Students Least Likely to Persist Benefit Most From Extra Financial Aid, Study Finds

July 07, 2011

Given the same grant, certain students perform better while others struggle more, even though all of them are financially needy. That is one of the major findings of a new study that suggests that need-based aid could be more effectively distributed.

The report, "Conditional Cash Transfers and College Persistence: Evidence From a Randomized Need-Based Grant Program," was released on Thursday by the Institute for Research on Poverty at the University of Wisconsin at Madison.

The study compared two groups of first-time, traditional-age students who received federal Pell Grants at public universities in Wisconsin. One group of 600 randomly selected students received a private grant of up to $1,750 per semester for up to 10 semesters. A control group of 900 students was then formed from the larger group of students who received a Pell Grant but not the private grant.

Over all, the private grant had a modest effect on student outcomes. The grant did not make a statistically significant difference in how many terms students enrolled, or how many credits they attempted or completed on average.

The grant did change the distribution of credits students completed, however, with some students shifting from taking a full-time course load of 24 to 29 credits a year to taking a load of 30 or more credits a year that would put them on track for timely graduation. This effect was offset by an increase in students who enrolled part time.

The researchers then broke down the sample into groups based on the students' likelihood of persistence, which allowed them to see some interesting differences masked by the average results.

"Pell recipients are often treated like they're all alike, and they're not," said Sara Goldrick-Rab, an associate professor of educational-policy studies and sociology at the university and the lead author of the report.

The researchers assigned each student to one of three groups: those with low, medium, or high likelihood of persisting in college three years after they began. Those assignments were made using a variety of characteristics, with parents' education level, standardized-test scores, and parents' help applying for financial aid among the most important.

When the researchers considered students' expected persistence, they saw that receiving the additional grant did make a difference. For example, 72 percent of students who were least likely to persist and received the grant were still in college three years into the program, compared with 55 percent of students who were least likely to persist and did not receive the money.

The students most likely to persist had a very different experience, however: Seventy-nine percent of grant recipients in this group were still in college three years later, compared with 94 percent of nonrecipients.

Based in part on interviews with students, the report's authors hypothesize that the difference in student outcomes may have to do with how students respond to the additional grant money—for example, by reducing work hours and increasing study time. And they speculate that students who were least likely to persist, many of whose parents had lower levels of education, were more likely to involve their families in their decisions about how to proceed in college. These are students who needed their families to rally around them to overcome the odds and go to college in the first place, Ms. Goldrick-Rab said, and they tended to stay more attached to the family unit even during college. Students whose families had more education, she said, allowed students to make their own decisions, which sometimes led to the students making mistakes in how they approached their studies.

The report has several policy implications, Ms. Goldrick-Rab said, especially as pressure builds to reduce the cost of the Pell Grant program. There are two main proposals for doing so, she said: reducing the maximum award, or increasing the number of credit hours students must take to be eligible. But, she said, there is a third way, albeit a more difficult one.

For instance, Ms. Goldrick-Rab said, the program could be designed so that students all get the same grant in their first year, but over time the money would be directed toward students who face the most obstacles to finishing college.

The desire to see more students graduate from college in a timely way "is going to require us to take a different approach than we've been taking," she said.

The researchers will continue to track their sample of students, who were freshmen in 2008, and plan to follow a new group beginning in the fall of 2012.