Study Shows Higher Earnings For Pell Grant Recipients, But Many Utah Students May Be Missing Out
The cost of higher education is a campaign issue for at least two of the 2020 presidential candidates, who are floating, proposals to wipe out some of the country’s ever-growing student loan debt.
Meanwhile, in Utah, grants that don’t have to be paid back are stunningly underutilized by students. But a new study shows those grants can have a huge impact on college students’ future.
Low-income U.S. students received $28 billion in federal Pell Grants in the 2015-16 academic year, according to the study by researchers from Brigham Young University, the University of Illinois at Urbana-Champaign and Vanderbilt University.
“Grants can be really helpful for driving student graduation and earnings,” said Jeff Denning, a BYU economics professor who worked on the study. “This can actually have benefits on the tax side, where the students will pay increased taxes and this will actually pay for itself.”
But in Utah, many students may be missing out. Nationwide, Utah has the second lowest completion rate — 38% — of the Free Application for Federal Student Aid (FAFSA), according to the National College Access Network. The Washington-based organization aims to close equity gaps in postsecondary education, and produces the Form Your Future FAFSA Tracker, an interactive data dashboard that tracks and ranks states’ progress toward 100 percent of their high school seniors completing the FAFSA.
By not completing the FAFSA, Utah students left “almost $40 million on the table” in 2017 and 2018, said Dave Woolstenhulme, Utah’s interim commissioner of higher education, who said the state played a role in the students not taking advantage of Pell Grants.
“We have not done a good enough job in the state of Utah to help make students aware of what’s available to them,” he said.
The study, titled “ProPelled: The Effects of Grants on Graduation, Earnings and Welfare,” looked at educational and financial outcomes for a sample of about 37,000 Texas college students. It looked at those who received the maximum Pell Grant and students whose families made a dollar over the eligibility threshold to receive the maximum grant award. That additional dollar meant a difference of about $700 in Pell Grant money, Denning said.
The maximum Pell Grant amount has fluctuated between $5,620 in the 1977-78 school year and $5,920 in the 2017-18 school year, according to an analysis by the College Board, the nonprofit organization behind the SAT tests.
The Pell Grant study found that the likelihood of first-time college students completing a bachelor’s degree within five years increases by 5 percentage points for every $1,000 of grant aid received.
Every $1,000 in grant aid also mean an extra earning potential of $1,000 four years after starting college, Denning said. The study anticipates that the more students earn, the more they will pay in taxes, meaning they will indirectly return the money they received in grants to the federal government within 10 years.
“People think of the Pell Grant as something that the government is handing out,” he said. “So this is actually, for the sample we are looking at, a money maker for the federal government to invest in.”
About 58,000 Utah students received $223 million in Pell Grants in the 2017-18 fiscal year, according to the Utah System of Higher Education (USHE).
Last year, the USHE set a goal to increase the state’s FAFSA completion to 40% by 2019, but fell short by 2 percentage points. Higher ed leaders are hoping to improve the rate as they expand a program that seeks to add a college advisor in every Utah high school.
This fall the first 34 college access advisors of the USHE program are starting work in four Utah regions — Weber/Davis County, Salt Lake County, Utah County and Washington County.