Authors: Bob Collins, Betheny Gross, David Lang, Jonathan Huck, Adam Cota, Patti Kohler, and Debbie Fowler

Executive Summary  

Between June 2020 and April 2021, WGU distributed almost $24M of unrestricted basic needs financial aid to about 17,000 students living in low-income households in two separate distributions. This aid responded to the immediate economic impact of COVID, as well as growing evidence that even seemingly small financial burdens and shocks can disrupt the academic progress of students who face significant financial constraints.  

In June 2020 WGU tapped $1.8M of institutional resources to distribute $500 in emergency aid to nearly 4,000 eligible students. WGU students were not eligible for the first wave of distributions under the Higher Education Emergency Relief Fund (HEERF I). However, WGU utilized $22M from the second wave (HEERF II) to distribute between $750 and $2,400 in emergency aid to over 13,000 students in April 2021. As required by the legislation, WGU prioritized students with exceptional need and distributed the aid directly to students with no restrictions on how students applied the resources.  

Research teams at WGU Labs and WGU Advanced Analytics analyzed academic outcomes for students who received these funds and, for the first distribution of $500, conducted a survey of students who applied for funding. This analysis shows:  

  1. Emergency aid reached students who face significant financial constraints. Thirty-seven percent of students receiving aid through the June 2020 distribution and 53 percent of students receiving aid in the April 2021 distribution reported earning less than $35,000. More than 40 percent of recipients were first-generation college students.  
  1. The aid, on average, showed no detectable effects on students’ credit accumulation (by competency units or CUs), pace through courses (on-time progress or OTP), or retention for any level of aid received.  
  1. Aid reduced student account balances and the amount of borrowing for specific student groups. Students who were eligible for HEERF II and typically pay for their own tuition showed lower account balances than similar non-eligible students. Eligible first-generation students borrowed less from federal student loans than similar non-eligible students.  
  1. Students who received aid appreciated the support and perceived greater institutional belonging and support — factors that affect students’ engagement and persistence in higher education.

Finding limited impact on academic outcomes for levels of funding up to $2,400 but promising effects on social and emotional factors, the HEERF III distribution is designed to test if:

  1. Information and a more distributed payout steers recipients toward spending that is more likely to impact academic outcomes
  1. The aid improves outcomes that affect academic performance indirectly through improvements in social and emotional well being
  1. Aid targeted to students in specific circumstances, such as those experiencing emergencies, those who must cut back hours or leave their job to complete student teaching, or those with military backgrounds, shows more impact on student outcomes

Another $37M of funding (HEERF III) was received and will be distributed between June 2021 and early 2022, informed by the learnings from HEERF II. Like HEERF II, funds must be distributed directly to students without limitation on their use. To amplify impact, HEERF III funding will be distributed via multiple programs with distinct goals. Sixteen million dollars will target students with an EFC less than $500 and via random assignment study will test the impact of messaging that encourages students to use funding for academic support, as well as the impact of smaller monthly installments of funding instead of a lump sum payment. With this allocation we will also explore whether aid improves students’ wellbeing, belonging, and perceptions of institutional support — all factors that could have long-run positive effects on students’ academic outcomes.

WGU departments throughout the university will distribute the remaining funding to students in specific circumstances (e.g., student teachers, students experiencing emergencies, and veterans who have exhausted their veterans' benefits). With these allocations we will explore whether emergency aid is more impactful for targeted subgroups of students

Together these and prior analyses will provide a valuable assessment of emergency-based aid and the potential this funding vehicle holds to support students’ journeys at WGU.  


Financial distress among college students is commonplace and causes many students to drop out of college unnecessarily. A 2018 survey of more than 17,000 college students found that over 50 percent anticipated difficulty paying their next month’s bills, and more than 60 percent reported that they could not come up with $500 for an emergency expense. A 2019 survey found that more than 50 percent of students in 2-year and more than 30 percent of students in 4-year institutions lived with food insecurity. Each year thousands of students who face significant financial constraints, even successful students, drop out of college for seemingly small financial losses.

Policy leaders and university administrators widely understand that failing to assist students who are navigating financial hardship risks immeasurable loss to individuals, our communities, and our economy. Yet, it is still unclear how this support impacts student outcomes and how it should be structured.

Over the last 18 months, WGU, a non-profit, accredited online university serving 130,000 students nationally, used institutional resources and the second wave of the Federal Higher Education Emergency Relief Fund (HEERF II) to issue two waves of basic needs financial aid totaling almost $24M and reaching more than 17,000 students. Per the federal legislation, the university placed no restrictions or instructions on how students applied these resources. These distributions offer an unprecedented opportunity to examine the impact of emergency basic needs financial aid at scale.  

