of the poverty guideline: 1.30; Lower 
and upper bounds of 95 percent confidence interval: 0.72-2.16.

Employer aid; Percent at or below 150 percent of the poverty guideline: 
9.43; Lower and upper bounds of 95 percent confidence interval: 0.04-
53.11; Percent above 150 percent of the poverty guideline: 25.40; Lower 
and upper bounds of 95 percent confidence interval: 23.30-27.49.

Lifetime Learning tax credit; Percent at or below 150 percent of the 
poverty guideline: 29.38; Lower and upper bounds of 95 percent 
confidence interval: 22.74-36.72; Percent above 150 percent of the 
poverty guideline: 49.35; Lower and upper bounds of 95 percent 
confidence interval: 46.85-51.86.

Institutional aid; Percent at or below 150 percent of the poverty 
guideline: 7.11; Lower and upper bounds of 95 percent confidence 
interval: 0.00-51.59; Percent above 150 percent of the poverty 
guideline: 3.09; Lower and upper bounds of 95 percent confidence 
interval: 2.30-4.05.

Other aid; Percent at or below 150 percent of the poverty guideline: 
6.03; Lower and upper bounds of 95 percent confidence interval: 1.70-
14.61; Percent above 150 percent of the poverty guideline: 4.90; Lower 
and upper bounds of 95 percent confidence interval: 3.83-6.16.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 29: Average Costs and Amount of Aid Received by Less Than Half-
time Students, by Income, 1999-2000:

Average costs; Amount for students at or below 150 percent of the 
poverty guideline: $1120.84; Lower and upper bounds of 95 percent 
confidence interval: $940.32-$1301.37; Amount for students above 150 
percent of the poverty guideline: $1047.88; Lower and upper bounds of 
95 percent confidence interval: $982.68-$1113.08.

Total Aid; Amount for students at or below 150 percent of the poverty 
guideline: $478.32; Lower and upper bounds of 95 percent confidence 
interval: $336.31-$620.33; Amount for students above 150 percent of the 
poverty guideline: $459.90; Lower and upper bounds of 95 percent 
confidence interval: $405.72-$514.08.

Pell; Amount for students at or below 150 percent of the poverty 
guideline: $471.97; Lower and upper bounds of 95 percent confidence 
interval: $428.69-$515.24; Amount for students above 150 percent of the 
poverty guideline: $453.49; Lower and upper bounds of 95 percent 
confidence interval: $409.99-$497.00.

State aid; Amount for students at or below 150 percent of the poverty 
guideline: $582.93; Lower and upper bounds of 95 percent confidence 
interval: $262.14-$903.72; Amount for students above 150 percent of the 
poverty guideline: $414.40; Lower and upper bounds of 95 percent 
confidence interval: $285.94-$542.85.

Employer assistance; Amount for students at or below 150 percent of the 
poverty guideline: $789.82; Lower and upper bounds of 95 percent 
confidence interval: $185.48-$1394.16; Amount for students above 150 
percent of the poverty guideline: $783.73; Lower and upper bounds of 95 
percent confidence interval: $697.51-$869.95.

Lifetime Learning tax credit; Amount for students at or below 150 
percent of the poverty guideline: $67.99; Lower and upper bounds of 95 
percent confidence interval: $51.91-$84.06; Amount for students above 
150 percent of the poverty guideline: $74.38; Lower and upper bounds of 
95 percent confidence interval: $68.16-$80.60.

Institutional aid; Amount for students at or below 150 percent of the 
poverty guideline: $336.53; Lower and upper bounds of 95 percent 
confidence interval: $193.93-$479.14; Amount for students above 150 
percent of the poverty guideline: $747.19; Lower and upper bounds of 95 
percent confidence interval: $546.71-$947.66.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 30: Grade Point Average of Adult Undergraduates, 1999-2000:

Less-Than-Halftime Adult; Percent with GPA of C or lower: 17.11; 
Lower and upper bounds of 95 percent confidence interval: 15.37-18.97.

All Other adult Students; Percent with GPA of C or lower: 10.22; 
Lower and upper bounds of 95 percent confidence interval: 9.41-11.04.

Source: GAO calculations based upon NPSAS 1999-2000 data.

[End of table]

Table 31: Degree Or Certificate Expectation Among Adults Who Enrolled 
Less Than Halftime During First Year:

Expect to earn certificate or degree; Percent: 75.25; Lower and upper 
bounds of 95 percent confidence interval: 66.23-84.27.

