Objective: This paper provides evidence on the efficacy and effectiveness of federal and state financial aid programs in supporting community college students. Method: I use a regression discontinuity design that takes advantage of discontinuities in the Pell Grant formula known as Automatic-Zero Estimated Family Contribution to estimate the effects of Pell Grant aid on community college student enrollment and financial and academic outcomes. Results: The study findings show that increases in grant aid boost associate degree completion, but these increases do not translate into significantly higher bachelor’s degree completion rates or lower student debt burdens. These results fall in line with most of the empirical literature on Pell Grant aid effectiveness finding only modest effects of marginal increases in financial aid on degree completion. Contribution: Findings further highlight the potential importance of combining efforts to improve financial aid programs and the transfer experience for degree-seeking, transfer-intending community college students.
AveryC.KaneT. (2004). Student perceptions of college opportunities. The Boston COACH program. In HoxbyC. M. (Ed.), College choices: The economics of where to go, when to go, and how to pay for it (pp. 355–394). University of Chicago Press.
2.
BaileyT.JaggarsS. S.JenkinsD. (2016). Redesigning America’s community colleges. Harvard University Press.
3.
BaumS.Scott-ClaytonJ. (2013). Redesigning the pell grant program for the twenty-first century. The Hamilton Project.
4.
BelfieldC. R.JenkinsD.FinkJ. (2019). Early momentum metrics: Leading indicators for community college improvement. CCRC Research Brief. Community College Research Center, Teachers College, Columbia University.
5.
BelfieldC.FinkJ.JenkinsP. D. (2017). Is it really cheaper to start at a community college? The consequences of inefficient transfer for community college students seeking bachelor’s degrees. CCRC Working Paper No. 94. Community College Research Center, Teachers College, Columbia University.
6.
BettingerE. P.LongB. T.OreopoulosP.SanbonmatsuL. (2012). The role of application assistance and information in college decisions: Results from the H&R Block FAFSA experiment. The Quarterly Journal of Economics, 127(3), 1205–1242.
7.
CalonicoS.CattaneoM. D.FarrellM. H.TitiunikR. (2017). Rdrobust: Software for regression-discontinuity designs. The Stata Journal, 17(2), 372–404.
8.
CarruthersC.WelchJ. (2019). Not whether, but where? Pell grants and college choices. Journal of Public Economics, 172, 1–19.
9.
CollinsB.DortchC. (2022). The FAFSA simplification act. CRS Report R46909. Congressional Research Service.
10.
DenningJ. T. (2017). College on the cheap: Consequences of community college tuition reductions. American Economic Journal: Economic Policy, 9(2), 155–88.
11.
DenningJ. T.MarxB. M.TurnerL. J. (2019). ProPelled: The effects of grants on graduation, earnings, and welfare. American Economic Journal: Applied Economics, 11(3), 193–224.
12.
DortchC. (2023). Federal pell grant program of the higher education act: Primer. CRS Report R45418, Version 6. Updated. Congressional Research Service.
13.
EngA.MatsudairaJ. (2021). Pell grants and student success: Evidence from the Universe of Federal aid recipients. Journal of Labor Economics, 39(S2), S413–S454.
14.
FinkJ.MyersT.SparksD.JaggarsS. (2021). Toward a practical set of STEM transfer program momentum metrics. CCRC Working Paper No. 127. Community College Research Center, Teachers College, Columbia University.
KelchenR. (2017). A review of college promise programs: Evidence from the Midwest. MHEC Policy Brief. Midwestern Higher Education Compact.
18.
ImbensG.KalyanaramanK. (2012). Optimal bandwidth choice for the regression discontinuity estimator. The Review of economic studies, 79(3), 933–959.
19.
KofoedM. S. (2017). To apply or not to apply: FAFSA completion and financial aid gaps. Research in Higher Education, 58(1), 1–39.
20.
LadermanS.KunkleK. (2022). SHEF: State higher education finance, FY 2021. State Higher Education Executive Officers.
21.
MaJ.BaumS. (2016). Trends in community colleges: Enrollment, prices, student debt, and completion. College Board Research Brief, 4, 1–23.
22.
MarxB. M.TurnerL. J. (2015). Borrowing trouble? Student loans, the cost of borrowing, and implications for the effectiveness of need-based grant aid (No. w20850). National Bureau of Economic Research.
23.
MatsudairaJ. D. (2017). Not so simple? Financial aid simplification and the impact of pell grants on college enrollment. New York Federal Reserve Working Paper.
24.
McCraryJ. (2008). Manipulation of the running variable in the regression discontinuity design: A density test. Journal of econometrics, 142(2), 698–714.
25.
McKinneyL.NovakH. (2015). FAFSA filing among first-year college students: Who files on time, who doesn’t, and why does it matter?. Research in Higher Education, 56(1), 1–28.
26.
Miller-AdamsM. (2021). The path to free college: In pursuit of access, equity, and prosperity. Harvard Education Press.
27.
ParkR. S. E.Scott-ClaytonJ. (2018). The impact of Pell Grant eligibility on community college students’ financial aid packages, labor supply, and academic outcomes. Educational Evaluation and Policy Analysis, 40(4), 557–585.
28.
PernaL. W.LeighE. W. (2018). Understanding the promise: A typology of state and local college promise programs. Educational Researcher, 47(3), 155–180.
29.
Scott-ClaytonJ. (2017). Financial aid simplification: Why it matters and which aspects matter most. Testimony to the US Senate Committee on Health, Education, Labor, and Pensions. Hearing on Reauthorizing the Higher Education Act: Examining Proposals to Simplify the Free Application for Federal Student Aid (FAFSA).
30.
Scott-ClaytonJ. (2013). Information constraints and financial aid policy. In Student financing of higher education (pp. 75–97). Routledge.
31.
Scott-ClaytonJ.ZafarB. (2019). Financial aid, debt management, and socioeconomic outcomes: Post-college effects of merit-based aid. Journal of Public Economics, 170, 68–82.
32.
TaylorJ. (2021). Making financial aid work for transfer students. In The transfer experience (pp. 99–113). Routledge.
