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Study looks at effects of guaranteeing Pell Grant for low-income eighth-grade students

A Guaranteed Pell Grant?
December 18, 2012

Early-commitment scholarships -- in which a donor offers to pay the way for a class of students to attend college, for example -- have been an occasional hallmark of philanthropy. A new study examines making a similar effort with the Pell Grant: telling low-income students as early as the eighth grade that they will receive federal help to attend college, in the hopes that it would encourage them to prepare for and pursue a postsecondary education.

The study, by Robert Kelchen and Sara Goldrick-Rab of the University of Wisconsin at Madison, found that guaranteeing a Pell Grant to students who qualify for free school lunch in the eighth grade could increase retention rates in college. Similar programs have been suggested by other researchers and commissions studying financial aid and making recommendations, including the federal Advisory Committee on Student Financial Assistance, on the theory that earlier notification will make students more likely to prepare for college because they know that they will have financial help to attend.

Students whose families make below a certain income threshold are automatically eligible to receive a Pell Grant, and those students make up almost half of all Pell Grant recipients nationwide. The majority of students who receive free lunch are eventually eligible for Pell Grants, although about 29 percent are not eligible for the full grant and automatic estimated family contribution of $0.

While some towns, schools and communities have "promise" programs, which guarantee some amount of college money to students who meet certain prerequisites, there was little research available for the study’s results. So the researchers used a Monte Carlo situation -- a computer simulation based on random sampling -- to estimate both the costs and the benefits of such a program.

Guaranteeing Pell Grants to all students receiving a free school lunch in eighth grade would increase program costs slightly, by about 4 percent or $1.5 billion -- a potential obstacle because some have argued that the Pell Grant Program is already too big. It also means that larger grants would be awarded to some students than they would have otherwise qualified before, because those students' families incomes would rise between eighth grade and the end of high school.

But the researchers argued that the economic benefits of more college graduates would outweigh the costs. The researchers estimated that college retention and completion rates would increase by 3 percent for students already enrolled and receiving additional aid, and that enrollment rates would increase by 4 percent. Based on increased tax receipts for higher earners who have completed college, the researchers estimated that the benefits would outweigh the costs. (Note: This paragraph has been updated to correct an error. The researchers did not find that high school completion rates would increase by 10 percent.)

 

 

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