Do not expect to earn certificate or degree; Percent: 24.75; Lower 
and upper bounds of 95 percent confidence interval: 15.73-33.77.

Source: GAO calculations based upon BPS 2001 data.

[End of table]

Table 32: National 6-Year Completion Rate Among Adult Undergraduates 
With A Degree Or Certificate Expectation:

Enrolled in first year as less-than-halftime student; Percent who did 
not receive a degree or certificate and are no longer enrolled: 66.39; 
Lower and upper bounds of 95 percent confidence interval: 54.77-78.01.

Source: GAO calculations based upon BPS 2001 data.

[End of table]

Table 33: Household Income Distribution of Adult Students, 1999-2000:

$0-9,999; Less Than Halftime: Percent: 6.78; Less Than Halftime: Lower 
and upper bounds of 95 percent confidence interval: 5.61-8.10; 
Halftime or More: Percent: 20.4; Halftime or More: Lower and upper 
bounds of 95 percent confidence interval: 19.36-21.44.

$10-$19,999; Less Than Halftime: Percent: 10.69; Less Than Halftime: 
Lower and upper bounds of 95 percent confidence interval: 9.27-12.26; 
Halftime or More: Percent: 22.68; Halftime or More: Lower and 
upper bounds of 95 percent confidence interval: 21.54-23.82.

$20-$29,999; Less Than Halftime: Percent: 15.09; Less Than Halftime: 
Lower and upper bounds of 95 percent confidence interval: 13.41-16.89; 
Halftime or More: Percent: 17.86; Halftime or More: Lower and 
upper bounds of 95 percent confidence interval: 16.80-18.92.

$30-$39,999; Less Than Halftime: Percent: 15.93; Less Than Halftime: 
Lower and upper bounds of 95 percent confidence interval: 14.22-17.76; 
Halftime or More: Percent: 11.48; Halftime or More: Lower and 
upper bounds of 95 percent confidence interval: 10.60-12.36.

$40-$49,999; Less Than Halftime: Percent: 11.13; Less Than Halftime: 
Lower and upper bounds of 95 percent confidence interval: 9.70-12.68; 
Halftime or More: Percent: 8.2; Halftime or More: Lower and 
upper bounds of 95 percent confidence interval: 7.44-8.96.

$50-$59,999; Less Than Halftime: Percent: 11.13; Less Than Halftime: 
Lower and upper bounds of 95 percent confidence interval: 9.72-12.68; 
Halftime or More: Percent: 5.59; Halftime or More: Lower and 
upper bounds of 95 percent confidence interval: 4.96-6.22.

$60-$69,999; Less Than Halftime: Percent: 9.29; Less Than Halftime: 
Lower and upper bounds of 95 percent confidence interval: 7.96-10.76; 
Halftime or More: Percent: 4.57; Halftime or More: Lower and 
upper bounds of 95 percent confidence interval: 4.02-5.12.

$70-$79,999; Less Than Halftime: Percent: 5.90; Less Than Halftime: 
Lower and upper bounds of 95 percent confidence interval: 4.79-7.16; 
Halftime or More: Percent: 3.28; Halftime or More: Lower and 
upper bounds of 95 percent confidence interval: 2.79-3.77.

$80,000 and above; Less Than Halftime: Percent: 14.07; Less Than 
Halftime: Lower and upper bounds of 95 percent confidence interval: 
12.52-15.73; Halftime or More: Percent: 5.95; Halftime or 
More: Lower and upper bounds of 95 percent confidence interval: 5.30-
6.60.

Source: GAO calculations based upon NPSAS 1999-2000 data.


[End of table]

[End of section]

Appendix III: Budgetary Impact of Possible Behavioral Response to Cost 
of Attendance Changes in the Pell Program:

The policy change in the Pell Grant Program we considered was changing 
the cost of attendance calculation for less-than-halftime students so 
that it does not exclude room, board and personal expenses. This policy 
change would increase the number of people who are qualified to receive 
an award, and it would increase the size of the award for those who are 
already qualified to receive an award under current law.

This policy change may cause people to change their postsecondary 
enrollment behavior. Specifically, some people who are not enrolled in 
postsecondary education may choose to enroll less than halftime in 
response to the policy change. Students who are already enrolled less 
than halftime in postsecondary education are unlikely to change their 
enrollment in response to the policy change.

