Aiding or Dissuading? The Effects of Reducing Lifetime Eligibility Limits for Need- based Aid on Bachelor’s Degree Attainment and Time to Completion

Abstract:

Little is known about the effects of need-based financial aid disbursed late into college and how students respond when they approach lifetime limits for receiving aid. I exploit changes to federal Pell Grant eligibility rules that reduced the lifetime availability for grant aid from 9 to 6 full-time-equivalent years to examine these questions. Using data from the University System of Georgia and a matched difference-in-differences research design, I compare student outcomes before versus after the rule change for Pell recipients affected and unaffected by the new policy. Risk of aid exhaustion due to the policy change led students to increase their academic effort, as measured by term-over-term re-enrollment and term credits attempted and earned.  I find weak evidence that the policy change accelerated time to completion and no evidence that it increased or decreased degree attainment overall. These findings indicate that aid disbursement policies and lifetime aid limits can impact the cost-effectiveness of aid expenditures and the efficiency of college degree production.

Last updated on 05/13/2020