Association for Public Policy Analysis & Management

Despite decades of growth of online education and a large and increasing student body, rigorous empirical studies of distance learning are virtually nonexistent, particularly studies focused on federal aid and matriculation for students pursuing online education. This paper studies the effect of Federal Pell grants on college enrollment among students pursuing online education. The Higher Education Reconciliation Act of 2006 (HERA) that permitted students pursuing online degrees to receive Pell grants and other Federal aid programs is considered as a natural experiment. We employ three waves of the restricted use repeated cross sectional data from the National Postsecondary Student Aid Study (NPSAS) and use the difference-in-differences estimator to answer the question of interest. Preliminary findings suggest a higher overall online enrollment among respondents eligible for Pell grants in the periods after the policy change. The online enrollment was specifically higher among students pursuing Associate degrees, enrolled full time, and enrolled in one of humanities majors. Expectedly, not only the availability of Pell grants, but the amount of the grant was important for enrollment among mentioned groups of students. We additionally study the characteristics of online students in the attempt to understand who is more likely to pursue their education online. We find, that among other characteristics, online students tend to be older, married, have dependent children, work longer hours, and choose for-profit private colleges.