ProPelled: The Effects of Grants on Graduation, Earnings and Welfare

Title: ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare

Author: Jeffrey T. Denning, Benjamin M. Marx, & Lesley J. Turner

Date: September 2017

A recent report released by the National Bureau of Economic Research examines the effects of Pell Grant aid on low-income students in Texas. The sample consisted of more than 36,000 individuals who were first-time four-year college students between 2008-11 and whose families’ adjusted gross income fell within $12,000 of the threshold for Pell Grant eligibility. The final sample was made up of 46 percent black or Hispanic students and 46 percent white students.

The authors demonstrate that while Pell eligibility does not necessarily increase or change the likelihood of a student choosing to go to college or not, relatively small additional grant aid (approximately $700 on average) at college entry substantially increases college completion and earnings. These effects remained positive not only for the duration of the panel but continued seven years after college entrance. Federal taxes assessed on the increased earnings from these students was estimated to have fully paid for the program only 10 years after initial college entry.

The report concludes that grants targeting low-income students have a substantial benefit, and the Pell Grant pays for itself through quickly realized financial gains for the public.

For more information, read the full report here.