Panel Paper: A Necessary Investment? Evaluating the Impact of Need-Based Grant Renewal On Credit Accumulation and Graduation

Saturday, November 10, 2012 : 1:45 PM
Carroll (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Benjamin Castleman, Harvard University

Over the past several decades both state and federal governments have relied on financial grants as a primary policy instrument to address the lack of college affordability for students from low- and moderate-income families. A considerable body of research has documented the positive effects of initial grant eligibility on a range of college outcomes. By contrast, very few studies have rigorously examined the impact of grant renewal on students’ credit accumulation and degree attainment, despite the fact that a substantial portion of grant spending is dedicated to award renewal. I address this gap in the literature by investigating the impact of being eligible to renew the need-based Florida Student Access Grant on students’ credit accumulation and on whether students earn a degree.  Using a regression-discontinuity design, I find a positive effect of FSAG renewal eligibility on whether students earned a bachelor’s degree within five years. My estimates suggest that $1,000 in grant aid (in 2000 dollars) increased the probability that students just below the renewal cut-off would earn a degree by 4 - 6 percentage points. I also find suggestive evidence of positive impacts on students’ academic performance; however, for the academic outcomes I am able to analyze, the effects are imprecisely estimated.