As Seftor and Turner[Footnote 31] note, there is no consensus within 
the economic literature on the effect of Pell Grants on enrollment. For 
example, Hansen[Footnote 32] and Kane[Footnote 33] found that Pell 
Grants have no effect on enrollment. However, they found that Pell 
Grant Program does affect the enrollment behavior of older, 
nontraditional students. Since the policy changes we consider are 
specific to less-than-halftime students and over 80 percent of less-
than-halftime students are independents, the Seftor and Turner findings 
appear to be more applicable to this analysis. Seftor and Turner 
estimated price elasticities that fall in the range of -0.34 to -0.14.

To estimate the possible behavioral response to a change in Pell Grant 
policy, we applied a price elasticity in the middle of those identified 
by Seftor and Turner (-0.24) to the less than halftime Pell award 
amounts estimated in this study.[Footnote 34] We assumed that changes 
to the Pell Grant cost of attendance methodology, if adopted, would be 
applied to the cost of attendance for both dependent and independent 
students enrolled on a less than halftime basis. Therefore, in 
calculating the possible behavioral response we applied these estimated 
Pell Grant awards and price elasticities to the population of all 
persons 18-35 who were not enrolled in school and who had not earned a 
postsecondary credential.[Footnote 35] On this basis, we estimate that 
the Pell Grant policy change will cause about 35,000 people between the 
ages of 18 and 35 who are not currently enrolled in school and who do 
not currently have an undergraduate degree to enroll less than 
halftime. This conclusion was reached based upon the following 
calculations:

* We found that the Pell Grant policy change would increase the average 
Pell Grant award from $0 to $630 for 0.63 percent (12,679/2,007,542) of 
the less-than-halftime student population, increase the average Pell 
Grant award $111 for 7.46 percent (149,731/2,007,542) of the less-than-
halftime student population, and have no effect on the Pell Grant award 
for the rest of the student population.

* Of the 33 million people aged 18-35 who are not enrolled in school 
and without a undergraduate degree, we assumed that only 18 percent of 
them would consider going to school less than halftime: the same 
proportion of the undergraduate population currently enrolled on a less 
than halftime basis. This is the population who may change their 
enrollment behavior because of the policy change.

* Of that population, we assumed that 0.63 percent of them would have 
an increase in their Pell Grant award of $630 and 7.5 percent of them 
would have an increase in their Pell Grant award of $111.

* Using the average cost of school when attending less than halftime of 
$500,[Footnote 36] this suggests that there would be an additional 
35,053 people ([33,000,000 x 0.18 x 0.0063 x 630/500 x 0.24]+ 
[33,000,000 x 0.18 x 0.075 x 111/500 x 0.24]) enrolling in school less 
than halftime in response to the policy change.

* This enrollment response would cost the federal government $9,764,063 
([33,000,000 x 0.18 x 0.0063 x 630/500 x 0.24] x $630+ [33,000,000 x 
0.18 x 0.075 x 111/500 x 0.24] x $111).

[End of section]

Appendix IV: Comments from the Department of Education:

UNITED STATES DEPARTMENT OF EDUCATION:

OFFICE OF POSTSECONDARY EDUCATION:

September 8, 2003:

THE ASSISTANT SECRETARY:

Ms. Cornelia M. Ashby Director, Education, Workforce, and Income 
Security Issues United States General Accounting Office Washington, DC 
20548:

Dear Ms. Ashby:

Secretary Paige has asked me to respond to your request for comments on 
the General Accounting Office (GAO) draft report, "Federal Student Aid: 
Expanding Eligibility for Less Than Halftime Students Could Increase 
Program Costs, But Benefits Uncertain" (GAO-03-905). This report was 
transmitted to the Department of Education by your letter of August 27, 
2003.

Thank you for the opportunity to review this draft report. My staff had 
previously shared our technical comments with your office.

Your report will complement the Department's publication, "Work First, 
Study Second: Adult Undergraduates Who Combine Employment and 
Postsecondary Enrollment," recently issued by the National Center for 
Education Statistics. It will also assist us in developing effective 
means to achieve the Department's strategic goal of enhancing the 
quality of and access to postsecondary and adult education.

We appreciate your thorough review and examination of the financial, 
and other, impediments that are often unique to adult learners as they 
pursue postsecondary education and training opportunities. We 
especially found useful the concerns raised by institutions of 
postsecondary education with respect to potential cohort default rate 
consequences resulting from extending student loan program eligibility 
to less than halftime students.

If you or your staff have any questions, please do not hesitate to 
contact my office.

Sincerely,

Sally L. Stroup:

Signed by Sally L. Stroup:

[End of section]

Appendix V: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Jeff Appel (202) 512-9915 Thomas Weko (202) 512-8796:

Staff Acknowledgments:

In addition to those named above, the following people made significant 
contributions to this report: Cedric Burton, Betty Clark, Cindy Decker, 
Gordon Mermin, John Mingus, Susan Conlon, and Corrina Nicolaou.

