State College Aid

State aid represents nine percent of the college money awarded in this country. Almost every state education agency has at least one grant or scholarship program available to residents and many have a long list of state aid possibilities, which can create confusion for families.

While there are some exceptions, eligibility for these state programs is usually restricted to state residents attending college within their states. Some state programs are centralized which means the awards are set by formulas on the state level. States that use this system include California, New York and South Carolina.

Other states have a decentralized program – the governments set basic eligibility criteria but they provide the funding to the schools that exercise some discretion when making awards. States in this category include Colorado, Texas and Virginia.

You can find links to the aid programs that are available in the 50 states by visiting the website of the National Association of Student Financial Aid Administrators.

An easy way to begin getting familiar with state aid practices is to look at a comprehensive report that the Brookings Institute released  called Beyond Need and Merit: Strengthening State Grant Programs. After examining the aid practices in the 50 states and the District of Columbia, the institute concluded that 73% of state grants went to students who required financial assistance.

Some states, however, are dispensing most or all of their aid based on such factors as grade point averages and standardized test scores. Most of the states that award the majority of their aid by merit are located in the South and these programs often benefit affluent students.

States Providing Least Aid to Financially Needy

Here are the states, according to the report, that provide the smallest percentage of their government college grants based on financial need:

  • Georgia 0%
  • South Dakota 5%
  • District of Columbia 6%
  • Mississippi 14%
  • Louisiana 16%
  • South Carolina 19%
  • Tennessee 23%
  • Florida 26%
  • Idaho 30%
  • New Mexico 30%
  • West Virginia 44%

Of course, you can flip the above percentages to see which states devote the highest percentage of their awards to students who are often better off financially.  In Louisiana, for instance, 35% of students, who captured 45% of all the state grant money, had median household incomes of $80,000 compared with the statewide median income of $45,433.

Students who qualify for these state-based merit scholarships won’t necessarily hold onto them. According to the Brookings report, about two-thirds of merit scholarship recipients in Georgia and 40% in Kentucky lose their scholarships after the first year because they don’t maintain the necessary grade point averages.

States Providing Most Aid to Financially Needy

Families with low and moderate-incomes are more likely to benefit if they live in states where all or the majority of state money is based on the financial need of the household. With the exception of Texas, the states that devote all or nearly all of their aid to those who have demonstrated financial need are above the Mason-Dixon line.

Here are the 22 states that allocate at least 95% of state aid to those who require financial assistance:

  • Alaska
  • California
  • Colorado
  • Connecticut
  • Delaware
  • Illinois
  • Indiana
  • Kansas
  • Maine
  • Maryland
  • Michigan
  • Minnesota
  • Nebraska
  • New Hampshire
  • New York
  • Oregon
  • Pennsylvania
  • Texas
  • Vermont
  • Washington
  • Wisconsin
  • Wyoming

State Map of Financial Aid

Look at this Brookings Institute map to get a bird’s eye view of which states devote most of their money to need-based aid (darkest blue) versus merit aid.


 With this link, you’ll access the map and be able to see information on grant programs by clicking on any individual state. Here is the snapshot of California’s programs:

Not Enough State Money

The percentage of state money that goes to students who need a helping hand doesn’t tell the full story.

For instance, Texas only funds a fraction of the students who are eligible for TEXAS Grants because of limited funds. Other states, such as Illinois, Kentucky, North Carolina and Oregon, also limit access to their money by dispensing money on a first-come, first-served basis. If you hope to receive merit or need-based state grants find out what the application requirements are and apply at the earliest possible date.

Minnesota, New York and Pennsylvania are rare examples of states with large need-based grant programs that fund all eligible students.

Here’s another reality: in some states that devote their funds to needy students, the average grant is very low. Alaska and New Hampshire fall into that category. New Hampshire and Michigan are in the worst possible category: high tuition/low financial aid states. In other words, the tuition at state universities in Michigan are higher than average, but the financial awards are lower than average.

Alaska, as well as Utah, is in the low tuition and low aid category. New Jersey and South Carolina fit into the high tuition and high aid category while West Virginia and Louisiana’s policies are characterized as low tuition/high (merit) aid.

