Study Questions 'Traditional Approaches' to Administering Financial Aid

By Allie Bidwell, NASFAA Senior Reporter

Looking for ways to improve college affordability, policymakers and researchers have at times questioned the efficacy of financial aid programs, particularly need-based aid, and whether students receiving grants have improved outcomes as a result. A new study from The Hope Center for College, Community, and Justice tracked recipients of one state grant program over a period of up to 10 years, and found the students didn't always have increased odds of earning a degree.

The researchers — Drew Anderson of the RAND Corporation, Katharine Broton of the University of Iowa, Sara Goldrick-Rab of Temple University, and Robert Kelchen of Seton Hall University — examined the outcomes of students who had received the Wisconsin Scholars Grant, a program created in 2008 to support low-income students who meet certain eligibility criteria. This particular program gave the researchers a unique opportunity to effectively measure the impact of a need-based grant program because the recipients are chosen through a lottery, allowing them to examine the effect of the grant "disentangled from the characteristics of those who receive it."

Overall, they found that for the first cohort of students who received the grant in 2008-09, the program accelerated their time to completion, but did not increase their overall likelihood of earning a degree or enrolling in graduate school. Recipients in the first cohort — and overall — were also more likely to major in science, technology, engineering, and mathematics (STEM) fields. The researchers did see an upward trend in the impact on degree completion in later cohorts.

While there was a weaker impact on degree completion for the first cohort, accelerating the time to completion can also be beneficial for low-income students, the group wrote, and could "yield benefits in terms of completing in a field with better labor market returns, leaving college with less debt, and entering the labor market or graduate school more quickly."

But aside from degree completion, the study yielded some surprising results, according to Kelchen, such as the impact on STEM degree completion.

"This is a grant that didn't really target STEM," he said. "It seems to have allowed them to take on majors where they spend more time in labs and can't work as much."

The findings in that sense were unexpected, he said, because unlike some other aid programs, students did not receive extra money to pursue STEM fields. The researchers found that overall, about 16 percent of eligible students who did not receive the Wisconsin Scholars Grant earned a degree in STEM, but those who did receive the grant were 6.8 percentage points and 5.9 percentage points more likely to earn a STEM degree in the 2008 and 2009 cohorts. Looking at all four cohorts, they found that receiving the grant increased students' odds of receiving a STEM degree by 3.6 percentage points.

"There's no reason to really expect that large of a change," Kelchen said. "It just seems like giving students more grant aid helped them study the majors they wanted to study rather than the ones they could potentially get through more quickly or work more while studying."

And considering the mixed results with regard to degree completion, the researchers wrote that the study contributes to a growing body of evidence "that dollars delivered via traditional financial aid programs are exhibiting inconsistent effects when it comes to ameliorating students' financial challenges and promoting student success." They argued that "other ways of addressing students' evident financial needs should be considered," including methods such as emergency grant programs, according to Kelchen.

"There is at least some evidence that need-based aid helps students," Kelchen said. "Then I think the question is how much money do students need to really move the needle on degree completion, and would that be more cost effective than just giving colleges money via appropriations?"


Publication Date: 8/9/2018

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