How Well Do College Emergency Aid Micro-Grant Programs Work?

Almost 40% of students who start college never graduate. Students leave college for a variety of reasons, but for many it is unaffordable—and sometimes it is a financial emergency that derails their path. Today’s students often face high levels of unmet financial need and many must balance their education with the demands of work and parenthood. These students are highly vulnerable to unexpected costs and events—a car repair, medical issue, or change in childcare arrangements—that may cause them to leave college.

In response, institutions of higher education established emergency aid micro-grant programs that provide small amounts to students to help them overcome these unexpected financial hurdles. A study from 2016 found that more than three-quarters of surveyed institutions provided some kind of emergency financial assistance. In addition, several states, including Minnesota, North Carolina, and Washington have implemented emergency aid programs. Federal COVID-relief funds temporarily allowed colleges and universities to dramatically expand the availability of emergency aid. During the pandemic, more than 18 million students received emergency aid from the Higher Education Emergency Relief Fund (HEERF) as part of the CARES Act.

This explainer provides an introduction to emergency aid programs and recent research on their impact. Since students who leave college without finishing their degree are significantly more likely to default on their student loans, micro-grants that help financially vulnerable students overcome unexpected expenses and remain on the path to graduation can make a big difference in student outcomes. Although recent studies show mixed results for emergency aid’s effect on retention and completion, they include promising indications of its potential. They also suggest that program design may play a major role in determining emergency aid’s effectiveness.

Understanding Emergency Aid

Although net college prices have fallen in recent years, affordability remains a significant challenge for many students, especially those from lower-income families: an estimated 90% of Pell Grant recipients face unmet financial needs. For these students, who may already be struggling to cover basic needs, unexpected financial expenses may lead them to leave college.

In recognition that even minor financial setbacks can disrupt a student’s academic journey, many institutions have implemented emergency aid programs that provide small grants, generally less than $2,500 and usually much smaller, to help students with high need address immediate expenses. Most of these programs are small-scale (the 2016 survey found that most served fewer than 50 students per year) with limited budgets.

Emergency aid programs use varying definitions of “emergency” and have different goals, eligibility criteria, application processes, and expense coverage. Programs most commonly focus on providing grants to students who have suffered a financial shock. Austin Community College, for example, has established an emergency aid fund that provides assistance to students experiencing unforeseen financial emergencies or catastrophic events that may disrupt their education, with a maximum award of $500 per student each academic year. Other programs focus on students closest to graduating but at risk of stopping out due to financial difficulties. Georgia State University’s Panther Retention Grant program provides up to $2,500 in emergency aid to students in good academic standing who have exhausted other forms of aid to clear unpaid tuition balances, allowing these students to remain enrolled and focus on their studies without having to work extra hours.

How Effective Is Emergency Aid?

Emergency aid programs aim to address a widely recognized challenge to postsecondary student success. Program reports and descriptive studies indicate that emergency aid is often associated with increased retention and/or completion. Surveys and student interviews similarly testify to the role of emergency aid in fostering retention, enhancing students’ sense of belonging, and increasing student well-being.

High-quality research studies looking at the causal impact of emergency aid and micro-grants, however, provide mixed evidence on retention and completion effects (Table 1). A Hope Center research study on the effectiveness of completion micro-grants found no evidence that the grants had a positive impact on completion or time to degree. On the other hand, a recent review of Georgia State University’s Panther Retention Grant program showed it has positively impacted time to completion, finding that seniors who received a grant were significantly more likely to graduate within one to three terms than non-recipients. The analysis did not find, however, that the program helped students graduate who would not have completed otherwise.

The sole randomized control trial on an emergency financial assistance program paints a similarly mixed picture. Researchers with the Wilson Sheehan Lab for Economic Opportunities at the University of Notre Dame analyzed the provision of emergency aid as part of a comprehensive student case management program at the Trinity River Campus of Tarrant County College in Texas. They found that emergency aid on its own did not improve student outcomes. Students who received emergency aid alongside comprehensive support services, including mentoring and coaching, however, were substantially more likely to persist and graduate. The study was not able to determine to what extent emergency aid contributed to these better outcomes.

Recent studies on the impact of federal emergency aid dollars during COVID provide some evidence of its benefits (Table 2). In evaluations of three distributions of emergency aid at Western Governors University, researchers determined that one of the distributions saw an 11 percentage point increase in graduation among recipients compared to students who just missed the eligibility threshold for grants. The researchers did not find any detectable effects on academic progress in the other two distributions, though the aid did lead to a greater sense of institutional belonging and less borrowing. A review of HEERF grants at Southern New Hampshire University, meanwhile, found that recipients of emergency grants were more likely to remain enrolled in the next term compared to control groups.

In a study of HEERF emergency aid distributions in Texas, the Education Trust similarly detected a correlation between the share of students receiving emergency aid and improved retention rates, with the correlation strongest at institutions with the highest share of Pell recipients. Notably, alongside this general correlation between broader distribution of emergency aid and improved retention rates, the study found that larger average awards correlated with lower retention rates at institutions serving a higher proportion of Pell students, while larger average awards correlated with improved retention rates at institutions with a smaller share of Pell students. The researchers surmise that institutions with fewer Pell students could more easily prioritize and target aid dollars, while some institutions serving more Pell students may have struggled to balance the reach of limited aid dollars against high levels of student financial need.

Some studies of pandemic emergency aid thus suggest a positive effect on student outcomes. However, federal relief funds allowed institutions to distribute emergency aid far more broadly than normal. These results may point as much to the general benefits of helping low-income students meet their basic needs as to the potential of emergency aid programs to boost outcomes by supplying students with aid when it is needed most.

Advancing Emergency Aid

Reviews and studies indicate that emergency aid can help to improve outcomes among financially vulnerable students. Although evidence on emergency aid’s impact varies, researchers report that mixed results may stem in large part from differences in program design and implementation. Additional high-quality studies are needed to determine the most effective approach—for example, whether it is more effective to distribute smaller awards broadly or to target a more limited number of larger awards.

Both practitioner experience and academic research suggest that emergency aid may be most impactful when it is part of holistic support for students. Practitioners report that students facing multiple barriers to retention need comprehensive support. Similarly, Wilson Sheehan Lab researchers note that emergency aid may not be sufficient to improve student outcomes without the benefit of a case manager to help address the underlying causes of financial distress.

As many students continue to struggle with basic needs, emergency aid will remain a critical tool for supporting student persistence and completion. BPC’s Task Force on Higher Education Financing and Student Outcomes recommended allowing institutions to use a portion of their Supplemental Educational Opportunity Grant (SEOG) program funding to provide emergency aid micro-grants to students. Since limited funding is often a major barrier to expanding availability of emergency aid, providing flexibility in the use of SEOG dollars would enable colleges and universities to expand support for students facing unexpected expenses. Combining additional funding for micro-grant programs with rigorous evaluation of different program designs could build vital knowledge about how best to deliver emergency aid, integrate it with other forms of support, and maximize its impact.