Financial Aid Policy: Lessons from Research

By: Susan Dynarski & Judith Scott-Clayton | The Future of Children, 23(1) | Spring 2013

This article reviews what is known, and just as important, what is not known, about how well various student aid programs work. The evidence clearly shows that lowering costs can improve college access and completion. But this general rule is not without exception. First, the complexity of program eligibility and delivery appears to moderate the impact of aid on college enrollment and persistence after enrollment. Second, for students who have already decided to enroll, grants that tie financial aid to academic achievement appear to boost college outcomes such as persistence more than do grants with no strings attached. Third, compared with grant aid, relatively little rigorous research has been conducted on the effectiveness of student loans. The paucity of evidence on student loans is particularly problematic both because they represent a large share of student aid overall and because their low cost (relative to grant aid) makes them an attractive option for policymakers.