We know the data. We know the stories: Students working multiple jobs to stay in school, students struggling to come up with the money for next month’s bills, students living with food insecurity. A 2020 survey found that students not only struggle to come up with the money for books and tuition but also feel the need to prioritize work over studying and find that financial matters crowd their attention. Fourteen percent report being homeless. Financial stress can undermine their academic performance. This financial distress hurts students who, as a result, see their degree opportunities fade. It also hurts our communities, our economy, and our nation as incalculable potential is diverted from academic pursuits. 

This is one problem that seems like money could solve for.  

Beginning in 2020, as the pandemic gripped the globe and shut down our economy, the U.S. legislature passed three relief bills that included $77 billion for the Higher Education Emergency Relief Fund (HEERF I, II, and III). The legislature stipulated that institutions allocate nearly half or more of this funding to emergency financial assistance to students facing significant financial hardship. This funding gave higher education an unprecedented opportunity to see if money could help students who are struggling financially to stay on track to college success.  

In June of 2020, Western Governors University (WGU), a nonprofit university that enrolls 147,000 students in fully online bachelors and master's degree programs, launched the first of three waves of unrestricted emergency aid to students. This aid leveraged both institutional resources as well as HEERF II and HEERF III.  WGU used a variety of allocation models to distribute the funding with aid packages ranging from $500 to $2400. 

To ensure that the institution could assess the impact of emergency aid, the financial aid department collaborated with WGU Labs and WGU’s Institutional Analytics team to analyze the impact of this funding on students’ academic and financial outcomes. We also surveyed students to get a better sense of the financial challenges they face. Across the three waves of emergency aid, we were able to not only test the impact of aid but also whether providing aid in installments or providing aid with informational resources seemed to matter for its impact. (See the pullout box below for details on the three waves of aid and our analytic approach in each.)

What we learned 

  1. Many students at WGU face tremendous financial challenges. Around half of the 3,000+ aid recipients from our third wave who responded to our survey reported having difficulty paying for food (55%), housing (54%), utilities (50%), or credit card bills (48%). The same is undoubtedly true in institutions across the country. In fact, a 2020 survey of more than 195,000 students across the country, conducted by the Hope Center at Temple University, found that nearly 30% of students at four-year colleges reported experiencing food insecurity. And that number is even higher (nearly 40%) for students at two-year colleges.

  2. Emergency aid can strengthen students’ relationship to their institution. In our first wave of funding, we found that students who were randomly selected to receive funding reported a significantly higher sense of institutional belonging and support than those students who did not receive funding. Institutional belonging and support are factors other research has shown to be important for students' performance and persistence in higher education.

  3. For some students, emergency aid lowers student loan balances and balances owed to the institution. It stands to reason that additional aid reduces the total amount students need to take out in loans and reduces what they owe to institutions. We found that first-generation college students who were eligible for aid took out $600 less in loans. We also found that students who were eligible for funding and self-funding their college tuition held a lower balance with the institution than similar students who were not eligible for funding. Though a predictable outcome, it is a significant one given that student debt tends to impact students' personal and financial well-being for years after they graduate.

  4. Emergency aid shows promise for improving graduation rates. In our third wave of aid (HEERF III), we found that students eligible for funding showed an 11% increase in graduation rates relative to those who just missed the cut off for eligibility. This encouraging finding, however, is tempered to some degree by the fact that we did not find similar results in our first or second wave  distributions. It will, therefore, be important to situate findings from WGU among others that are sure to come from other institutions.

  5. There’s no need to get fancy with emergency aid distributions. Prior to distributing HEERF III funds, we believed that providing students access to an information hub to guide the use of their aid and/or distributing payments in installments to stretch out their aid would increase the overall benefit of receiving aid. Previous 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. In practice, however, we found that none of these approaches performed better than a simple lump sum payment. 

The need to support students who are struggling with basic needs is without question. How to provide and structure this aid and its potential to improve the educational outcomes of students has been less clear. The HEERF funding showed that emergency aid can have measurable benefits in terms of students’ sense of belonging, financial burdens, and, possibly, graduation rates.  

Turning data into action  

HEERF was a unique program in a unique time, and few expect a similar scale of funding to be made available again. So what do we do with what we’ve learned? 

  1. Take the potential benefits seriously, continue to invest in emergency aid programs, and assess their impact. Our findings are encouraging and follow logically from what we know about the impact of financial stress on students’ college experience but we still have a lot to learn about when, how, how consistently, and under what circumstances emergency aid yields these benefits. 

  1. Figure out how to maximize potential benefits. Given that we’re unlikely to see the HEERF-scale funding again, we need to figure out how to target and direct emergency aid so it reaches those most in need at the moment they need it. To do this Financial Aid departments will need to continue to build more data-informed, agile funding mechanisms that lift the burden of asking for and receiving assistance.

  1. Last, but certainly not least, we need to push for progress on college affordability. Emergency aid is a band aid — an all too often needed band aid — in a higher education system that lacks reliable, high-quality, flexible, and affordable learning options that can accommodate learners who do not want to borrow a lot of money or who do have to work to support themselves and those they care for. An increasing number of colleges and education providers are realizing that they need to reimagine the learner pathway to be more flexible and provide marketable skills more quickly — and at a lower cost. However, we are still very much in a transition toward a higher education ecosystem that provides these opportunities. Progress cannot stop.

While it is unlikely institutions of higher education will receive access to such large sums of unrestricted emergency aid again, our findings have implications for the future of aid and point to the need for systemic change to better support the many students experiencing financial strain.