College grants: 10 stingiest states for students

(MoneyWatch) With prices at state universities continuing to spiral ever higher, affording college has become increasingly difficult for many families.

Some states, however, are making it even tougher for students to afford college by directing much of their state grant aid to more affluent students who don't need the financial help.

An important new report from the Brookings Institute pinpoints how all 50 states and the District of Columbia deploy their state grants to college students. Nationwide, states allocate 73% of their college grants to students who file for financial aid and require a helping hand.

Some states, however, are playing grinch with their college grants by allocating much of the money to students who don't require assistance. Some of these states are devoting the majority of awards to students based on "merit." A common way that states determine merit is to look at high school performance such as grades and test scores.

10 stingiest states for college students

What follows is a list of states, the majority of them in the South, that provide the smallest percentage of their college grants based on students' financial need:

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

In addition to these 10 states, in the District of Columbia only 6% of grants are linked to need.

A consequence of poor aid policies

Ironically some of the states with the poorest record of helping low and moderate-income students with college costs also have some of the lowest percentages of college graduates living within their borders. In West Virginia, for instance, only 17% of residents have earned a bachelor's degree, which is the lowest rate in the nation. Following close behind is Mississippi where just 19% of residents have a bachelor's degree.

Despite limited funds, some states admirably allocate all their grants to students who demonstrate financial need. In contrast to the states above, the following 14 states allocate 100% of their grants to low and moderate-income students who qualify for financial aid. Here is the list:

14 states that award all college grants based on need

• Alaska
• California
• Colorado
• Connecticut
• Delaware
• Hawaii
• Maine
• Minnesota
• Nebraska
• New Hampshire
• Oregon
• Pennsylvania
• Rhode Island
• Texas
• Wyoming

Not surprisingly, the report urges states to use their limited state resources to help students who truly need the assistance and explore linking this help in ways that will encourage students to actually graduate. Sounds like a no brainer to me.

State government image courtesy of Flickr user Marxchivist.