Working Paper: Aid and Encouragement

Full Title: Aid and Encouragement: Does a Letter Increase Enrollment Among UI Recipients?

Full Abstract: Displaced workers may not be fully aware of the federal financial aid and enrollment opportunities available to them. Indeed, incomplete knowledge of financial aid availability and eligibility during the recent recession may have limited the extent to which workers receiving Unemployment Insurance (UI) took advantage of collegiate opportunities. In May of 2009, an executive initiative and guidance from the Department of Labor and the Department of Education encouraged states to send letters to UI recipients. These letters: (1) suggested training as an avenue to better job security and higher wages, (2) informed displaced workers about the Pell grant program, and (3) suggested that displaced workers may be given special consideration for Pell grant receipt. We use variation in the sending of Pell letters within and across states to identify the effect of this information on the college enrollment decisions of millions of individuals who began drawing UI between May 2009 and November 2010. Using the 2008 Panel of the Survey of Income and Program Participation, we find that individuals who are likely to have received a letter are four to five percentage points more likely to enroll in college within the following six months. A back of the envelope calculation suggests that the intervention resulted in an increase in enrollment of at least half a million UI recipients. Individuals exposed to the letter appear to complete additional years of college, though our limited window of observation leaves open long-term questions about the economic return to individuals and society.

EdPolicyWorks Working Paper Series No. 40. October 2015.