What is painfully clear is that the states aren’t doing enough to support their higher-education systems, which is making the cost of college more expensive for all students heading off to state universities.

Cutting Costs Through Education Compacts

One way to cut costs is to look for reciprocal agreements that lower the price for eligible students interested in attending public universities beyond their state borders.

 You might be able to capture a discounted price or in-state tuition if your state maintains a reciprocal agreement with its neighbors. States commonly maintain reciprocal agreements with public colleges and universities in other states. Some of these compacts are large and involve many states in a region, while others are quite small.

Some compacts can involve just a couple of states or counties within states.  Ohio, Kentucky and Indiana, for instance, maintain a reciprocal agreement with each other, as does Minnesota and North Dakota. The University of Minnesota maintains reciprocal agreements with North and South Dakota, Wisconsin and the Canadian province of Manitoba.

Some colleges and universities will offer in-state tuition border waivers to nonresidents in specific counties. The University of Cincinnati, for instance, offers in-state tuition to students from certain counties in Kentucky and Indiana. The University of Louisville in Kentucky maintains an agreement with Indiana counties that are close to the Kentucky border. Eligible Indiana residents pay in-state tuition while attending Louisville.

Some state universities in Texas  provide border waivers to students who live within 100 miles of the Texas state line. The University of Memphis gives border waivers to students who live in certain counties in Mississippi and Arkansas. The University of Utah provides in-state tuition to students attending certain high schools in Nevada and Wyoming. To find more examples, Google border waiver and university or reciprocal agreement and university.

There are countless examples around the country of these piggyback arrangements. Schools won’t necessarily advertise these arrangements so you should ask.

Why would states cut the price for outsiders? Money is one motivator. If reciprocal agreements are in place, a state might not have to worry about offering its own students, for instance, a school of architecture, optometry or forestry. Instead of spending the money on these majors, a state can reach a deal with a neighboring state.

Reciprocal Example

That’s exactly the sort of agreement that the states of Kansas and Missouri reached many years ago. My alma mater, the University of Missouri, has a dentistry school, but the University of Kansas doesn’t. KU, however, has a School of Architecture, but Mizzou doesn’t. Consequently, Missouri architecture students can pay in-state tuition at KU and dentistry students from Kansas enjoy a lower price at Mizzou.

Regional Reciprocity Compacts

Large groups of states have also entered into regional reciprocity agreements. Keep in mind that not all state universities are involved in these compacts. In the Western Undergraduate Exchange, which includes schools from 15 states, some premiere state research universities such as the University of California campuses, University of Washington (Seattle) and University of Colorado (Boulder) don’t participate. In addition, WUE schools won’t always offer the full range of majors to outsiders receiving a discount through the program.

Getting accepted into a school in the compact doesn’t automatically mean the student will get the reduced price. In the Western Undergraduate Exchange, for instance, schools can accept students based on their GPA and test scores. And you should make it clear when your child is applying that you want the reciprocity rate. There can also be earlier deadlines for WUE acceptances.

Here are major regional compacts across the country:

Southern States

Academic Common Market

This program provides tuition discounts for more than 1,900 academic programs in Southern states.

Member states: Alabama, Arkansas, Delaware, Georgia, Florida, Kentucky, Louisiana, Maryland, Mississippi, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia.

Regional Contract Program

This program allows qualified students to pursue a health degree in fields such as dentistry, medicine, optometry, osteopathic medicine, podiatry and veterinary medicine, by paying in-state tuition at participating public universities and reduced tuition at private universities.

Members states: Arkansas, Delaware, Georgia, Kentucky, Louisiana, Mississippi, South Carolina and Tennessee.

Midwestern States

Midwest Student Exchange Program

The public institutions that participate in this compact will charge students no more than 150% of the in-state resident tuition for specific programs. Private institutions offer a 10% reduction on their tuition rates.

Member states: Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota and Wisconsin.

