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Policy Framework
One factor affecting low-income students’ ability to realize their educational goals — whether they aspire to earn a degree, complete a credential, and/or successfully transfer to a four-year institution — is having adequate financial resources to cover college-related costs. Unfortunately, many low-income college students are not accessing and using the financial aid for which they are eligible in a manner that supports their aspirations. For example, many students do not understand that financial aid is available to cover a broad range of educational costs, including living expenses. At some institutions, students may be encouraged to take out student loans to cover educational and living expenses without a clear understanding of the advantages and disadvantages of federal versus private loan options. In some cases, the prospect of accumulating significant debt may lead students to go to school part time so that they can work or to avoid enrolling in college altogether. Finally, students who do not apply for financial aid — or who do not make full use of the aid that is available — often end up working long hours to cover their living expenses. Balancing work and academic responsibilities is difficult and can lead students to perform poorly in school or drop out.
In partnership with The Institute for College Access and Success (TICAS), MDRC has launched the Aid Success Project to explore how changes in the information students receive and in the delivery of need-based grants may help students perform better academically. The Aid Success Project is exploring how changes in communication practices and delivery strategies related to financial aid may help students succeed academically. We hypothesize that minor changes in financial aid delivery — for instance, more regular payments and tools to inform students about how using aid to limit their work hours can lead to better academic outcomes — will help students use available aid more effectively. As a result, students may be able focus more time and energy on academic pursuits, increasing the likelihood they will complete a credential and/or transfer to a four-year institution.
Agenda, Scope, and Goals
The goal of the Aid Success Project is to investigate whether the informational sessions and distribution mechanisms described below may lead to improvements in academic progress and college completion rates. The programs will be targeted to low-income students attending two- and possibly four-year public institutions.
In the short term, we anticipate the proposed strategies will:
- Motivate students to access available aid for which they are eligible
- Help students make more informed choices about financial aid options, including student loans
- Encourage students to keep work hours to a manageable level, to stay enrolled in school, and to devote more time to academic pursuits
Design, Sites, and Data Sources
Two strategies will be explored:
Strategy #1: Working Smart
An interactive, online session has been developed to inform students about the inverse relationship between hours of work and college completion and to encourage them to keep employment under 20 hours per week while in school. The online session also makes students aware of the financial aid options that are available to them and explains the difference between federal and private loans.
Strategy #2: Aid Like a Paycheck
Students who receive need-based grants typically receive their funding in one or two lump sums during the semester. For Aid Like a Paycheck, we are exploring disbursing aid more evenly throughout the semester, more like a paycheck and less like a windfall, to help students budget and manage their expenses. The idea is to reduce the likelihood that students will spend their grant money too quickly and end up dropping classes or cutting back on study time in favor of additional work.
The Aid Success Project will target low-income students attending selected community colleges in several states, including California and Illinois. During a pilot phase, approximately 900 students will be served. A formative evaluation will be conducted to determine whether the strategies are operationally feasible and appear beneficial for students. MDRC and TICAS will issue a report on the findings from the pilot phase in early 2012.
If the pilot phase suggests that the strategies are helpful to students, MDRC and TICAS may propose a more rigorous evaluation involving random assignment of students to program and control groups to determine the impact of the strategies on students’ academic progress and achievement, persistence, graduation, indebtedness, and other measures. The findings will be used to inform federal and state policy decisions involving financial aid and will also help community colleges, and possibly four-year institutions, to structure their financial aid counseling and distribution practices so that as many eligible students as possible are applying for, receiving, and effectively using the aid that is available to them.
What's Next
In spring 2010, MDRC and TICAS began recruiting institutions willing to pilot-test Working Smart or Aid Like a Paycheck. An impact study is not likely to begin until 2013.
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