Student Aid, Student Behavior, and Educational Attainment

Forty years ago, when the federal system of student loans and grants was born, about half of all recent high school graduates enrolled in college. While significant differences persist across demographic groups, we have made considerable progress in improving access to higher education. Today, two-thirds of those who complete high school enroll in two-year or four-year colleges within a year (NCES, 2013, Table 302.10). Since 1972, the percentage of adults ages 25 or older who have completed at least four years of college has increased from 12 percent to 32 percent (U.S. Census Bureau, 2014, Table A-2).1 Despite this progress, many of those who start college never earn degrees. Among Americans ages 25 and older, 17 percent have some college but no degree (U.S. Census Bureau, 2014, Table A-4). Among students who first enrolled in college in fall 2007, less than 60 percent had completed a degree or certificate after six years. While some were still enrolled, just under one-third had left without a credential (Shapiro & Dundar, 2013). The rising price of college, increasing reliance on student debt, and the significant earnings gap between those with only some college and those who completed degrees have led to an increasing focus on improving completion rates.2 Increasing the number of adults with postsecondary credentials depends both on removing barriers to college access and on finding ways to improve completion rates. In addition to the social and economic factors shaping the lives of young people long before they reach the age when they might begin postsecondary study, the quality of postsecondary pedagogy and academic support systems, the mechanisms available for financing college, and the attitudes and behaviors of students all influence the rate at which individuals successfully complete programs of study. The financial aid system is only one part of this story. But the availability of financial subsidies, the extent to which students understand and can access the system, and the enrollment patterns it encourages all contribute to educational attainment. The issue is not just whether the money is there, but whether financial aid programs and processes are structured to maximize the impact of the available funds on student enrollment and success. This paper examines the U.S. financial aid system from the perspective of its influence on behaviors likely to affect postsecondary enrollment and success. The federal student aid system was designed to diminish financial barriers for students without sufficient resources to pay for