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The Effects of Financial Aid Grant Offers on Postsecondary Educational Outcomes: New Experimental Evidence from the Fund for Wisconsin Scholars

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  • Deven E. Carlson
  • Felix Elwert
  • Nicholas Hillman
  • Alex Schmidt
  • Barbara L. Wolfe

Abstract

In this pre-registered study, we analyze the effects of need-based financial aid grant offers on the educational outcomes of low-income college students based on a large-scale randomized experiment (n=48,804). We find evidence that the grant offers increase two-year persistence by 1.7 percentage points among four-year college students. The estimated effect on six-year bachelor’s degree completion is of similar size—1.5 percentage points—but is not statistically significant. Among two-year students, we find positive—but not statistically significant—effects on persistence and bachelor’s degree completion (1.2 and 0.5 percentage points, respectively). We find little evidence that effects vary by cohort, race, gender or the prior receipt of food stamps. However, further exploratory results do suggest that the offers reduce associate’s degree completion rates for two-year community college students by around 3 percentage points, with no statistically significant evidence of effects on technical college students. We also estimate that the effects of actually receiving grant money are very similar, though slightly greater than the effects of merely receiving a grant offer. Overall, our results show only very small effects of the need-based grant offers on college students’ trajectories towards degree completion.

Suggested Citation

  • Deven E. Carlson & Felix Elwert & Nicholas Hillman & Alex Schmidt & Barbara L. Wolfe, 2019. "The Effects of Financial Aid Grant Offers on Postsecondary Educational Outcomes: New Experimental Evidence from the Fund for Wisconsin Scholars," NBER Working Papers 26419, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26419
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    References listed on IDEAS

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    1. Jeffrey T. Denning & Benjamin M. Marx & Lesley J. Turner, 2019. "ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare," American Economic Journal: Applied Economics, American Economic Association, vol. 11(3), pages 193-224, July.
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    3. Dynarski, Susan M. & Scott–Clayton, Judith E., 2006. "The Cost of Complexity in Federal Student Aid: Lessons From Optimal Tax Theory and Behavioral Economics," National Tax Journal, National Tax Association;National Tax Journal, vol. 59(2), pages 319-356, June.
    4. Markus Frölich & Blaise Melly, 2013. "Identification of Treatment Effects on the Treated with One-Sided Non-Compliance," Econometric Reviews, Taylor & Francis Journals, vol. 32(3), pages 384-414, November.
    5. Benjamin L. Castleman & Bridget Terry Long, 2016. "Looking beyond Enrollment: The Causal Effect of Need-Based Grants on College Access, Persistence, and Graduation," Journal of Labor Economics, University of Chicago Press, vol. 34(4), pages 1023-1073.
    6. James Heckman & Jeffrey Smith & Christopher Taber, 1998. "Accounting For Dropouts In Evaluations Of Social Programs," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 1-14, February.
    7. Susan Dynarski & Judith Scott-Clayton, 2013. "Financial Aid Policy: Lessons from Research," NBER Working Papers 18710, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Scott E. Carrell & Michal Kurlaender, 2023. "My Professor Cares: Experimental Evidence on the Role of Faculty Engagement," American Economic Journal: Economic Policy, American Economic Association, vol. 15(4), pages 113-141, November.
    2. Lisa Barrow & Cecilia Elena Rouse & Amanda McFarland, 2020. "Who Has the Time? Community College Students’ Time-Use Response to Financial Incentives," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 48(1), pages 35-52, March.

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    More about this item

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

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