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ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare
Jeffrey T. Denning, Benjamin M. Marx, and Lesley J. Turner
American Economic Journal: Applied Economics. Jul 2019, Vol. 11, No. 3: Pages 193-224

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

Jeffrey T. Denning1, Benjamin M. Marx2 and Lesley J. Turner3

1Department of Economics, Brigham Young University, 435N CTB, Provo, UT 84602, and IZA (email: )

2Department of Economics, University of Illinois at Urbana-Champaign, 214 David Kinley Hall, 1407 W. Gregory, Urbana, IL 61801, MC-707 (email: )

3Department of Economics, University of Maryland, 3114 Tydings Hall, College Park, MD 20742, NBER, and CESifo (email: )

Abstract

We estimate effects of the Pell Grant—the largest US federal grant for college students—using administrative data from Texas public colleges and a discontinuity in grant generosity for low-income students. Within four-year institutions, eligibility for additional grant aid significantly increases first-time students’ degree completion and later earnings. Our estimated impacts on earnings alone are enough to fully recoup government expenditures within 10 years, suggesting that financial aid likely pays for itself several times over. (JEL H75, I22, I23, I26, J24, J31)