The aid, which was distributed during some of the most disrupted periods of the pandemic, yielded few detectable effects on academic or financial outcomes. Nonetheless, this funding provided valued support to the university’s most financially constrained students and showed promising effects on students’ sense of belonging and institutional support — social and emotional factors that may have wide-reaching and long-term effects on students’ wellbeing and learning.

With HEERF III, the university has an additional opportunity to build from these early analyses to consider alternative ways to structure the funding for more impact and to further explore the impact of funding on social and emotional outcomes.  

Unrestricted basic needs support at WGU: Two distributions respond to the COVID-19 crisis

In June 2020, as the economic impact of COVID set in, WGU allocated $1.8M of institutional funding for supplemental financial aid. The university invited students to apply for $500 in unrestricted basic needs support, eventually distributing aid to more than 4,000 students. All students identified as “high need” — based on a range of financial factors, including income, debt, and perceptions of housing and food security — received funding. Students identified as “low need” received no funding.  Of the 4,607 students identified as “moderate need” and eligible for funding, WGU randomly awarded funding to 2,548.

A year later, in April 2021, WGU used $22M of HEERF II funding to issue a second basic needs package targeting students with a reported Expected Family Contribution (EFC) of $0 according to their FAFSA. WGU increased the aid allocated per student and distributed funding in the amount of $750, $1,000, $1,700, and $2,400 to more than 13,000 students. Cutoffs for different funding levels were based on students’ income-to-poverty ratio, which represents the individual’s income relative to the poverty line.  

Emergency aid reached students who face significant financial constraints.  

Emergency basic needs aid is meant to support students experiencing financial distress. By design, WGU’s distributions targeted the largest amount of resources to students with the deepest financial needs. In June 2020, nearly 40 percent of recipients reported household income less than $35,000; almost half were first-generation college students; and about one-third were Black or Hispanic. Among students receiving aid in 2021, over half reported household incomes less than $35,000; almost 40 percent were first-generation college students; and 28 percent were Black or Hispanic. (Table 1).

Table 1

Open-ended responses from a follow-up survey of 248 students after the June 2020 distribution, though not fully representative of aid recipients, suggests that many students receiving funding were dealing with sudden losses in income and mounting expenses from those losses.  

One survey respondent’s comment showed just how timely this aid was for students:  

Another student revealed how the funding provided an important stopgap when other government systems were slow to respond:

Testimony of the aid’s impact on individual students’ experiences gives a glimpse into how challenging their experiences have been and how significant this aid has been for them, their families, and their education.  

Funding, on average, had no detectable effects on academic outcomes  

Researchers at WGU Labs and WGU’s Department of Advanced Analytics estimated the impact of receiving aid on completed competency units (CUs) — segments of content and skills that form the curriculum that students complete through self-paced learning, student on time performance (OTP), and retention, finding few significant effects.  

Leveraging random assignment from the first wave of aid, WGU Labs found no significant differences between the treatment and control groups in the accumulation of CUs, OTP, or retention (Figure 1).  

Figure 1

Some variation emerged when comparing students’ from different economic circumstances. Approximately 40 percent of the sample reported an EFC above zero, indicating that they were somewhat financially advantaged at the time they reported data on the FAFSA. Among these aid recipients, Labs detected a positive treatment effect in CU accumulation and modest positive effects on OTP, suggesting that emergency aid may have greater impact for students who would be eligible for less aid via traditional financial aid mechanisms. (Figure 2)

Figure 2

The timing of the first distribution coincided with the onset of economic closures due to the pandemic and is an important consideration, though it is not clear how this unprecedented shock affected these outcomes.  

WGU’s second distribution with HEERF II increased funding levels to between $750 and $2,400. Taking advantage of the arbitrary cutoffs determining how much funding students received, WGU’s Department of Advanced Analytics examined the effect of funding on CUs earned and students’ retention. Across all funding levels, researchers found no effects on academic outcomes. Researchers further considered if funding affected students with varied characteristics (age, gender identity, race, and ethnicity) and circumstances (employment, household income, and eligibility for Pell grants) differently.  This analysis found no effects of receiving aid (Figure 3) for any subgroup.

Figure 3

Aid reduced student account balances and loans for some student groups

We also examined the relationship between receiving aid and students’ account balances and loan amounts. On average across all students, we did not find that eligibility for emergency aid reduced current tuition account balances, or the amount of borrowing students made.  However, we did find modest improvements for eligible students in certain subgroups in both cases.  

