- Early commitment programs may increase enrollment rates of Pell recipients by 4 percent
- The $1.5 billion increase in cost to the Pell Grant Program would be offset by $2.1 billion in net discounted tax revenues
- The level of inefficiency would be low and current need analysis calculation would remain the same-- ensuring that all students who are eligible under current rules would remain so
An early commitment program may increase the enrollment rates of Pell Grant recipients by approximately 4 percentage points, though it would cost an additional $1.5 billion per cohort to the federal government, according to a recent study in the Journal of Higher Education.
The study, “Accelerating College Knowledge: A Fiscal Analysis of a Targeted Early Commitment Pell Grant Program,” evaluates the fiscal consequences of making an early commitment of the full Pell Grant to eighth graders from needy families. The use of a cost and benefits analysis also finds these additional costs would be offset by $2.1 billion in net discounted federal tax revenues resulting from increased enrollment and college completion rates.
Previous studies examining the effectiveness of “early commitment” or “college promise” programs have focused on small-scale programs like the Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) and concluded generally positive results. Using these studies, and others that suggest the current timing of Pell eligibility notification -- which occurs late in high school -- reduces students’ ability to adequately prepare for college financially, report authors Robert Kelchen and Sara Goldrick-Rab address three major research questions:
Kelchen and Goldrick-Rab studied over 2,200 children from more than 1,500 households and found just under 30 percent of those who received federal benefits in the eighth grade had enrolled in college by 2009, compared to 44 percent of those who did not receive benefits. They also found the relationship between household income and receipt of public assistance weakened between grades eight and twelve, but indicated the early notification program may result in increased take-up rates if tied to the free and reduced price lunch (FRL) program.
While a cost estimate resulted in an increase of $1.5 billion in spending (of the currently $34 billion program), the benefits analysis showed an additional $2.2 billion in the median simulation -- a net benefit of more $600 million. The study’s overall findings suggest that changing the timing of financial aid notification would be well targeted, because though seven in 10 students who would receive the maximum Pell Grant already do so under current rules, giving eighth graders and their families the knowledge early-on that they would be eligible for the grant could encourage those who might not have enrolled because of cost concerns to reconsider.. “More research is needed to test the assumptions of early commitment programs,” the report said including exploring the relationship between providing a commitment of financial aid and the perception of college affordability, but this finds a change to early notification would likely come close to breaking even.
NASFAA has shown support for early notification of Pell Grant eligibility through a “Pell Promise” program that would notify students, as early as ninth grade, of how much Pell funding they would be able to receive in the future, as well a guarantee of that amount to be used for higher education upon successful completion of high school. An early commitment program like Pell Promise could encourage college-going behavior by introducing a level of certainty for low-income students and incentivizing them to start planning, saving, and completing the necessary coursework early in their high school career. NASFAA has also supported the commitment to early notification through the use of prior-prior year income data on the FAFSA as a way to inform students earlier of their award eligibility through “A Tale of Two Income Years: Comparing Prior-Prior Year and Prior-Year Through Pell Grant Awards” and work with the Gates Foundation’s Reimagining Aid Design and Discovery (RADD) project.
Publication Date: 2/27/2015