Does the Summer Pell Grant Improve College Completion and Employment Outcomes?

This study examines whether the Summer Pell Grant (SP) improves college completion and employment outcomes. Using administrative data from the City University of New York (CUNY), the study employs a difference-in-differences approach to compare SP-eligible and ineligible students. Findings show that SP eligibility increased summer enrollment by 2.3–5.1 percentage points, associate’s degree attainment by 1.3–5.4 percentage points, and earnings up to nine years post-college by $753–$1,357 annually. Effects were strongest for Black and older students. The reinstated SP had larger impacts than the original, suggesting greater familiarity and policy refinements enhanced effectiveness.

Full Citation and Link to Article

Liu, V. Y. T., Zhou, R. Y., & Matsudaira, J. (2024). Six Years Later: Examining the Academic and Employment Outcomes of the Original and Reinstated Summer Pell Grant. Association for Education Finance and Policy. https://doi.org/10.1162/edfp_a_00423

Extended Summary

Central Research Question

The study investigates the impact of the Summer Pell Grant (SP) on academic and labor market outcomes. Specifically, it asks whether SP eligibility improves college persistence, degree attainment, and post-college employment earnings. The research explores both the original SP program (2009–2011) and its reinstated version (2017–present), assessing differences in outcomes between SP-eligible and ineligible students. Given concerns that summer tuition costs could hinder low-income students’ educational progress, the study seeks to determine whether expanding Pell Grant coverage to summer terms increases degree completion and enhances long-term employment prospects.

Previous Literature

The research builds on prior studies examining the relationship between financial aid and educational outcomes. The Pell Grant program is a well-established federal initiative supporting low-income students, but it traditionally covered only two semesters per academic year. Studies indicate that uninterrupted year-round enrollment improves college persistence and graduation rates (Adelman, 2006; Attewell et al., 2012). However, only limited research has focused on financial aid for summer enrollment.

Earlier work on the original SP program suggests it increased summer enrollment but had limited documented effects on degree completion due to data constraints (Bannister & Kramer, 2015; Friedmann, 2016). Liu (2020) found that the SP program improved retention and short-term earnings, but there was little evidence on long-term effects or the impact of the reinstated SP. This study expands upon previous work by providing causal estimates of SP’s effects using longer-term data, examining both initial and reinstated implementations.

Data

The study uses administrative data from the City University of New York (CUNY), the largest urban public university system in the U.S., serving a diverse and economically disadvantaged student population. The dataset links student demographic and academic records with employment and earnings data from the New York State Department of Labor.

The analysis focuses on first-time college students entering community colleges between 2005–2010 (for the original SP) and 2013–2018 (for the reinstated SP). Students are categorized into SP-eligible (full-time Pell recipients) and ineligible (part-time students). Outcomes examined include summer enrollment, credit accumulation, second-year retention, associate’s and bachelor’s degree attainment, and post-college earnings up to nine years after enrollment.

Methods

The study employs a difference-in-differences (DID) design, comparing outcomes between full-time and part-time students before and after SP implementation. Since part-time students are generally ineligible for the SP, they serve as a control group, isolating the program’s effects from broader educational trends.

The model estimates the intent-to-treat (ITT) effect of SP eligibility, focusing on changes in summer enrollment, degree attainment, and earnings. The authors also conduct robustness checks, including alternative definitions of SP eligibility, parallel trends tests, and an event-study analysis to verify the validity of their approach.

Findings/Size Effects

The results indicate that the SP program significantly improves educational and labor market outcomes.

1. Summer Enrollment and Retention:

   • SP eligibility increased summer enrollment by 2.3 percentage points (15% increase) under the original program and by 5.1 percentage points (24% increase) under the reinstated program.

   • Retention into the second year rose by 2.9 percentage points (original SP) and 3.5 percentage points (reinstated SP).

2. Degree Completion:

   • Associate’s degree attainment increased by 1.3 percentage points (original SP) and 5.4 percentage points (reinstated SP), representing a 13–27% improvement.

   • The original SP led to a 0.8 percentage point increase in six-year bachelor’s degree completion. Data on long-term bachelor’s degree completion is not yet available for the reinstated SP.

3. Earnings Gains:

   • Earnings increased by $753 (year 3), $995 (year 6), and $1,357 (year 9) for SP-eligible students compared to their ineligible peers.

   • Employment rates were not significantly affected, suggesting that higher earnings resulted from increased educational attainment rather than employment likelihood.

4. Heterogeneous Effects:

   • Race: Black students experienced the most pronounced benefits, with a 3.4 percentage-point increase in summer enrollment and a 1.3 percentage-point rise in bachelor’s degree completion. Hispanic students saw modest gains, while White students had negligible effects.

   • Age: Older students (25+) benefited more than younger students, with a 9.6 percentage-point increase in summer enrollment, a 2.6 percentage-point increase in associate’s degree completion, and higher post-college earnings gains.

5. Stronger Effects for Reinstated SP:

   • The reinstated SP had larger impacts than the original, likely due to increased program familiarity, improved implementation, and broader eligibility across multiple summer terms.

   • Take-up rates were higher: 18% of eligible students used the reinstated SP, compared to 12% under the original program.

     
     

Conclusion

This study provides robust evidence that the Summer Pell Grant positively impacts college persistence, degree attainment, and earnings. By enabling year-round enrollment, the program accelerates students’ progress toward degrees, ultimately improving labor market outcomes. The findings suggest that reinstating and maintaining SP funding is beneficial, particularly for underrepresented groups such as Black and older students.

The study also highlights policy implications, emphasizing the need for continued financial support for summer enrollment. Colleges should expand summer course offerings and advising support to maximize SP’s effectiveness. Future research should examine long-term impacts of the reinstated SP, particularly bachelor’s degree completion and career trajectories.

Overall, the results reinforce the importance of financial aid policies that promote continuous enrollment, demonstrating that year-round Pell funding is an effective tool for improving educational and economic opportunities for low-income students.