Panel Paper: Looking Beyond Enrollment: The Causal Effect of Need-Based Grants On College Access, Persistence, and Graduation

Thursday, November 8, 2012 : 10:35 AM
International D (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Benjamin Castleman and Bridget Terry Long, Harvard University

Gaps in average college success among students of differing backgrounds have persisted in the United States for decades. One of the primary ways that federal and state governments have attempted to ameliorate such gaps is by providing need-based financial aid to low-income students. A considerable body of research has examined the impact of need-based grants on college access, and several recent studies have investigated the effect of academic merit-based scholarships on whether students earn a degree. However, surprisingly little research has examined the effect of need-based grants on students’ longer-term college attainment, despite the fact that need-based assistance accounts for the considerable majority of all governmental grant aid awarded. In this paper, we examine the impact of eligibility for the Florida Student Access Grant (FSAG) on a range of college outcomes. Exploiting the cut-off in the index used to measure a family’s ability to pay for college and determine grant eligibility, we utilize a regression-discontinuity strategy to estimate the causal effect of grant eligibility. We investigate whether being eligible for a need-based grant increases the probability that students enter college, remain continuously enrolled, accumulate more credits toward graduation, and ultimately earn a degree. We find that grant eligibility had a positive effect on whether students attended a four-year university, short-term persistence, the cumulative number of credits students completed, and whether students earned a bachelor’s degree. On average, we find that being eligible for $1,000 (in 2000 dollars) in grant aid increased bachelor’s degree receipt within six years by 3.5 percentage points. FSAG eligibility had a particularly pronounced impact for academically accomplished students. An additional $1,000 in aid eligibility increased the probability that students in the 75th percentile of the distribution of senior year GPA earned a bachelor’s degree within six years by 5.1 percentage points.