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More Aid, Better Results: No-strings-attached financial aid keeps students on the road to success

Sep 24, 2013

By Marcie Foster and Manuela Ekowo

As college costs rise precipitously, the promise of a postsecondary education is falling farther out of reach for low-income students and families. And while research shows that need-based financial aid increases college access for low-income students, not much is known about the impact of such aid on student success. A new study is changing this, providing evidence that an increase in financial aid-with no strings attached-may increase student persistence and completion, and accelerate progress. This signals that closing the unmet need gap of many students and families is critical to improving student success.

A recent National Bureau of Economic Research report by Benjamin Castleman and Bridget Terry Long, Looking Beyond Enrollment, examines the impact of student eligibility for a need-based state grant program in Florida on student outcomes by comparing eligible recipients to those just below the income eligibility cutoff. Low-income Floridian students could receive a $1,300 Florida Student Access Grant (FSAG), which, in the study year of 2000-01, covered 57 percent of the average tuition and fees at a public, four-year state university. Recipients were also eligible to receive a federal Pell Grant of at least $1,750. Students who were not eligible to receive the FSAG grant could still receive the federal Pell Grant. The study only examined the impact of aid in the first year of college since the majority of students do not receive FSAG for multiple years.

The study found students who qualified for FSAG grants were not only more likely than their peers of similar socioeconomic backgrounds to enroll in a public four-year university, but also more likely to stay continuously enrolled in college, graduate within six years, and accumulate credits at a quicker pace. Students receiving FSAG were 3.2 percentage points more likely to enroll at a public, four-year university and 4.3 percentage points more likely to persist through the spring semester of their freshman year. Eligible students were also 4.6 percentage points (or 22 percent) more likely to earn a bachelor's degree within six years.

These findings provide new evidence that unmet need, or the "gap" between college costs and what students can afford to pay on their own or with grant aid, remains one of the most significant barriers to college access and success, particularly among low-income students. For these students, increasing aid amounts-for example, through larger federal grants or supplemental state grants-could have a positive impact on student access, persistence, and completion. And while previous studies have focused on tying academic conditions to this aid, the report suggests that providing more grant aid can have an impact even without such strings attached.

High unmet need can force students to work too many hours in jobs outside of schoolwhile they are enrolled, threatening their academic success, or force them to take out unmanageable levels of student loans. While greater "no strings attached" financial assistance to low-income students may be one answer, CLASP also supports proposals to 1) use a negative "expected family contribution" to allow students to document the full extent of their financial need, 2) allow working students to keep a greater share of their earnings to cover expenses, 3) partner with colleges on increasing student success, and 4) make students aware of the public benefits for which they may be eligible. With greater financial resources to meet the full cost of college, low-income students may have a better chance of meeting their postsecondary and economic goals, ensuring a better life for themselves and their families.

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