The estimated national six-year graduation rate for Pell Grant recipients is 51%, compared to 64% for non-Pell students. This achievement gap persists at even highly selective institutions. As the Enrollment Management Forum reported earlier, for the first time ever the federal government released institution-specific Pell student four- and six-year completion rates. As a result, institutions can expect to face mounting public scrutiny over outcomes and their ability to serve low-income students.
Balancing mission and constrained financial aid budgets has spurred innovation by some institutions to target grants to at-risk low-income students with high demonstrated performance. In 2014, Seattle University’s Enrollment Services piloted “The Challenge Grant” to promote persistence among the most at-risk segments of its Pell student population.
The Challenge Grant: How it works
Given that Seattle lacks the resources to fully meet demonstrated need, the program’s objectives are calibrated to maximize impact by:
1. Slightly reducing a student’s unmet need2. Incentivizing academic performance from the academically at-risk3. Building engagement by demonstrating commitment on behalf of the institution
The modest incentives are targeted to Seattle’s most financially and academically vulnerable population—Pell-eligible freshmen who were not awarded merit aid as high school seniors. These students tended to have the highest unmet need levels and were unlikely to meet the first-year GPA standards that correlate with retention at Seattle.
Overview of Challenge Grant program
Triaging the grants
Other popular incentive structures like senior-year on-time completion rebates are ineffective because the reward is too far down the line for students to appreciate. Seattle’s model addresses this problem by offering contenders two opportunities to obtain financial incentives early in their first year through to graduation. First, personalized letters provide early notification of the grant and build engagement from the start of term. Contenders are offered an initial partial incentive if they meet a 3.25 GPA requirement at the end of their first term (Seattle operates on a quarter system).
Secondly, to encourage sustained academic performance, regardless of their first-term grades, contenders attaining a cumulative GPA of 3.0 at the end of their first year receive the full incentive—a permanent addition to their aid packages in subsequent years.
Signs of early success
Retaining the most at-risk students
Seattle’s “Challenge Grant” program targeted students who had the weakest academic records upon entry and the greatest financial need—Pell-eligible, non-merit students. The pilot’s results suggest that the incentive is helping improve the recipients’ performance. About 40% of the grant contenders met the year-end cumulative 3.0 GPA to earn the permanent grant, representing a fifth of Seattle’s Pell population. Overall, fall-to-fall retention for permanent grant recipients was considerably higher than Seattle’s historical rate for low EFC students.
Retention of grant recipients exceeds historical rates for high-need students
First-Year Retention Challenge Grant Recipients vs. Low EFC Students, Seattle University
Retention measured from fall semester to fall semester
Challenge Grant recipients recorded from 2014-2015
Low EFC students recorded from 2013-2014
More than just money: Fostering engagement
Despite the reward, Challenge Grant recipients might still exhibit high levels of unmet need. This underscores the effectiveness of the incentive; students can improve their academic performance over what it would have been without the grant, even if the grant does not cover full demonstrated need. The grant may simply foster greater enthusiasm for one’s studies, increasing high-need students’ willingness to stay in spite of the up-front cost.
Tailoring the program for your institution
At Seattle, Pell status and the high GPA requirement limit the number of potential awardees. Institutions can expand or contract the GPA and income requirement parameters based on the size of their aid budget. Even for the most constrained financial aid budgets, smart targeting of a limited pool of resources (and the engagement it builds) can go a long way in helping low-income students succeed.
