Costly Withdrawals Reduce Future College-Going for Low-Income Students: Evidence from Return of Title IV Funds. EdWorkingPaper No. 25-1179
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| Title: | Costly Withdrawals Reduce Future College-Going for Low-Income Students: Evidence from Return of Title IV Funds. EdWorkingPaper No. 25-1179 |
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| Language: | English |
| Authors: | Ari Anisfeld, Elizabeth Bell, Oded Gurantz, Annenberg Institute for School Reform at Brown University |
| Source: | Annenberg Institute for School Reform at Brown University. 2025. |
| Availability: | Annenberg Institute for School Reform at Brown University. Brown University Box 1985, Providence, RI 02912. Tel: 401-863-7990; Fax: 401-863-1290; e-mail: annenberg@brown.edu; Web site: https://annenberg.brown.edu/ |
| Peer Reviewed: | N |
| Page Count: | 40 |
| Publication Date: | 2025 |
| Document Type: | Reports - Research |
| Education Level: | Elementary Secondary Education Higher Education Postsecondary Education |
| Descriptors: | Student Financial Aid, Loan Repayment, Withdrawal (Education), College Graduates, Low Income Students, Federal Aid, Debt (Financial), College Administration, Financial Policy |
| Abstract: | Governments must strike a balance between promoting access to financial aid while at the same time remaining good stewards of taxpayer funds by preventing fraudulent access. This paper focuses on one of the largest-scale and most consequential policies determining whether students maintain access to Title IV aid, the "Return of Title IV" funds policy, referred to as R2T4. Students receiving Title IV aid who withdraw from college before completing the academic term are subject to an R2T4 calculation that could require the student or college to pay back any unearned Title IV funds to the federal government. We estimate the causal impacts of the R2T4 policy on student outcomes in a regression discontinuity design, leveraging a cutoff in the formula that determines whether a student or their college is required to return aid. We find that students at our threshold, who earn 60 percent of the federal aid to which they were entitled, must return $1,600 on average. Such debt makes students almost four percentage points less likely to re-enroll in college the following year and 2.6 percentage points within 4 years. These results are driven by students in the bottom half of the R2T4 income distribution who experience persistent enrollment declines of roughly 5.5 percentage points. Our findings add to a growing body of literature revealing the detrimental impacts of complex administrative processes on student outcomes, particularly for students from marginalized communities interacting with federal policies. |
| Abstractor: | As Provided |
| Entry Date: | 2025 |
| Accession Number: | ED674051 |
| Database: | ERIC |
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