The Impact of Need-Based Aid on College Graduation: A Randomized Trial of the Wisconsin Scholars Grant

As the first large-scale random-assignment evaluation of a private need-based aid program, this study will generate the most compelling and rigorous evidence to date on the effectiveness of financial aid as a policy mechanism used to reduce college costs and increase educational attainment.

Beginning this year, the Fund for Wisconsin Scholars will award a grant to low-income college students attending the 42 two- and four-year colleges throughout Wisconsin. Recipients enrolled full-time at universities will receive $3,500 per year, and those at two-year colleges will receive $1,800 per year. Wisconsin is a relatively low-tuition state, and thus this aid represents a significant reduction in college costs for its recipients.

We will examine two cohorts of students, each consisting of all 1,200 grant recipients and a random sample of 1,800 non-recipients. We will collect longitudinal information on a range of factors affected by financial aid—students’ decisions about study and work time, how they manage their money, and their educational and occupational expectations. Such analysis will help us explain precisely how and why financial aid is—or is not—effective in increasing college attainment.

Smith Richardson Foundation funding supports the crucial first phase of our project, during which we will administer a survey to students in the first cohort attending their first year of college. Collecting comprehensive information on all first-year students will facilitate a rich policy-relevant analysis.