FOOTNOTES

[1] Stafford loans are offered under the Federal Family Education Loan 
Program and the William D. Ford Direct Loan Program.

[2] Issued annually by the Department of Health and Human Services, the 
poverty guidelines are a simplification of the Census Bureau's poverty 
thresholds, and they are used to determine financial eligibility for 
certain federal programs. NPSAS 2000 reports 1998 income data, since 
these served as the basis for financial aid applications in the 1999-
2000 school year, when its data were collected. The 1998 poverty 
guideline for a three-person household was $13,650.

[3] This cost estimate assumes that adults who are not enrolled in 
school will not choose to enroll in response to the policy change.

[4] A cohort default rate is the percentage of a school's borrowers who 
enter repayment status on certain Federal Family Education Loan Program 
and/or William D. Ford Federal Direct Loan Program loans during one 
federal fiscal year and default prior to the end of the next fiscal 
year. 

[5] The 1999 Adult Education Survey of the National Household Education 
Survey surveys "formal learning activity" among all civilian, 
noninstitutionalized individuals age 16 and older who were not enrolled 
in elementary or secondary school at the time of the interview.

[6] Qualitative measures include grades or work projects that are used 
against an established standard to assess academic progress. 
Quantitative measures are standards used to establish the maximum time 
frame in which students are expected to complete their academic 
programs. 

[7] Institutions may also meet this requirement by being preaccredited 
by an agency or association approved by Education to grant 
preaccreditation. Public postsecondary vocational institutions may be 
accredited by a state agency that Education recognizes to be a reliable 
authority. 

[8] Institutions may also admit home-schooled students, or individuals 
beyond the age of compulsory school attendance in the state where it is 
located.

[9] To be classified as an independent student for the purpose of 
receiving Title IV financial aid, students must meet one of the 
following criteria: (1) veteran of armed services; (2) age 24 years or 
older by December 31st of the award year; (3) married; (4) enrolled in 
a graduate or professional educational program; (5) have legal 
dependents other than a spouse; or (6) be an orphan or ward of the 
court. Financial aid administrators may also classify students as 
independent through the exercise of their professional judgment. In 
1999-2000, 87 percent of students classified as independent were 24 or 
older.

[10] These sources include, for example, vocational rehabilitation 
financial assistance, which an estimated 0.3 percent of the nation's 
adult students enrolled in postsecondary students received in 1999-
2000.

[11] National Academy Press, Knowledge Economy and Postsecondary 
Education: Report of a Workshop, 2002; National Center for Education 
Statistics, Employer Aid for Postsecondary Education, 1999.

[12] International Foundation of Employee Benefit Plans, The Many Faces 
of Employee Benefits, http://www.ifebp.org/knowledge/reedubn1.asp.

[13] For additional information concerning the credits, see U.S. 
General Accounting Office, Student Aid and Tax Benefits: Better 
Research and Guidance Will Facilitate Comparison of Effectiveness and 
Student Use, GAO-02-751 (Washington, D. C.: Sept. 13, 2002).

[14] Tax-free educational assistance includes scholarships, Pell 
Grants, employer-provided educational assistance, and veterans' 
educational assistance.

[15] Adjusted gross income is total income reduced by certain amounts, 
such as for an individual retirement account or student loan interest.

[16] These phase-out limits apply to returns filed in 2000. Under the 
Taxpayer Relief Act of 1997, these amounts are indexed to inflation. 

[17] We identified only one study examining less-than-halftime adult 
students, Illinois Student Assistance Commission Research Reports, 
Summer 2001. Others, however, examined similar student populations, 
such as working adults or part-time adult students. The findings of 
these studies point to broadly similar factors influencing adults' 
enrollment decisions. See, for example, Work First, Study Second: Adult 
Undergraduates Who Combine Employment and Postsecondary Enrollment, 
NCES, June 2003; Opening Doors: Students' Perspectives on Juggling 
Work, Family, and College, MDRC, July 2002.

[18] National Center for Education Statistics, Employer Aid for 
Postsecondary Education, 1999.

[19] University of Maryland School of Social Work, School Counts I 
Report, 2000.

[20] The federal financial aid methodology provides that dependent and 
independent students use the same cost elements in calculating their 
cost of attendance. Therefore, our analysis assumes that all less-than-
halftime students, dependent and independent, would be affected by a 
change to the cost of attendance. 

