Examining the Role of the State: Need-Based Grants and Their Effect on Student Persistence and Degree Completion

• In Event: The Intersection of State Policy and Student Attainment

Abstract

This study examines the effect of state need-based financial aid on crucial student outcome measures at 4-year institutions. In particular, I seek to analyze differential effects across income groups. To account for potential endogeneity bias and the nested data structure, this study employs a propensity score matching, multilevel modeling approach. Preliminary results show, state need-based grants significantly increase chances for low-income students to obtain a baccalaureate degree within six years. Estimates for the ATET show, students from the lowest income backgrounds are 4.7% to 7.7% more likely to graduate with every additional $1,000 received in this form of state financial aid.

Author

• Ray Franke, University of Massachusetts - Boston