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The Consequences of Performance Standards in Need-Based Aid: Evidence from Community Colleges

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  • Judith Scott-Clayton
  • Lauren Schudde

Abstract

Even need-based financial aid programs typically require recipients to meet Satisfactory Academic Progress (SAP) requirements. Using regression discontinuity and difference-in-difference designs, we examine the consequences of failing SAP for community college entrants in one state. We find heterogeneous academic effects in the short term, but, after six years, negative effects on academic and labor market outcomes dominate. Declines in credits attempted are two to three times as large as declines in credits earned, suggesting that SAP may increase aid efficiency. But students themselves are worse off, and the policy exacerbates inequality by pushing out low-income students faster than their higher-income peers.

Suggested Citation

  • Judith Scott-Clayton & Lauren Schudde, 2020. "The Consequences of Performance Standards in Need-Based Aid: Evidence from Community Colleges," Journal of Human Resources, University of Wisconsin Press, vol. 55(4), pages 1105-1136.
    • Handle: RePEc:uwp:jhriss:v:55:y:2020:i:4:p:1105-1136
    Note: DOI: 10.3368/jhr.55.4.0717-8961R2
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    File URL: http://jhr.uwpress.org/cgi/reprint/55/4/1105
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    Cited by:

    1. Ibrahim Bicak & Lauren Schudde & Kristina Flores, 2023. "Predictors and Consequences of Math Course Repetition: The Role of Horizontal and Vertical Repetition in Success Among Community College Transfer Students," Research in Higher Education, Springer;Association for Institutional Research, vol. 64(2), pages 260-299, March.
    2. Hakimov, Rustamdjan & Schmacker, Renke & Terrier, Camille, 2022. "Confidence and college applications: Evidence from a randomized intervention," Discussion Papers, Research Unit: Market Behavior SP II 2022-209, WZB Berlin Social Science Center.
    3. Christian Belzil & Julie Pernaudet, 2023. "Les effets à court et moyen terme du soutien financier aux étudiants au Québec et dans le reste du Canada," CIRANO Project Reports 2023rp-15, CIRANO.
    4. Veronica Rattini, 2022. "The Effects of Financial Aid on Graduation and Labor Market Outcomes: New Evidence from Matched Education-Labor Data," CESifo Working Paper Series 10010, CESifo.
    5. Minaya, Veronica & Agasisti, Tommaso & Bratti, Massimiliano, 2022. "When need meets merit: The effect of increasing merit requirements in need-based student aid," European Economic Review, Elsevier, vol. 146(C).
    6. Rustamdjan Hakimov & Renke Schmacker & Camille Terrier, 2023. "Confidence and College Applications: Evidence from a Randomized Intervention," Working Papers 962, Queen Mary University of London, School of Economics and Finance.
    7. Skinner, Benjamin T. & Doyle, William R., 2024. "Predicting postsecondary attendance by family income in the United States using multilevel regression with poststratification," Economics of Education Review, Elsevier, vol. 99(C).

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