Leveling Up: Early Results from a Randomized Evaluation of Post-Secondary Aid

Higher Education, March 2017

Does finan­cial aid increase col­lege atten­dance and com­ple­tion? Selection bias and the high implicit tax rates imposed by over­lap­ping aid pro­grams make this ques­tion dif­fi­cult to answer. This paper reports ini­tial find­ings from a ran­dom­ized eval­u­a­tion of a large privately-funded schol­ar­ship pro­gram for appli­cants to Nebraska’s pub­lic col­leges and uni­ver­si­ties. Our research design answers the chal­lenges of aid eval­u­a­tion with ran­dom assign­ment of aid offers and a strong first stage for aid received: ran­domly assigned aid offers increased aid received markedly. This in turn appears to have boosted enroll­ment and persistence, while also shift­ing many appli­cants from two- to four-year schools. Awards offered to non­white applicants, to those with rel­a­tively low aca­d­e­mic achieve­ment, and to appli­cants who tar­geted less-selective four-year pro­grams (as mea­sured by admis­sions rates) gen­er­ated the largest gains in enroll­ment and persistence, while effects were much smaller for appli­cants pre­dicted to have stronger post-secondary out­comes in the absence of treat­ment. Thus, awards enabled groups with historically-low col­lege atten­dance to level up, largely equal­iz­ing enroll­ment and per­sis­tence rates with tra­di­tion­ally college-bound peers, particularly at four-year pro­grams. Awards offered to prospec­tive com­mu­nity col­lege stu­dents had lit­tle effect on col­lege enroll­ment or the type of col­lege attended.