Public universities are intent on increasing degree completion for many reasons. A stronger policy focus on completion and interest in removing students’ financial hurdles has led to a rapid proliferation of completion grant programs.
In this paper, we explain why discussions must take into account a critical issue conspicuously absent from most public debate about reforming higher education financing, and student loans in particular: There is a substantial racial disparity in families’ need to borrow for college, such that black students depend much more heavily on access to loans than white families, and leave college with a great deal more in student loan debt than their white counterparts.
This paper draws on a randomized experiment to investigate an alternative explanation related to resource constraints. Findings indicate that university students from low-income families who were offered additional need-based grant aid were 7.87 percentage points more likely to declare a STEM major than similar peers, representing a 42% increase.