The Impact of Pell Grant Eligibility on Community College Students

This article examines the effects of receiving a modest Pell Grant on financial aid packages, labor supply while in school, and academic outcomes for community college students. Using administrative data from one state, the authors compare students just above and below the expected family contribution cutoff for receiving a Pell Grant.

The authors find that other financial aid adjusts in ways that vary by institution: Students at schools that offer federal loans borrowed more if they just missed the Pell eligibility threshold, but at other schools, students were instead compensated with higher state grants.

At loan-offering schools,  receiving a modest Pell Grant leads students to reduce labor supply and increase enrollment intensity. Therei s  indirect evidence that students’ initial enrollment choices are influenced by an offer of Pell Grants versus loans.