Students who were eligible for aid and used self-pay as their primary or secondary source for funding their tuition were likely to have lower account balances than similar non-eligible students. On average, the effect of receiving funds resulted in an approximately $400 decrease in account balances for these students. Students who were eligible for aid and enrolled in their first term at the time of distribution, students who had outstanding tuition balances prior to the disbursement of funds, and students with household sizes of two or fewer individuals show modestly (but not statistically significant) lower account balances than similar non-eligible students. (Figure 4)

Figure 4

We also examined the extent to which students took out additional student loans as of April 2021. Generally, we found no effect of funding eligibility on students' loan balances. However, first-generation students who were eligible for funding, on average, borrowed $600 less in federal student loans than non-eligible students. (Figure 5)

Figure 5

Aid improved students’ perceptions of institutional support and belonging

Survey results from the June 2020 distribution suggest that basic needs funding improved students’ sense of institutional belonging and support — two important social and emotional foundations for learning.

A student’s perceptions of belonging and support are significant factors in engagement and success. Students who feel that they are supported by and belong in an institution of higher education are more motivated to engage in their learning, feel confident in their academic pursuits, and persist in their program.  

Two weeks after the June 2020 aid distribution, WGU Labs administered a survey to all students who applied for the aid, receiving responses from 2,640 students. The survey asked students several questions probing their satisfaction with how the university supports students and the extent to which they felt the university provides resources and assistance for both academic and non-academic needs. In addition, the survey asked students the extent to which they felt like they belonged at WGU and felt part of a community at the university. As Figure 6 shows, students who were randomly assigned to receive aid showed significantly higher perceptions of belonging at WGU and support from WGU. Although aid showed no immediate impact on academic outcomes, it may boost students in ways that fortify them for the future and deepen their connection to the university.

Figure 6

Aid in an unusual time

The two original aid distributions rolled out in an extraordinarily unusual time and with specific constraints and opportunities that likely influenced its impact on student outcomes.  

First, the nation’s economy experienced highly unusual economic and workforce conditions during these funding distributions. Business closures to stem the spread of COVID-19 were in full effect during the Spring and early Summer 2020. While the Spring of 2021 brought vaccines and a sense that the world had turned the corner on the pandemic, the nation was just emerging from the impact of the Delta variant and the impact of labor shortages and associated rising wages started to take hold. At the same time, wide variation in state level pandemic policy and virus conditions only confounded issues further for WGU’s student population, which resides in every state in the U.S.    

These economic conditions likely shaped the impact of the aid but in uncertain ways.  Emergency aid would be expected to help sustain students amid the sudden loss of wages, as many experienced early in the pandemic. The sudden loss of wages in spring 2020, however, was also accompanied by a sudden loss of activity for individuals without children, potentially making it easier for students to sustain their online learning, which was largely unaffected. On the opposite end of the spectrum, overwhelming demands on individuals with children, who no longer had schooling or access to childcare, potentially made it harder to stay engaged in learning regardless of the financial support.

Second, both distributions offered eligible students funding in a single bundle at a specified time. Though the goal was to distribute funding during a period of generalized high need, neither distribution was structured to be a highly responsive aid system that alleviates financial need for students in the grips of a crisis. Qualitative data suggests that some of the resources reached students at “just the right moment” to protect their academic progress. For many other students, the funding was welcome but not essential to sustain their progress.  

WGU’s approach to distributing aid, particularly the second distribution that tapped HEERF II funding, was shaped by the constraints of the federal policy. Specifically, the policy included two limiting conditions:


  1. The legislation did not permit universities to cover administrative costs with the funding, limiting the resources available to stand up a truly responsive distribution system that would collect information on need from students and rapidly dispense resources to students with acute financial needs.
  1. The legislation required universities to distribute the funding quickly or lose access to the resources.

Both of these conditions limited the extent to which the aid distributions could reflect the true goals of emergency aid, which are to strategically target aid to students as they face an acute financial emergency.  

Given the specific conditions and restrictions on these distributions, it is important to think of these findings as informative and not definitive on the impact of emergency aid on students’ academic outcomes. We have a great deal more to learn about the design and impact of these policies.  

