The goal of most financial aid programs is to increase educational attainment for prospective students who might not otherwise be able to enroll in college or to complete a degree. In Marginal Effects of Merit Aid for Low-Income Students (NBER Working Paper 27834), Joshua Angrist, David Autor, andAmanda Pallais measure the impact of a Nebraska program that provides students from low-income families with full scholarships to public colleges and universities. Unusually for research of this sort, the study relies on a randomized controlled trial.
The study found that award recipients enrolled in four-year degree programs at higher rates and were less likely to drop out than those in the randomly selected control group. Among those who said they were targeting four-year degree programs, awards increased bachelor's degree completion by 8.4 percent, relative to the mean of 63 percent for the control group that did not receive aid. Conversely, awards made to applicants who planned to seek a two-year degree did not increase their likelihood of earning that degree.