No Strings Attached” Financial Aid from HEERF III Shows 11.2% Boost in Graduation Rates for Low-Income Students

SALT LAKE CITY– Leading nonprofit, accredited and online university Western Governors University (WGU) and WGU Labs, the innovation arm of WGU, today announced findings from their analysis on the impact of the $39 million received from the Higher Education Emergency Relief Fund (HEERF III) in 2021. The purpose of the federal aid was to support financially constrained students in response to the economic challenges brought on by the COVID-19 pandemic.

Between the summer of 2021 and the winter of 2022, WGU employed several models to gauge the effectiveness of distributing resources, which aimed to address students’ immediate financial challenges and help them persist and complete their degrees.

The most notable “no strings attached” distribution with positive effects allocated about $16M to 10,388 students – about one-third of the total eligible students at WGU – with an Expected Family Contribution of $500 or less. Across all eligible students, the allocation is equivalent to $523 for each student in this “intent-to-treat group.”

Key findings from the research revealed:

• Emergency aid reached students with significant financial constraints. Among all HEERF III recipients, 30% reported a household income of less than $35,000, and 43% were first-generation college students.
• The institution-wide distribution model resulted in an estimated 11.2% increase in graduation 12 months after students received funding.
• The method of aid distribution, whether in installments or lump sum and provision of additional academic support information did not affect student outcomes.
• The cost per additional graduate, due to increased graduation rates, was estimated at $4,745.  

The data underscores the value and necessity of financial aid programs like HEERF. While such a program is unlikely to be repeated due to the unique circumstances in which it was enacted, the need it addresses remains, and the lessons are significant.

“Through the distribution of the HEERF III funds, WGU has demonstrated that unrestricted financial aid can both relieve financially constrained students and increase graduation rates. This highlights the crucial role of financial aid in supporting students and ensuring their success in higher education,” said Bob Collins, Vice President of Financial Aid at WGU. "Our priority at WGU has always been to put our students first and empower them to succeed. While this level of aid was in response to a once-in-a-century event, the results emphasize the importance of continued investment in our students, particularly those who face financial constraints."

The COVID-19 pandemic had a significant and lasting impact on many households' finances, leading to job losses and wage reductions. This financial stress can negatively affect college students’ ability to complete their degrees.

"Our research provides critical insights into the intersection of financial stress and academic success," said Betheny Gross, Research Director at WGU Labs. "These results offer compelling evidence that direct, unrestricted aid in a simple lump sum can make a substantial difference for students facing significant financial constraints and stress, helping them to stay on the path to graduation.”

The results show that the form of resource distribution, whether lump sum or installments, and even the provision of additional academic support information, didn't significantly affect outcomes. WGU is committed to understanding and addressing the financial needs of its students. These findings will help streamline future efforts to effectively support WGU students in need of financial assistance, and to mitigate the impact of financial stress on academic achievement.