Continuing to learn from HEERF III: The importance of messaging, further examining social and emotional outcomes, and differences across targeted populations

WGU will distribute $37M of HEERF III funding in the fall and winter of 2021 and 2022. This funding will be distributed in partnership with several different programs and departments across the university, each of which will target somewhat different populations. In the end, these distributions will help us:  

  1. assess if information and a more distributed payout steers recipients toward spending that is more likely to impact academic outcomes,  
  1. further examine whether emergency aid improves outcomes that affect academic performance indirectly through improvements in social and emotional wellbeing
  1. consider if aid that is targeted to students in specific circumstances, such as those experiencing emergencies, those who must cut back hours or leave their job to complete student teaching, or those with military backgrounds, shows more impact on student outcomes.  

In November 2021, WGU will allocate $16 million of HEERF III funding in a way that will test if academic outcomes improve if aid is:

  1. accompanied by a resource hub elevating and encouraging students to consider resources that will help students' engagement in learning (e.g., counseling and coaching, tutoring, family care, mental health counseling, and technology tools),  
  1. distributed over several months instead of a lump sum.

There is reason to believe providing a resource hub with information on learning support could shift spending behavior and help recipients make more informed decisions. Prior research shows that simple labels on unrestricted cash transfers like HEERF can influence how individuals use the funding. One study shows that labeling a cash transfer as “education support” compelled greater educational participation by recipients’ children. Another study found that labeling an unrestricted cash transfer as a “winter fuel payment” increased the use of funding for fuel expenses more than tenfold. Other research shows that, when provided information on alternatives, individuals will consider the information even if they do not ultimately make different choices, suggesting that sending supplemental information when disbursing unrestricted aid could encourage more informed decision making. Finally, because our resource hub will include information on an array of resources, the hub intervention, though limited by the constraints of HEERF legislation, mimics elements of the economic inclusion model — an anti-poverty approach that combines cash transfers with complementary support.  

Whether funds are disbursed as a lump sum or at regular intervals can also change spending patterns. However, only limited research considers how these spending differences may influence education outcomes, making it worthwhile to consider again with HEERF funding.  

With this allocation, we will also dig more deeply into the relationship between emergency basic need aid and students’ wellbeing and sense of belonging and support. We take this opportunity to learn from participating students about the financial challenges they face, the resources they turn to, and how they apply emergency financial aid to sustain them and their families.  

Departments across the university will distribute the remaining aid to support students in specific circumstances. In total, seven departments including the Teachers College, College of Health Professions, College of IT, College of Business, Student Success, Financial Aid, and Military and Veterans Benefits will allocate HEERF III funding to students meeting a range of criteria that put them at risk of financial hardship and/or falling off the path to success. For example, Teachers’ College is targeting students who are in the midst of their demonstration of teaching, an experience that requires most to either dramatically reduce or quit their paid employment for a time. WGU also allocated $500,000 to veteran students who exhausted their Veterans education benefits. Student Success will provide aid to students who have been impacted by serious natural disasters. The College of Business is targeting students who are in their first term and have failed an assessment, and also experiencing a combination of financial and academic challenges that threaten their continued learning. (See Table 2 for a tentative list and description of departmental aid programs)

Table 2

With these allocations, we will explore whether emergency aid helps students persist and succeed in their program and consider whether it better addresses the needs of specific student subgroups.  

Where things stand with emergency aid

It is indisputable that many students face significant financial challenges that threaten their health, wellbeing, and academic progress and success. The COVID crisis only amplified and expanded the financial need of students making efforts to meet these needs while attending universities across the country. Traditional financial aid mechanisms cannot be relied on to address the most urgent needs of students.  Financial shocks — unemployment, raised rents, health events, a vehicle repair — disrupt students’ learning journeys at unpredictable times and with unpredictable impact. A flexible and responsive funding mechanism is needed to meet these needs.  

Emergency aid, which WGU dispensed twice in the last 18 months, is one answer. Our analysis of this aid shows that it helped many students under significant financial strain and improved their perceptions of the university and their place in the university. Our analysis, however, has not detected a substantial boost in academic benefits.  

We are left with many questions about the policy design, implementation, and potential impact of emergency financial aid. Are there better ways to structure and support students receiving this aid? Is the aid getting to the students it will impact the most? Will effects of aid and its distribution methods be revealed over time? Are we looking at the right outcomes? Will the impact of aid on student success operate by improving the social and emotional foundations of students? These are the questions we will explore in more depth with HEERF III.

Appendix A1

Appendix A2

In June 2020, Edquity determined eligibility based on a proprietary threshold for self-reported financial need. Students deemed ineligible could appeal to receive the grant after consulting with a financial aid counselor. In April 2021, WGU determined eligibility for different allocations based on students’ household income relative to federal poverty thresholds.

Figure 4A

Figure 5A