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November 07, 2012 10:00 AM What Financial Aid Policies Work?

By Daniel Luzer

As education policymakers consider changes to financial aid, including rules about repayment of federal loans and total funding for federal grants, Andrew Kelly at the American Enterprise Institute wonders something interesting: why don’t we know which financial aid policies work? We’ve had federal financial aid since the 1960s, don’t we have some idea which ideas work?

No, we don’t. As Kelly explains:

As the Pell Grants and other financial-aid programs come under scrutiny, people leery of changing them caution that any modifications must be “research based.” William J. Goggin, executive director of the federal Advisory Commission on Student Financial Assistance, recently warned that any effort to focus on college completion rather than access must be carefully weighed. “The burden of proof should be on those who say you can redistribute and come out ahead,” he told Inside Higher Ed. The nonprofit Center for Law and Social Policy said in a news release that revisions must be “backed up with data showing that change is needed and that the proposed changes will help—not hurt—needy students.”
Those warnings illuminate the hulking elephant in the room: the sheer lack of rigorous, thoughtful research examining the impact of financial aid on student success. Simply put, current research doesn’t answer basic questions about how changes in financial-aid programs would affect student behavior.

Yes, why aren’t there randomized control trials for federal financial aid policy ideas?

Kelly brings up an curious point, which is that we really should be making a serious effort to study policy, not simply make changes based on perceived problems or potential benefits.

As he points out, there are studies about financial aid but most concentrate on enrollment decisions, not completion. That doesn’t really explain how financial aid is or is not effective. That’s not a great way to make decisions.

If we want to develop effective and efficient financial-aid policy, based on facts rather than fiction, then policy makers need to get serious about investing in research and development.

Good luck with that. While mere opinions and beliefs might be a bad way to run policy it is, however, very common for higher education.

In truth, “the sheer lack of rigorous, thoughtful research” is not the hulking elephant in the room; it’s the room itself. Most education research is pretty terrible. For a number of reasons it’s incredibly difficult to find randomized control trials for anything in education.

In part this is because those policy makers who “need to get serious about investing in research and development” don’t face much pressure to fund and generate good research. They do, however, face extensive pressure from interest groups eager to get funding for their own programs.

Furthermore, just looking back to recent history reveals funding for research isn’t likely to be forthcoming anytime soon.

In Congressional budget negotiations last year the Pell Grant program, which provides education funding for low-income college students, came up for funding reductions. Congress managed to keep the maximum Pell Grant at $5,550, but only by reducing the qualifications for the award (meaning that people only qualify automatically if their income is particularly low) and decreasing the number of semesters a student could receive the grant.

This is despite the fact that increasing income qualifications and decreasing the number of semesters for which it was possible to receive money were a positions no one even thought was a good idea; much less had rigorous research to back up.

Considering fights over basic funding, it’s going to be really difficult to find extra money to fund rigorous, large-scale research.

But I guess it’s worth a try. AEI, you go first.

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer