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Additional Grant Aid Boosts Student Success and Earnings

July 19, 2019
 
 

Low-income students who enroll for the first time at four-year public colleges and are eligible for additional grant aid -- meaning larger federal Pell Grant awards and state and other grant aid -- are significantly more likely to earn a degree and more in earnings after they graduate.

That's the bottom-line finding from a new study published in the American Economic Journal: Applied Economics. The study, which was based on administrative data from Texas public colleges, found that the estimated impact of additional aid on graduates' earnings and corresponding tax payments alone are enough to fully recoup government spending on the grants within a decade. As a result, the researchers said, grant aid likely pays for itself several times over.

"The aid not only speeds up degree receipt but increases the overall number of college graduates," the study concluded. "In this setting, the benefits of additional aid provided to low-income students are substantial, and among students entering public universities in Texas, increasing grant aid pays for itself through financial gains for the public."

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