We estimate effects of the Pell Grant—the largest US federal grant for college students—using administrative data from Texas public colleges and a discontinuity in grant generosity for low-income students. Within four-year institutions, eligibility for additional grant aid significantly increases first-time students' degree completion and later earnings. Our estimated impacts on earnings alone are enough to fully recoup government expenditures within 10 years, suggesting that financial aid likely pays for itself several times over.
Denning, Jeffrey T., Benjamin M. Marx, and Lesley J. Turner.
"ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare."
American Economic Journal: Applied Economics,
State and Local Government: Health; Education; Welfare; Public Pensions
Educational Finance; Financial Aid
Higher Education; Research Institutions
Returns to Education
Human Capital; Skills; Occupational Choice; Labor Productivity
Wage Level and Structure; Wage Differentials