RAND researchers studied more than 450,000 recipients of New Jersey's Tuition Aid Grant — the nation's most generous state-funded grant program per state resident college student — to explore whether getting larger amounts of grant aid led to higher graduation rates for students at varying income levels and attending two-year, four-year, public, and private institutions.

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Cutting the College Price TAG

The Effects of New Jersey's Tuition Aid Grant on College Persistence and Completion

by Drew M. Anderson, Melanie A. Zaber

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Research Questions

  1. How much does an additional $1,000 in TAG aid increase short-term persistence: either graduating or re-enrolling for an additional year of college?
  2. How much does an additional $1,000 in TAG aid increase longer-term completion: graduation and/or transferring from a community college to a university?
  3. How do these effects differ across sectors: all students together, community colleges, public universities, and private nonprofit colleges and universities?
  4. How do these effects differ for students with the lowest incomes?

RAND researchers studied more than 450,000 recipients of New Jersey's Tuition Aid Grant (TAG) — the nation's most generous state-funded grant program per state resident college student — to explore whether getting larger amounts of grant aid led to higher graduation rates for students at varying income levels and attending two-year, four-year, public, and private institutions. The data set covered school years 2012–2013 through 2019–2020 at 52 colleges and universities. Students received from $1,000 to $13,000 per year in TAG awards, plus $600 to $6,000 per year in federal Pell Grant aid. Grants help students cover tuition and living expenses and do not need to be paid back.

On average, TAG aid increased the rate of on-time bachelor's degree completion at public universities, the sector where TAG has the most recipients and covers the largest percentage of tuition costs. An additional $1,000 in aid over four years led to a 2.6 percentage point increase in the graduation rate from a sample average graduation rate of 35 percent, a significant increase and higher than the average effect found in prior studies of other aid programs. In community colleges and at private colleges and universities, the effect of TAG for its lowest-income recipients on four-year graduation outcomes was positive and marginally statistically significant.

Key Findings

  • TAG increased the rate of on-time bachelor's degree completion at public colleges and universities. Receiving an additional $1,000 improved graduation by 2.6 percentage points, a significant increase.
  • At private nonprofit colleges and universities, TAG was significantly more helpful to the lowest-income students. For the moderate-income group, additional TAG aid did not increase graduation rates, perhaps because it merely offset other sources of aid.
  • At New Jersey's county colleges, there was suggestive evidence that TAG aid was more helpful for the lowest-income students, but results were not conclusive.
  • TAG was effective at helping already-enrolled students finish their degrees earlier. Among our sample of college applicants, there was not conclusive evidence that additional TAG aid increased rates of initial enrollment.

Recommendations

  • New Jersey is pursuing a goal of college degrees for 65 percent of its adult population by 2025. TAG will play an important role toward that goal, and the study suggests that increased funding for TAG could accelerate progress by supporting faster degree completion.
  • In the private college sector, funding more of the lowest-income students at the maximum award amount is likely to have a significantly greater positive effect on four-year graduation rates than funding more of the moderate-income students at a lower award amount.
  • TAG is most effective at helping already enrolled students finish degrees earlier, rather than shaping whether college applicants enroll in college. This indicates that there is room for improvement in communicating awards earlier to potentially attract student enrollment.

Table of Contents

  • Chapter One

    Meeting College Students' Needs Through Financial Aid

  • Chapter Two

    TAG Program and Data

  • Chapter Three

    Cumulative Regression Discontinuity Design

  • Chapter Four

    TAG Effects by Context

  • Chapter Five

    Informing Financial Aid Policy

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The research described in this report was sponsored by the ECMC Foundation and conducted by RAND Education and Labor.

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