What Happens when Students Must Meet Academic Standards to Receive Need-Based Aid?

College students who receive need-based financial aid typically must meet minimum academic standards to stay eligible, and it’s not well understood how this impacts their outcomes. Do these standards encourage low-income college students to improve their academic performance, or encourage them to drop out? Judith Scott-Clayton and Lauren Schudde examined the consequences of failing to meet Satisfactory Academic Progress (SAP) standards for federal aid recipients—specifically, a minimum 2.0 GPA requirement—among community college entrants in one state.

The team looked at the relationship between first-year GPA and subsequent outcomes for students receiving federal aid, and then compared this to patterns observed for students not receiving federal aid. They used two quasi-experimental designs—regression discontinuity and difference-in-difference methods —to estimate whether students on federal aid are affected by the potential consequences of falling below a 2.0 GPA.

Failing to meet the SAP standard in the first year of college appeared to encourage effort in the short term, resulting in a small increase in second-year GPA among students who just missed the GPA requirement. But, it also discouraged some students from continuing in college.

After six years, the results were decidedly more negative. Students who failed to meet the SAP requirements early in college were more likely to have dropped out than their similar-performing peers who were not subject to the policy. They were also less likely to have earned a certificate and earned lower wages.

Students were discouraged from attempting some credits they were unlikely to complete, so the SAP standards requirement may increase aid efficiency from a policymaker perspective. But if the desired outcome is to nudge these students to succeed in college, it’s not a success. The SAP policy also exacerbates inequality by pushing federal aid recipients—low-income students who stand to benefit from a college education—out of college faster than their peers who are not held to the same standards.

Read the full study in the Journal of Human Resources: “The Consequences of Performance Standards in Need Based Aid: Evidence from Community Colleges,” by Judith Scott-Clayton and Lauren Schudde.
Judith Scott-Clayton (@jscottclayton) is at Teachers College, Columbia University. Lauren Schudde (@LaurenSchudde) is at The University of Texas at Austin.

This research was supported by the Institute of Education Sciences, U.S. Department of Education, through Grant R305C110011 to Teachers College, Columbia University (Center for Analysis of Postsecondary Education and Employment). The opinions expressed are those of the authors and do not represent views of the Institute or the U.S. Department of Education.