New England States

New England Regional Student Program

This program allows New England residents to enroll in out-of-state New England state universities with a tuition discount. Students are eligible to enroll outside their state at a reduced price if they have selected a major that is not offered by public colleges and universities in their home states. More than 700 undergraduate and graduate programs are offered through the region’s 82 public colleges and universities.

Member states: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.

Western States

Western Undergraduate Exchange

Participating state universities will provide nonresidents with a tuition rate that is no more than 150% greater than the in-state rate.

Member states: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming.

Professional Student Exchange Program

In 10 Western states, students in 10 professional healthcare fields program receive admission preference and most students will pay resident tuition at public institutions or reduced standard tuition at private schools. The fields of study are allopathic medicine, dentistry, occupational therapy, pharmacy, physical therapy, physician assistant, podiatry and veterinary medicine.

Western Regional Graduate Program

This program enables nonresidents to enroll in available graduate programs outside their home state at resident tuition rates.


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  1. Lynn, are you aware of any reciprocity agreements that Pennsylvania may have? We are PA residents and my daughter would prefer to attend an out-of-state university. I didn’t see PA mentioned in any of the regional programs above.

    1. Hi Karen,

      Pennsylvania does not participate in the major educational compact programs. Don’t lose heart though! State universities routinely provide scholarships for nonresidents. You don’t have to get a discount through an educational compact.

      Please read the lesson entitled, State Universities and Merit Aid, that you will find in this module – Targeting Schools for the Most Money, Part II.

      Lynn O.

  2. Lynn, one of our sons wants to go to a large university so we are looking in the south where they are generally cheaper and he had a better chance of getting merit. We are looking at the the universities that are not the flagships which seem to make a big cost difference but seem to offer still a great education.

    My question is that when we do the net price calculator for these universities and put in our efc they do not give any grants or merit, all the money that we are getting is under loans. Is this because they don’t know anything about our son (the questions were very vague and really only asked about our income (also vague), and how many kids we had in college. How are they supposed to base merit on those questions? Why do they even have that as a category? For us it was zero.

    Do I assume they will give him nothing or is it just a way of them playing it safe until they see what he has to offer. It seems as if they do give some merit to their students. These net calculators seem to be lame in the sense they know nothing about the students academic or test results yet are claiming they can give an “estimate” on the amount of merit based on two questions.

    I know we would be better off going to a smaller school and getting more aid but he really wants a larger university, that is why we are looking at unc wilmington and old dominion as well as James Madison and George Mason – all great school for the price although not really known for giving a ton of money –

    On another note. You mentioned FIT in NYC. My daughter who is a freshmen wants to be get a degree in Fashion merchandising and be a buyer some day. I mentioned she look at FIT as it is almost the same cost as UMass Amherst (our flagship) and she is always saying she wants to go to school in NYC. She has been on their site a few dozen times since I mentioned it last week. I think she is looking into her college experience more than the my junior boys! Thanks for the great tip, what a great school for a great price, right in the heart of NYC. I always thought I would have to tell her there was no way she could go to FIT or NYC for school because of the cost.


    1. Hi Rebekah,

      I am glad your daughter is checking out the Fashion Institute of Technology! It is an unbelievable bargain right in NYC. New York state universities (SUNY) or which FIT is one, can be great values for nonresidents and, of course, for New York residents. The son of one of my oldest friends goes to school there (he’s from St. Louis) and he absolutely loves it. He’s a photographer and has gotten a lot of work in NYC.

      There is an easy explanation for why you are encountering trouble with the net price calculators for state universities. Many of these institutions use the federally designed net price calculator that does NOT calculate merit aid. It’s one of the big problems with the federal calculator. You will have to go on each school’s website (for institutions that use the federal calculator) and check what the requirements are for scholarships for residents and nonresidents.

      Please read the lessons on Net Price Calculators in the second module to learn more about these calculators.

      This school might be too small for your son, but if you are going to be in NC, I’d recommend checking out the University of North Carolina, Asheville, which is a great school. North Carolina State would also be worth checking out. I don’t know what your son is interested in, but I know the physics department is amazing.

      Lynn O.

      Lynn O.