Association for Public Policy Analysis & Management

Panel: Promoting College Success through Financial Aid Policy

(Education)

For decades financial aid has been a widely utilized policy tool to support access to higher education and postsecondary attainment. In the fifty years since the passage of the federal Higher Education Act of 1965, average aid per student has more than tripled in real dollars, largely due to the expansion of federal aid programs (Baum, Elliott, & Ma, 2014; Dynarski & Scott-Clayton, 2013).Yet in spite of this growth in spending, many students who attend college are leaving before earning a certificate or degree. Two-thirds of degree-seeking students who enter community colleges exit before earning an associate’s or bachelor’s degree and nearly 40 percent of four-year college-goers leave before graduation. The size of aid expenditures and troubling completion outcomes have motivated questions about whether financial aid is effectively helping students progress to graduation. While research largely finds that aid increases access (Dynarski, 2003; Seftor & Turner, 2002; Turner, 2011), much less is known about the effect of aid after students have entered and which design elements contribute to student success. For example, there is scant evidence on the effectiveness of student loans on college persistence, despite the growing reliance on borrowing to help pay for college. Little is also known about whether the effect of grant aid attenuates as students near degree completion, and how the availability of aid outside of the traditional academic cycle impacts academic progress. This panel will highlight new evidence on the effects of need-based aid, place-based scholarships, and institutional no-loan policies on a broad range of college outcomes. Each project evaluates a policy innovation that is focused on understanding how the design elements of aid programs and policies impact academic performance, persistence, and progress to degree completion. Given how much money is invested in financial aid, discerning which programs work best and why is crucial to designing policies that improve outcomes beyond initial enrollment. By providing rigorous causal evidence on the impacts of a variety of aid programs, this session will shed new light on these important questions. REFERENCES Baum, S., Elliott, D. C., & Ma, J. (2014). Trends in Student Aid 2014. Washington, DC: College Board. Dynarski, S. M. (2003). Does aid matter? Measuring the effect of student aid on college attendance and completion. American Economic Review, 93(1), 279–288. Dynarski, S., & Scott-Clayton, J. (2013). Financial Aid Policy: Lessons from Research. Future of Children, 23(1), 67–91. Seftor, N. S., & Turner, S. E. (2002). Back to School: Federal Student Aid Policy and Adult College Enrollment. Journal of Human Resources, 37(2), 336–352. Turner, N. (2011). The effect of tax-based federal student aid on college enrollment. National Tax Journal, 64(3), 839–62.