Aligning Dollars with Demand: Effects of Workforce-Aligned Financial Aid on Postsecondary and Labor Market Outcomes

Session Submission Type: Panel

Abstract

In an era of rapid economic and technological change, both state and federal policymakers have increasingly turned to workforce-aligned financial aid programs as a strategic tool to guide students into high-demand fields. These programs represent a significant evolution in postsecondary policy: rather than providing general subsidies for college attendance, they incentivize enrollment in programs that offer strong labor market prospects. This panel brings together four studies offering rigorous new evidence on how such targeted financial aid policies shape students’ postsecondary trajectories and employment outcomes.

The first paper evaluates Kentucky’s Work Ready Kentucky Scholarship (WRKS), a statewide last-dollar grant supporting enrollment in certificate and associate programs within state-identified high-demand industries. Using stacked difference-in-differences designs with administrative student-level data, the authors find that WRKS significantly boosts enrollment and credential attainment, with earnings gains emerging within two years of enrollment.

The second paper examines Virginia’s Get a Skill, Get a Job, Get Ahead (G3) initiative, a bipartisan effort to provide tuition-free community college in fields such as healthcare, IT, and skilled trades. Drawing on statewide administrative data spanning seven cohorts, the study employs individual fixed effects and a regression discontinuity design to estimate impacts on program-field alignment, earnings, and post-college employment. The results suggest that G3 increases alignment between educational programs and subsequent jobs and leads to higher post-graduation earnings, though its effects on in-college employment are limited.

The third and fourth papers turn to federal policies that have long sought to support education-to-employment pipelines. The third paper revisits the National Defense Student Loan (NDSL) program, established in 1958 to expand access to STEM and foreign language fields in the interest of national security. Using newly digitized historical state-level data merged with ACS, Census, and HRS datasets, the authors find that NDSL increases college enrollment and bachelor’s degree attainment, especially in foreign language majors among women. However, the effects on STEM outcomes are more mixed.

The fourth paper analyzes the Federal Work-Study (FWS) program, which allows eligible students to work part-time while enrolled in college or technical school. Work-Study positions are typically related to the student’s field of study or geared toward serving the community. Using a difference-in-differences approach with administrative data from a large, multi-campus public college system, the study finds that FWS increases college enrollment, particularly among independent students, even though it has limited effects on persistence, credit accumulation, or graduation.

Together, these studies provide timely and policy-relevant evidence on how financial aid can function as a lever for workforce development, helping align student decisions with labor market demand. They also demonstrate how different program designs, from state-administered scholarships to federally supported work and loan programs, can serve as vehicles for closing skill gaps and expanding access. The panel’s findings have direct implications for policymakers seeking to develop student aid programs that are both labor market-responsive and inclusive of historically underserved populations.

Policy Area

• Education

Chair

• Rajeev Darolia, University of Kentucky

Discussants

• Riley Kaitlin Acton, Miami University

• Paco Martorell, University of California, Davis

Individual Presentations

• The Effects of Workforce-Aligned Grants on College Enrollment, Credential Completion, and Labor Market Outcomes - Non-Presenting Co-Author: Rajeev Darolia, University of Kentucky; Non-Presenting Co-Author: Ron W Zimmer, University of Kentucky; Presenting Author: Chuanyi Guo, University of Kentucky; Non-Presenting Co-Author: Emily Wilcox Walls, University of Kentucky; Non-Presenting Co-Author: Kangwook Noh, University of Kentucky

• Grant Aid Effects on Earnings & Employment: Evidence from Virginia’s Tuition-Free College Program - Presenting Author: Daniel Sparks, University of Arkansas; Non-Presenting Co-Author: Sade Bonilla, University of Pennsylvania

• Workforce-Focused Financial Aid and Career Outcomes: Evidence from the National Defense Student Loan Program - Non-Presenting Co-Author: Joshua Goodman, Boston University; Non-Presenting Co-Author: Tadeja Gracner, University of Southern California; Presenting Author: Mingyan Ma, Boston University; Non-Presenting Co-Author: Christine Mulhern, RAND Corporation

• What Does Federal Work-Study Offer? Quasi-Experimental Evidence From Administrative Data - Presenting Author: Veronica M. Minaya, Teachers College, Columbia University; Non-Presenting Co-Author: Adela Ruth Soliz, Vanderbilt University; Non-Presenting Co-Author: Judith Scott-Clayton, Teachers College, Columbia University; Non-Presenting Co-Author: Tianshu Ma, Teachers College, Columbia University

Organizer

• Chuanyi Guo, University of Kentucky