By Owen Daugherty, NASFAA Staff Reporter
Allowing Pell Grants to be used on short-term programs may be a promising option, according to a new evaluation report from the Institute of Education Sciences, which showed the expansion led to increases across the board in terms of enrollment and completion rates.
The two multi-year experiments were the first of their kind to examine the impact of expanding the allowable uses of the Pell Grant, as the grants are currently only available to those who seek an undergraduate degree or credential for a program lasting at least a semester.
The experimental expansions spanned from 2011 through 2017, with one experiment offering Pell Grants to income-eligible students who have a bachelor’s degree for short-term occupational training programs lasting up to one year. The second experiment conducted over the same time period allowed income-eligible students to obtain Pell Grants for very short-term programs lasting as little as eight weeks.
Both experiments were meant to measure whether expanding the allowable uses of the Pell Grant would lead to increased enrollment in and completion of occupational training programs, “a first step toward improving individuals’ success in the labor market,” according to the report.
While the findings are largely positive, the report notes that the labor market returns from the two experiments and how these compare to the cost of expanding Pell Grant eligibility — about $1,800 per student in this study — are unknown.
To determine the effect of the experiments, roughly 2,700 eligible students were randomly assigned to either be offered or not offered experimental Pell Grant funds in their financial aid award packages. The 46 schools participating in the experiments were primarily public two-year colleges and were concentrated in the Southeast region of the country.
Students in the first experiment were 26 percentage points more likely to enroll in additional education and 17 percentage points more likely to complete a program if they were offered an experimental Pell Grant.
When it came to high-demand programs — defined as those associated with occupations in a new and emerging field, projected to grow rapidly, or having a large number of openings in the student’s state — the completion rate increased by 11 percentage points.
Notably, the most common high-demand programs completed by students who were offered an experimental Pell Grant were overwhelmingly in the health professions, such as nursing and emergency medical technology.
Perhaps most important of all findings from the first experiment was the fact that experimental Pell Grants for college graduates was particularly effective in increasing enrollment and completion for unemployed or underemployed students.
Among those who identified as a “dislocated worker” on the FAFSA form, those who received an experimental Pell Grant offer were 46 percentage points more likely to enroll in a program than those who were not.
For the second experiment, students who were offered an experimental Pell Grant to pay for a very short-term occupational training program were 15 percentage points more likely to enroll in additional education than students who did not receive the offer.
Sixty-six percent of students who were offered an experimental Pell Grant enrolled in any program at a school involved with the study within eight months, compared to 52% of students not offered an experimental Pell Grant. And program completion among participants offered Pell Grants in the second experiment increased by 9 percentage points.
“There was no evidence that the significant effect on program completion would be different if the analysis were extended beyond study schools or beyond the 10-month follow-up window,” according to the report.
Regarding high-demand programs relative to a respective student’s state, about 41% of students offered an experimental Pell Grant completed a high-demand program, compared to 33% of students who were not offered a grant.
“The offer of an experimental Pell Grant was similarly effective in increasing enrollment and completion among students of different genders, ages, and incomes, as well as those facing different employment challenges and local unemployment rates,” the report found.
Across both experiments, the report found that those who were offered the experimental Pell Grant were just as likely to take out federal student loans compared to those who were not offered the grant.
The report noted that while having access to a Pell Grant could reduce a student’s need for a federal student loan to pay for their education, since a student receiving a Pell Grant makes them more likely to enroll in a program, more may have needed additional funds to cover costs.
A recent paper from NASFAA analyzing short-term postsecondary career and technical education programs found that states and institutions would be interested in offering more short-term programs if the programs were eligible for Pell Grants and could serve more students. The paper concludes that better understanding of the wide array of short-term program offerings and purposes would lead to stronger Pell Grant expansion proposals.
Ultimately, the evaluation report found that if current, very short noncredit courses were made credit-earning and eligible for Pell Grants, low-income students’ participation could add as much as $500 million more to federal financial aid expenditures, which should be balanced “against a potential 10-percentage point impact on program completion.”
But without employment and wage data paired with the report’s findings, the evaluation stops short of making a declarative conclusion.
“The labor market returns from the two experiments and how these compare to the cost of expanding Pell Grant eligibility remain important open questions for the future,” the report stated.
Publication Date: 12/16/2020