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Looking Beyond Enrollment: Causal Effect of Need-Based Grants on College Access, Persistence, and Graduation

Issue/Topic: Postsecondary Affordability--Financial Aid; Postsecondary Students--Low-Income; Postsecondary Participation--Access/Outreach; Postsecondary Success--Completion
Author(s): Long, Bridget; Castleman, Benjamin
Organization(s): University of Virginia; Harvard Graduate School of Education
Publication: National Bureau of Economic Research
Published On: 8/1/2013

Background:
While median enrollment and degree completion rates have increased over the last 30 years, gaps still persist for low-income students. States and the federal government provide need-based grants, in part, to diminish attainment gaps. This study evaluates whether one state's need-based program produces the intended effect: that is, to improve degree completion rates for low-income students.

Purpose:
(1) To estimate the impact of student eligibility for the Florida Student Access Grant on college persistence and degree completion; (2) to investigate the interaction between need-based and merit-based aid.

Findings/Results:

Student Outcomes

  • The additional $1,300 in need-based aid increased the probability of completing a bachelor's degree within 150% time (i.e., six years) by 4.6 percentage points, or 22%.

  • Need-eligible students received 10.8% more credits than their low-income peers who were just above the family income cutoff. Low-income students with high school GPAs in the top 25 percent experienced much higher effects from grant eligibility than students in the other achievement quartiles.

Policy Outcomes

  • The effect of the need-based grant on enrollment and first-semester retention was not statistically significant.

  • The data show that the presence or size of the Florida Student Access Grant did not result in an increased number of students attending in-state colleges.

  • Low-income students with higher GPAs in their high school senior year were even more likely to earn a baccalaureate degree, both those who qualified for the Bright Futures Merit Scholarship and those who did not but still had moderately-high academic achievement.

  • Students who received the need- and merit-aid scholarships were 21% more likely to complete a bachelor's degree than students who were just eligible for merit aid.

Policy Implications/Recommendations:
  • Need-based aid has a positive effect on degree completion, and increasing the award amount for current aid programs could produce even higher attainment rates for low-income students.

  • States should consider the marginal effect of increasing aid amounts for low-income students, especially if a few hundred dollars more per year, per student leads to dramatic increases in degree completion rates for low-income students.

  • If low-income students receiving need-based aid graduate with a bachelor's degree at higher rates than their peers, then it follows that states should consider ways to tie financial aid to other college outcomes, such as course selection and major choice. Integrating student and workforce needs could improve personal incomes, increase tax revenues, and propel economic growth.

Research Design:
Study uses a regression-discontinuity analysis to estimate the causal effect of being eligible for need-based aid on whether students matriculate, accumulate credits, persist, and complete a bachelor's degree. Estimates the college outcomes of students just below and just above the family income eligibility cutoff.

Population/Participants/Subjects:
45,785 high school seniors. The sample excludes subjects who did not submit a FAFSA application.

Year data is from:
2000-2006

Setting:
State

Data Collection and Analysis:
Study uses student-level data from the Florida Department of Education's K-20 Data Warehouse. Sample contains seniors in Florida public high schools during the 1999-2000 school year. This study can be accessed through the following link: http://www.nber.org/papers/w19306

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