[21] For budgetary purposes, loan subsidy cost--the portion of cost 
paid by the federal government--is calculated for each loan cohort. 
Subsidy costs represent the estimated lifetime costs, excluding 
administration costs, to the federal government of FFELP and FDLP loans 
calculated on a net present value basis. Net present value is the 
future stream of benefits and costs converted into equivalent values 
today, using an appropriate discount rate. 

[22] The federal financial aid methodology provides that dependent and 
independent students use the same cost elements in calculating their 
cost of attendance. Therefore, our analysis assumes that all less-than-
halftime students, dependent and independent, would be affected by a 
change to the cost of attendance. 

[23] Stafford loans may be either subsidized or unsubsidized. If the 
loan is subsidized, the federal government pays the interest cost of 
the loan for the time a student is enrolled in school. If the loan is 
unsubsidized, the borrower is responsible for paying interest during 
the life of the loan. While called "unsubsidized," the federal 
government can still incur costs on such loans, including costs 
associated with borrowers who default on their loans and, under the 
FFELP, costs of making certain interest subsidy payments to lenders.

[24] Research on the characteristics of student loan defaulters 
indicates that current wages are inversely associated with the 
probability of default, while withdrawing from school is positively 
associated with the probability of default. Research findings are based 
on student borrowers who were enrolled halftime or more, and may not be 
applicable to a less-than-halftime borrowing population. See, for 
example, Clearing Accounts: The Causes of Student Loan Default, EdFund, 
2002; State of Student Aid in Texas, TG Research and Analytical 
Services, April 2003.

[25] Higher Education: Ensuring Quality Education From Proprietary 
Institutions, GAO/T-HEHS-96-158.

[26] There is not a consensus among those who study the economic 
returns to education or training whether the completion of a credential 
results in additional economic gains to students. See, for example, 
Labor Market Returns to Two-and Four-Year College: Is a Credit Really a 
Credit and Do Degrees Matter? Kane, T.J., and Rouse, C.E. (1993); 
Credits and Attainment: Returns to Postsecondary Education Ten Years 
After High School, NCES, 2001-168.

[27] Additional details of the methodology are described in appendix I 
of U.S. General Accounting Office, Student Aid and Tax Benefits: Better 
Research and Guidance Will Facilitate Comparison of Effectiveness and 
Student Use, GAO-02-751, Washington, D.C.: Sept. 13, 2002.

[28] Two-year tuition and fees were selected because nearly three out 
of four less-than-halftime adult students are enrolled at public 2-year 
institutions.

[29] The estimated cost of attendance and the expected family 
contribution were rounded to the middle of the ranges reported in the 
Disbursement Schedule.

[30] Subsidy rates represent the federal portion of non-administrative 
costs--principally interest subsidies and defaults--associated with 
each borrowed dollar over the life of the loan. Subsidy rates are 
estimated by Education for FFELP and FDLP by loan type (subsidized and 
unsubsidized), borrower characteristics (class year), and by 
institution attended (2 year, 4 year, and proprietary). While called 
"unsubsidized," the federal government can still incur costs on such 
loans, including costs associated with borrowers who default on their 
loans and, under the FFELP, costs of making certain interest subsidy 
payments to lenders. 

[31] Neil S. Seftor and Sarah E. Turner, "Back to School: Federal 
Student Aid Policy and Adult College Enrollment." The Journal of Human 
Resources 37 (2002): 336-352.

[32] W. Lee Hansen, "Impact of Student Financial Aid Access." In The 
Crisis in Higher Education, ed. Joseph Fromkin, 1983. New York: Academy 
of Sciences. 

[33] Thomas J. Kane, "College Entry by Blacks Since 1970: The Role of 
College Costs, Family Background, and the Returns to Education." 
Journal of Political Economy, 102(5), 1994; "Rising Public College 
Tuition and College Entry: How Well Do Public Subsidies Promote Access 
to College?" NBER Working Paper 5164, 1995.

[34] A price elasticity of -0.24 implies that a 1% decrease in college 
costs would increase enrollment by 0.24%

[35] Estimates of the size of this population were obtained from the 
National Household Education Surveys Program, Adult Education and 
Lifelong Learning Survey, 2001. Adults older than 35 were not included 
in the population, since they were assumed to be significantly less 
likely to enroll in response to changes in grant assistance.

[36] To be consistent with the Turner and Seftor methodology, we 
assumed that students attended 4-year colleges, and we included only 
tuition and fees in the definition of cost.

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