Financial Aid Policy: Lessons from Research

47 Pages Posted: 6 Jun 2013

See all articles by Susan M. Dynarski

Susan M. Dynarski

National Bureau of Economic Research (NBER); University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; University of Michigan at Ann Arbor - School of Education

Judith Scott Clayton

Harvard University - Harvard Kennedy School (HKS)

Date Written: January 2013

Abstract

In the nearly fifty years since the adoption of the Higher Education Act of 1965, financial aid programs have grown in scale, expanded in scope, and multiplied in form. As a result, financial aid has become the norm among college enrollees. The increasing size and complexity of the nation's student aid system has generated questions about effectiveness, heightened confusion among students and parents, and raised concerns about how program rules may interact. In this article, we review what is known and what is not known about how well various student aid programs work. We find evidence that lowering costs can improve college access and completion, but this general rule is not without exception. For example, the complexity of program eligibility and delivery appears to moderate the impact of aid, and for students who have already decided to enroll, grants that link financial aid to academic achievement appear to boost college outcomes more than do grants with no strings attached. Future research is likely to focus on several issues: the importance of program design and delivery, whether there are unanticipated interactions between programs, and to what extent program effects vary across different types of students.

Suggested Citation

Dynarski, Susan M. and Scott-Clayton, Judith E., Financial Aid Policy: Lessons from Research (January 2013). NBER Working Paper No. w18710. Available at SSRN: https://ssrn.com/abstract=2275163

Susan M. Dynarski (Contact Author)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
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University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )

735 South State Street, Weill Hall
Ann Arbor, MI 48109
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University of Michigan at Ann Arbor - School of Education ( email )

610 East University Avenue
Ann Arbor, MI 48109-1259
United States

Judith E. Scott-Clayton

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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