Do High School Career Guidance Programs and Financial Aid Impact Long-Term College and Income Outcomes?

This study investigates whether high school career guidance programs and student financial aid impact long-term educational and income outcomes. Using administrative data from a randomized control trial involving over 4,000 Canadian students, the research examines college enrollment, graduation rates, and earnings up to age 29. The career guidance intervention increased four-year college enrollment by 10 percentage points and raised annual adult income by approximately CA$2,700. Financial aid also increased enrollment but had a weaker impact on earnings. The findings suggest career guidance is more effective in improving long-term economic outcomes, particularly for students from lower-income backgrounds.

Full Citation and Link to Article

Renée, Laetitia. "The Long-Term Effects of Career Guidance in High School and Student Financial Aid: Evidence from a Randomized Experiment". AMERICAN ECONOMIC JOURNAL: APPLIED ECONOMICS (FORTHCOMING)

https://www.aeaweb.org/articles?id=10.1257/app.20230342&from=f

Extended Summary

Central Research Question

This study explores the long-term effects of high school career guidance programs and student financial aid on college enrollment, graduation rates, and labor market outcomes. Specifically, it asks: Do career guidance programs and financial aid improve post-secondary education attainment and later earnings, particularly for low-income students? While prior research has demonstrated short-term benefits of such interventions, this study examines whether these effects persist into adulthood. Using a large-scale randomized control trial, the research compares the impacts of career guidance, financial aid, and a combination of both to determine which intervention is most effective in fostering long-term success.

Previous Literature

A well-documented trend in education research is that students from low-income families are less likely to enroll in and complete college, even when controlling for academic performance. Previous studies suggest this gap may be due to financial constraints, informational barriers, and behavioral frictions that affect decision-making.

Financial aid has been shown to increase college enrollment in the short term, with systematic reviews finding that every $1,000 of grant aid eligibility increases enrollment by 3–4 percentage points and completion by 1.5–2 percentage points. However, evidence on long-term earnings effects remains mixed. Some studies find that grant aid boosts earnings, while others report no significant impact, implying that marginal students enrolling due to financial incentives may see limited labor market returns.

Similarly, career guidance programs have been found to help students navigate post-secondary education choices, particularly through interventions such as counseling, informational workshops, and mentoring. Research on programs like College Possible and Bottom Line has shown that intensive guidance can increase college enrollment among disadvantaged students. However, fewer studies examine whether these interventions lead to long-term economic benefits.

This paper contributes to the literature by directly comparing career guidance and financial aid interventions within the same experimental design. The study also leverages newly available administrative data, allowing for an assessment of long-term outcomes like income at ages 27–29, which is a key gap in the existing research.

Data

The study analyzes data from the Future to Discover Project, a randomized control trial conducted in New Brunswick, Canada, during the late 2000s. The experiment involved over 4,000 high school students who were randomly assigned to one of three treatment groups or a control group.

The three interventions included:

A career guidance program offering workshops from Grades 10 to 12, aimed at helping students explore education and career options.

A financial aid program providing grants of up to CA$9,600, contingent on post-secondary enrollment.

A mixed intervention, which combined both career guidance and financial aid.

Students from low-income families were randomly assigned to any of these three interventions or a control group, while high-income students were only assigned to either the guidance program or the control group.

The study uses multiple sources of administrative data, including post-secondary institution records, tax filings, and survey responses, to track college enrollment, graduation, and income outcomes up to age 29. The data includes information on both four-year universities and community colleges but does not cover private career colleges.

Methods

The research employs an intent-to-treat (ITT) analysis, comparing average outcomes across different treatment and control groups. The key outcome measures include:

College enrollment: Whether a student ever enrolled in a four-year university or a community college.

College graduation: Whether a student completed a degree within 10 years of high school graduation.

Labor market outcomes: Average annual income at ages 27–29, using tax records.

The estimation strategy controls for student background characteristics and includes stratification by school and income level. Additionally, the study examines whether effects differ between high- and low-income students and whether career guidance and financial aid interact to produce stronger outcomes.

Findings/Size Effects

The study finds that career guidance had significant and lasting effects on college enrollment and earnings, whereas financial aid primarily increased college enrollment without strong effects on later income.

Career Guidance Effects

Increased four-year college enrollment for low-income students by 10 percentage points, representing a 50% increase from the baseline rate.

Had no significant effect on community college enrollment.

Increased four-year college graduation by 4.8 percentage points.

Led to a CA$2,700 increase in annual labor income at ages 27–29, a 10% income boost compared to the control group.

For high-income students, career guidance had a different impact:

It did not increase four-year college enrollment but reduced college dropout rates by 3 percentage points.

The effect on earnings was positive but not statistically significant.

Financial Aid Effects

Increased both four-year and community college enrollment for low-income students by 5 percentage points each.

Increased community college graduation by 7.6 percentage points but had no effect on four-year college graduation.

Had no statistically significant impact on income at ages 27–29.

The absence of income effects suggests that financial aid primarily helped students enroll in lower-return educational pathways.

Mixed Intervention Effects

Had similar impacts to career guidance alone, increasing four-year college enrollment by 8 percentage points and annual income by CA$1,530.

The additional financial aid did not enhance outcomes beyond what career guidance alone achieved.

A key insight from these results is that career guidance had stronger long-term benefits than financial aid, particularly for low-income students. The financial aid intervention, while effective in boosting enrollment, did not lead to substantial labor market gains.

Conclusion

This study provides compelling evidence that career guidance programs can generate meaningful long-term benefits for disadvantaged students, improving both college graduation rates and labor market earnings. In contrast, financial aid alone increased college enrollment but had limited effects on adult income.

The findings suggest that addressing informational and behavioral barriers through structured guidance can be more effective than simply reducing financial constraints. Many students who enrolled due to financial aid may have entered lower-return programs, which did not significantly enhance their earnings potential.

Policymakers seeking to improve post-secondary and economic outcomes should consider expanding access to structured career guidance in high schools. The study also raises questions about how to design financial aid programs to maximize returns, potentially by pairing them with mentorship or career advising.

Overall, this research highlights the long-term impact of early career support and suggests that investing in guidance programs may be a more cost-effective way to reduce educational and income disparities than financial aid alone.