Working Paper Suggests Grant Offers Alone Don’t Significantly Increase Completion Rates

By Joelle Fredman, NASFAA Staff Reporter

The federal government, states, and institutions have historically offered students financial aid in the form of grants to help defray the cost of tuition and increase college affordability. However, a new and early working paper from the National Bureau of Economic Research (NBER) suggests grant offers on their own do little to ensure that low-income students remain in college and complete their degrees, and in some cases can even negatively impact persistence rates.

To study the effect of grant offers, the authors of the report, which has yet to be peer-reviewed, looked at the persistence rates of Pell Grant-eligible students who were offered scholarships between 2009 and 2015 from a Wisconsin program. During that time, 48,804 students were entered into a pool to receive the grant, and 8,407 were randomly selected. Two-year college students on average received $3,253 over the course of five years, and four-year college students on average received $9,512 over five years.   

The authors of the report found that grant offers only slightly increased (by 1.7 percentage points) the chance that freshmen enrolled at four-year institutions continued on to their sophomore year. While the authors found a similar increase (1.5 percentage points) in the two-year persistence rate for students pursuing bachelor’s degrees over the course of six years, they wrote that this result was not statistically significant. However, they also noted that the sample size for this group of students was relatively small. In addition, the authors found grant offers do not significantly impact persistence rates or bachelor’s degree completion rates among two-year college students, increasing rates by just 1.2 and 0.5 percentage points, respectively.   

Further, the authors wrote that grant offers may actually decrease completion rates among two-year college students pursuing associate degrees, reporting a 3 percentage point reduction in the chance that they earn a credential, and that they did not find any statistical evidence on grant offers’ effect on technical college students. The authors also estimated that actually receiving the grants — in addition to the offer itself — would show similar results, but wrote that they did not have access to data on grant acceptance.      

The authors wrote that future studies should examine whether the Wisconsin grant would be more effective in raising persistence and completion rates “if targeted at specific subgroups of students,” and suggested that its impact might be greater if grant offers were paired with other supports, such as academic mentoring.

 

Publication Date: 11/7/2019


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