Association for Public Policy Analysis & Management

Rising college enrollment over the last decades has not been met with a proportional increase in college completion. Federal government has attempted to mitigate gaps in college enrollment among student of differing background, by providing federal need-based grants (i.e., Pell Grant). Previous research has proved the positive effects of federal need-based grants on students’ enrollment in the college. However, little evidence exists on the impact of such aid on students’ long-term outcomes, a degree completion. Given recent concerns of rising tuition and student loan debts from college education, a much needed policy question would be whether or not federal need-based grants indeed lead students succeed in college, attaining college degree. In this research, I plan to examine the effects of federal need-based grant on college attainments.

In addition, I extend to examine the role of state financial aid policy on college attainment, and how state’s aid policies interact with federal policy for students’ success in the college. All fifty states in the U.S. provides student financial aid, mostly in the form of need-based scholarships. Interestingly, there is a wide variation across the states with regard to scale of need-based programs. In addition, trend of increasing college enrollment coupled with volatility in state support for higher education have resulted in a generally declining trend in state spending per student over the past decades. Considering this trends in state higher education policies, I plan to examine how states’ higher education policy interacts with federal aid policy, determining a successful college completion.

I plan to examine the effect of federal need-based financial aid on degree completion, using a Regression-Discontinuity (RD) strategy and exploiting the cut-off used to determine eligibility. The federal cutoff of the Pell Grant eligibility is determined by students’ information on the continuous Expected Family Contribution (EFC) from FAFSA. Those students with an EFC at or below the federally designated amount are eligible for the Pell Grant, and those who above the cutoff are ineligible. This Regression-Discontinuity (RD) allows me to examine whether students who vary the Pell Grant eligible/ineligible based on the EFC threshold, but who share very similar characteristics, differ in their college completion.

I drew data from the Educational Longitudinal Study 2002 (ELS: 2002), a nationally representative sample of high school sophomore in the United States. The base year (2002) to third follow-up (2012) of ELS data cover a decade of 2002 high school 10^th graders, and provide information on students’ financial aid and post-secondary enrollment & attainment. Also, restricted-use of ELS data includes information on respondents’ EFC in the FAFSA application and other personal finance. This information allows me to uncover the impacts of the federal Pell Grant eligibility on outcomes of interests.

For state aid policies, I merged state financial aid information from the National Association of State Student Grant and Aid Programs (NASSGAP) Annual Surveys on State-Sponsored Student Financial Aid. In addition, information on states’ fiscal support for higher education is drawn from the State Higher Education Executive Officers Association (SHEEO).