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Pell Grants and Community College Success: Improving Metrics via our Community College Survey

Regional Matters
September 8, 2022

Community colleges play a key role in economic development and workforce training. Yet measuring the success of community colleges has long been a challenging task due to data quality issues and the complicated array of programs offered. Recently, the Richmond Fed embarked on creating a survey tool to improve the data that are available on Fifth District community colleges.

Part of that survey effort involves collecting data on Pell Grant recipients. Our goal is to present a new way to view the success of how community colleges are serving these lower-income students beyond what traditional graduation rate measures tell us. A pilot survey, conducted in early 2022, collected data from nine District community colleges. Here, we discuss results from the pilot that show outcomes related to Pell Grant recipients and their likelihood of success.

Who Receives the Pell Grant?

The Pell Grant, originally called the Basic Education Opportunity Grant, was created by the Higher Education Act of 1965. Contrary to many other funds available to students, Pell Grants are not loans and are not required to be repaid. Eligibility for the Pell Grant is determined by the Free Application for Federal Student Aid (FAFSA) and is based on family income, along with other factors such as cost of attendance, the number of siblings attending college, and family assets. According to a report from the Department of Education (PDF), 95 percent of all dependent Pell Grant recipients have family income at or below the median. In addition, to be eligible, students must be a U.S. citizen or permanent resident and must be an undergraduate student who has not yet earned a bachelor's degree. The Pell Grant requires that students maintain satisfactory academic progress in a degree program and that programs be credit bearing.

For the 2022-23 academic year, the maximum amount of the Pell Grant is $6,895. If this amount exceeds the amount owed for tuition and fees, which is the case for some community college students, the remaining balance is refunded to students to cover books, living expenses, and transportation.

The Pell Grant is a very important funding source for community colleges across the Fifth District. Around 54 percent of first-time, full-time Fifth District community college students in 2020 received the Pell Grant. Across Fifth District states, students at community colleges are more likely to receive the Pell Grant when compared to those attending public, four-year institutions.

Table 1: Percent of Undergraduate Students Receiving the Pell Grant
Fall 2020
 Community CollegesPublic Four-Year Institutions
North Carolina55.8%37.0%
South Carolina53.6%28.5%
West Virginia59.8%39.1%
Source: Integrated Postsecondary Education Data System.

The Shortcomings of Current Measures of Success

The graduation rate is a commonly cited success metric reported by the Integrated Postsecondary Education Data System (IPEDS). This graduation rate is based on a cohort of full-time, first-time degree/certificate-seeking students who enter an institution in a given year and complete their program within 150 percent of expected completion time (six years for a bachelor's degree and three years for an associate degree). This measure favors traditional four-year institutions because the majority of students who enroll typically attend as full-time, first-time students. This is not the case for two-year institutions, where a significant amount of the student population consists of students who are part-time, have been previously enrolled at other institutions, or are dual enrollment or dual credit high school students. The result is a graduation rate for two-year institutions that leaves out a large percentage of students enrolled at those schools.

The Federal Reserve Bank of Richmond Success Rate

One of the goals of the Richmond Fed's Fifth District Survey of Community College Outcomes is to collect data on a broader cohort of students from participating institutions. We then use those data to calculate a metric that better reflects what success looks like at a community college. Our success metric uses a cohort that includes all students who are degree-seeking (regardless of full-time or first-time status), as well as high school students enrolled in dual enrollment/dual credit courses. The success rate is then calculated by examining the percentage of students who obtained a degree/credential/licensure, transferred to a four-year institution, or persisted in enrollment after four years. Our pilot results indicate a success rate that, on average, is higher than the IPEDS graduation rate (64 percent vs. 51 percent).

  • Degree/Credential/Licensure: This category consists of students who have received a degree, credential, or licensure from the institution within four years of enrollment (200 percent of expected completion for an associate degree). A 200 percent completion window was chosen instead of 150 percent, as used by IPEDS, since community college students may need more time to complete their degree, especially if they attend part time.
  • Transferred: This category is comprised of students who transferred to another institution before completing a degree. Many Fifth District community colleges serve a large number of students who eventually plan to transfer to a four-year institution.
  • Persisting: This category includes students who are in good standing and still pursuing a degree or credential four years after initial enrollment. These students are counted as failures in the IPEDS traditional graduation rate, which ignores the fact that community colleges serve nontraditional student populations who may take longer to finish a degree.

Pell Grant Data from Our Pilot Survey

Our pilot survey collects success rate data across many demographic categories, including Pell Grant recipience, gender, and race. Across the three success-rate categories — degree/credential/licensure, transferred, and persisting — we asked for the total number of females and males who received and did not receive a Pell Grant. Across pilot schools, 29.0 percent of students in the cohort received the Pell Grant.

The distribution of Pell Grant recipients is not equal across success categories. The transferred category has a significantly smaller share of Pell Grant recipients compared to degree/credential/licensure and persisting. This indicates that the transferred category has a much larger share of higher-income students compared to the other categories.

A similar pattern is seen when examining the same data across urban and rural institutions. However, students at rural institutions rely on Pell Grants significantly more than at urban institutions across all success categories. Notably, the majority of rural, persisting students (51.1 percent) are Pell Grant recipients, compared to just 32.1 percent of persisting students at urban schools.

Pilot survey results also showed that females hold a higher percentage of Pell Grants than males.

Additionally, when looking at all female students (both Pell and non-Pell) across the three categories, 5.1 percent of them are persisting; 4.2 percent of men are persisting. When looking at students regardless of gender across all categories, 6.7 percent of Pell Grant recipients are in the persisting category, compared to 4.1 percent of non-Pell Grant recipients.

When comparing rural and urban institutions in the sample, there is a higher share of females who rely on Pell Grants at rural schools than urban ones. Female Pell Grant recipients make up a noticeably large share of rural, persisting students (44.8 percent). This may indicate that lower-income female students in rural areas have a harder time completing their degree or credential program within four years compared to other students. (See chart below.) Of course, our pilot survey sample size is much too small for substantive analysis. As we increase participation in the survey to become more representative of the Fifth District, we'll see if these patterns persist.

What's Next for Our Survey of Community College Outcomes?

One of the reasons the Richmond Fed began the Survey of Community College Outcomes is that the traditional success measures used by IPEDS limit the cohort of students and exclude persisting students. While the number of students in the persisting category is relatively small compared to the degree/credential/licensure and transferred categories, we believe that including these students is appropriate when measuring community college outcomes and that leaving them out undercounts the success rate of community colleges across the District. Additionally, the data collected in our pilot survey indicate that Pell Grant students are more likely to be in the persisting category of success than non-Pell Grant recipients. Therefore, not counting them as successful may be undercounting the success rate of students receiving the Pell Grant. Furthermore, this undercounting may be more severe for rural institutions, where students appear to be taking longer to graduate.

The survey will be expanded to include a much larger sample of Fifth District community colleges in the coming months. We expect to release results in the spring of 2023. Community colleges may sign up to participate in the survey here.