The Impact of Pell Grant Eligibility on Community College Students’ Financial Aid Packages, Labor Supply, and Academic Outcomes

In this article, the authors examine the effects of receiving a modest Pell Grant on financial aid packages, labor supply while in school, and academic outcomes for community college students. Using administrative data from one state, the authors compare community college students just above and below the expected family contribution (EFC) cutoff for receiving a Pell Grant. Focusing on the loan-offering schools where students face a discontinuity in total grant aid, the authors find suggestive evidence that receiving a modest Pell Grant instead of additional loans leads students to reduce labor supply and increase enrollment intensity. The authors also provide indirect evidence that students’ initial enrollment choices are influenced by an offer of Pell Grants versus loans.