According to a new study published by the National Bureau of Economic Research, students who receive need-based grants to help cover tuition do better in college than those who don’t receive financial aid. That’s after a student’s background and other possibly related factors are accounted for.
The study also found that students who pay for college with loans do worse than students who get other forms of financial aid.
Researchers suggested that students who get grants might do better because they feel obligated to take their academic performance more seriously. “We find that students receiving financial aid grants perform significantly better than those who are not receiving financial aid, consistent with a social or gift exchange notion that the grants create pressure to reciprocate by taking academic performance more seriously,” researchers wrote.
Researchers measured success in college using grades. On a four-point grade point average scale, students who got need-based financial aid had a GPA about 0.08 to 0.15 points higher than students who got no financial aid.
Students who received student loans did about 0.12 to 0.6 points lower than students who got other forms of financial aid. “The fact that students with loans viewed their education as less worthwhile than those who only received grants is consistent with the notion of mental accounting, where the reminder of the payment makes them more critical of what they paid for,” researchers write.
The study was authored by Peter Cappelli, with the University of Pennsylvania, and Shinjae Won, with the University of Illinois.
Jason Russell is a commentary writer for the Washington Examiner.
