Association for Public Policy Analysis & Management

We use data on the universe of federal student aid recipients in the United States from 2002 to 2014 to study the impact of higher grant subsidies on college choice, degree completion, and post-enrollment earnings. Our research design leverage discontinuities and kinks in the relationship between family income and Pell eligibility created by the federal eligibility formula, that result in students from similar circumstances receiving aid awards differing by as much as 20 percent. We find that higher Pell eligibility has a very small effect on college choices, leading students to attend 2 year colleges at a slightly higher rate. And while estimates are sometimes imprecise the weight of the evidence suggests small positive impacts on degree completion, though the magnitudes are much smaller than found in other recent work. Exploring possible reasons for the discrepancy, we suggest the pattern of results are consistent with heterogeneity in impacts across settings, driven in part by interactions between federal and state grant aid programs.