Public Benefits and Financial Aid Support Education Beyond High School and Long-Term Economic Well-Being for Low-Income Young Adults

Key Findings

1. Public benefits—specifically the Earned Income Tax Credit (EITC) and Supplemental Nutrition Assistance Program (SNAP)—increase the likelihood that young adults from low-income backgrounds enroll in education beyond high school. SNAP receipt increases enrollment odds by 63 percent and the EITC increases them by 36 percent.
2. Public benefits and financial aid shape educational pathways in distinct but complementary ways. Public benefits facilitate enrollment and persistence; financial aid enables full-time engagement with education. Together, they function as a springboard to long-term economic self-sufficiency by making education beyond high school possible.
3. Receiving public benefits and financial aid while enrolled strongly predicts degree completion. Each additional year of receiving EITC, SNAP, WIC (Special Supplemental Nutrition Program for Women, Infants, and Children), Medicaid, or housing assistance while in school is associated with 14 to 59 percent higher odds of earning a degree (depending on benefit and degree). Receipt of any type of financial aid is also strongly associated with degree completion.
4. Facilitated by public benefits and financial aid, degrees deliver substantial mid-life economic returns. Earning a bachelor’s or graduate degree is associated with $18,400–$40,600 more in annual income at approximately age 40; associate degrees reduce poverty and improve economic mobility without an income premium.

Discussion and Recommendations

When public benefits reach young people as they are confronting choices about pursuing education beyond high school, they can function as a springboard to economic stability—increasing the likelihood of enrollment; supporting persistence through degree completion; and producing lasting gains in income, poverty reduction, and economic mobility.

Public benefits and financial aid each play distinct and complementary roles that point toward a system where both are necessary but neither is sufficient. Public benefits appear to ease post-high school education’s access and persistence problem—helping low-income young adults get into school and stay there. Financial aid facilitates fuller, more focused academic investment and faster completion. Policies that improve simultaneous access to both public benefits and financial aid—and that align program rules with the educational route to economic mobility—are likely to be more effective than reforming either system in isolation.

Persistent racial and gender gaps in mid-life outcomes—evident even after accounting for educational attainment—also remind us that expanding access to education and supports is necessary but not sufficient to achieve economic equity. Structural barriers in the labor market require attention alongside educational and public benefits policy.

Based on our analyses of nearly 30 years of data following young adults from low-income backgrounds, we offer the following recommendations that state and federal policymakers and higher education practitioners can take to optimize existing public benefits and financial aid programs to promote sustained economic well-being for youth from low-income backgrounds.

Footnote

[1] A note on context: The findings in this brief reflect a specific historical window. The largest share of participants in our study pursued education beyond high school in the early 2000s, a period that predates major changes to several of the public benefits programs examined here. Whether and how these changes have affected the capacity of public benefit programs to support educational investment among young adults from low-income backgrounds remains an open question—one that makes the underlying relationships documented in this study all the more important to understand.

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