ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare

A new article in the American Economic Journal-Applied Economics explores the effects of Pell Grants on enrollment, college completion, and later earnings for low-income students. Using administrative data from Texas public colleges, the authors find that eligibility for more Pell Grant assistance increases new students’ degree completion and later earnings. Importantly, enrollment effects were strongest for first-time students and students enrolling in community college. Graduation and earnings effects were also strongest for first-time students, still in effect seven years after grant receipt. The authors conclude that the benefits of additional aid to low-income students provides a significant return on investment through financial gains to the public over time.