More Aid ≠ More Graduates

Study finds that increased grant aid in Quebec improved students' college going and persistence, but did not raise graduation rates.
September 14, 2009

After years of stagnation, the U.S. government has significantly increased its spending on need-based financial aid and is poised to pour billions of dollars more into the Pell Grant Program. The aid is seen both as removing a major hurdle that keeps many students from low-income families out of college and as potentially helping more students stay in college and on track to graduation.

A new study being released today examines the impact that a government's significant infusion of need-based aid had on college enrollment, persistence and graduation of citizens from low-income families. It suggests that the money bolstered access to college and improved students' persistence, but did not increase the proportion of students who graduated within four years.

The study, released by the Measuring the Effectiveness of Student Aid Project, focuses not on the United States but on Canada's Quebec province, which drastically revamped its financial aid formulas in 2001-2 so that students from low-income families were required to contribute less to their educations and eligible in turn for significantly more grant aid in place of loan funds.

The study, by Matthieu Chemin, assistant professor of economics at the University of Quebec in Montreal, compares the behavior of students from families with incomes under $20,000 before and after the policy changes; it also compares their behavior with Quebeçois students with higher incomes as well as those from other Canadian provinces, notably British Columbia, where student aid policies did not change.

The change in student aid policy in Quebec resulted in a 5-7 percentage point increase in the likelihood that students from low-income families would receive grant aid, Chemin's study found. That increase translated, he found, into a 4-6 percentage point increase in the likelihood of students' entering postsecondary education -- especially important in Quebec, whose enrollment rates lagged significantly those elsewhere in Canada.

Access alone isn't enough, of course, Chemin notes, but some aspects of postsecondary performance appeared to improve, too, because of the Quebec government's changes. "Exit rates" -- defined as a student's enrolling in but dropping out of a university -- dropped by 3 percentage points more than did those in British Columbia during the comparable period, and persistence rates increased by 6 percentage points, "again indicating that Quebec students stayed enrolled longer" in postsecondary education because of the financial aid reforms, Chemin writes.

But on one important indicator, the changes in Quebec's student aid policies seems not to have had a beneficial effect. The data compiled by Chemin show that "the evolution of Quebec graduation rates did not outperform the evolution of graduation rates in British Columbia or the rest of Canada," he writes.

"This finding might indicate that some individuals who accessed postsecondary education had not yet graduated by the end" of four years," a finding that would resonate particularly in the U.S., where the average time to a bachelor's degree is well over four and a half years even for those who don't stop out for a major period of time. Another possible explanation, Chemin speculates, "is that students attracted [to postsecondary education] by the availability of these grants were less likely to graduate, a hypothesis that raises doubts about the efficacy of this reform."

He concludes: "These results therefore cast doubt on the efficacy of this reform in particular, and of needs-based grants in general, to improve graduation rates."

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