Individual and Institutional Responses to Last-Dollar Financial Aid Programs
*Names in bold indicate Presenter
The ever-increasing cost of postsecondary education threatens to put a college degree out of reach for many low- and middle-income students in the United States. Indeed, gaps in college access and completion between low- and high-income students have widened in recent decades, a pattern that may exacerbate already high levels of social and economic inequality. Advocates and like-minded policymakers have responded to these trends with calls to expand existing financial aid programs and even implement new ones. Such calls are driven by an expectation that such aid will increase postsecondary access and completion, and, ultimately, facilitate individuals’ transition into the labor force and society.
This panel features four papers that analyze institutional and individual responses to three different last-dollar financial aid programs. Institutionally, the panel will showcase work that analyzes how program implementation affects the revenue streams institutions use to finance their aid offers to students. More specifically, the first paper examines how implementation of the Tennessee Promise—a last-dollar aid program designed to reduce the financial barriers to postsecondary attendance—affected revenue from institutional, state, and federal sources. It also assesses how implementation of the Tennessee Promise affected students’ average aid award. In doing so, it provides insight into the fiscal sustainability of tuition-free college programs, an increasingly popular aid program design.
The second, third, and fourth papers move the focus from the institutional to the individual level. The first paper in this realm again leverages implementation of the Tennessee Promise, but draws upon individual-level data to examine differences between first-generation college students and their legacy peers. In particular, this paper examines differences in postsecondary outcomes between these two groups of students and, perhaps more importantly, examines whether enactment of the Tennessee Promise affected any such differences—it examines whether the Tennessee Promise provides a boost to first-generation students in terms of their postsecondary persistence and performance.
Moving from Tennessee to Tulsa, the third paper on this panel analyzes the effectiveness of a geographically localized last-dollar aid program in increasing credit accumulation, grade point average, and degree attainment. Leveraging multiple empirical strategies—the paper employs both regression discontinuity and difference-in-differences techniques—this analysis provides rigorous evidence on perhaps the most common last-dollar aid program design.
The final paper on the panel extends the focus on last-dollar aid effects beyond postsecondary outcomes to assess how these programs shape transition into the labor market. Specifically, the paper exploits random assignment of a need-based financial aid grant offer—the Fund for Wisconsin Scholars grant—and several sets of administrative records to provide among the first experimental evidence on the effect of need-based financial aid on students’ economic outcomes in their post-college years. In particular, the paper estimates the effect of the aid offer on students’ in-state employment, earnings, and participation in public assistance programs.
Together, this panel features a compelling and coherent set of papers that will provide insight into individual and institutional responses to last-dollar financial aid programs.