Bridging the Gap: How Last-Dollar Financial Aid Affects First-Year Student Outcomes

By Crystal Green

The Federal Reserve Bank of Philadelphia recently released a preliminary report examining the effect of a “last-dollar” financial aid program (called Bridging the Gap) that grants mostly lower-income first-year undergraduate students at Rutgers University-Camden a full or partial tuition discount after all need-based federal, state and institutional grants are applied. The report suggested that this program improved affordability and reduced financial stress but also revealed challenges students are facing with the bureaucracy of the financial aid process.

Among the report’s findings for the 2016 cohort:

• Students from families with an income of $60,000 or less received fully discounted net tuition and general campus fees through the Bridging the Gap program.
• Students from families with an income of $60,001-100,000 had half of their remaining tuition and general campus fees discounted through the Bridging the Gap program.
• Students receiving this “last dollar” aid reported diminished financial stress, reduced reliance on student loan debt, and the ability to reduce work hours during the school year as benefits of the program.
• The program had a positive impact on the overall enrollment rate of the college.
  • The enrollment rate for admitted students was 13%, substantially higher than in 2015 (10%)
  • The enrollment rate for students with an income at or below $60,000 increased by 5.2 percentage points and for African-American students the enrollment rate increased by 4.9 percentage points.
• The report found that not all students received the level of financial support they were eligible for, in part due to a failure to complete the financial aid verification process at the state or federal level.