The Long-Term Impact

June 21, 2016

By Ellen Wexler

Researchers say the real test of a state student aid program may not be enrollment alone, but graduate school, lifetime income and more.

When a student receives financial aid, the immediate goal is obvious: getting that student enrolled.

But if that aid money comes from the state, the long-term goals typically go beyond enrollment. States want more students to graduate, to earn more money over the course of years -- and, eventually, to stick around, driving the state’s economic growth.

So without studying long-term outcomes, how can we know if financial aid really works?

That’s the argument behind a new working paper (the abstract is available here) from the National Bureau of Economic Research. The researchers studied whether California’s aid program, called Cal Grants, affected enrollment, completion, institution type, earnings and location among students who graduated high school in the late ’90s. They found that Cal Grants actually have very little effect on college attendance -- but they matter for graduation, persistence and future earnings.