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Financial Aid for College Students With Drug Convictions

A new working paper (PDF; abstract) from economists Michael F. Lovenheim and Emily G. Owens examines the effects of federal financial aid, a somewhat controversial issue during last fall’s campaign, on the college attendance of students with drug convictions. From the abstract:

In 2001, amendments to the Higher Education Act made people convicted of drug offenses ineligible for federal financial aid for up to two years after their conviction. Using rich data on educational outcomes and drug charges in the NLSY 1997, we show that this law change had a large negative impact on the college attendance of students with drug convictions. On average, the temporary ban on federal financial aid increased the amount of time between high school graduation and college enrollment by about two years, and we also present suggestive evidence that affected students were less likely to ever enroll in college. Students living in urban areas and those whose mothers did not attend college appear to be the most affected by these amendments. 

The researchers also found no deterrent effect on drug offenses, leading them to conclude that: “[B]y forcing drug offenders to wait two years before enrolling in college, HEA1998 lowered the lifetime earnings of these at-risk students without generating benefits to society through reduced crime.”  Moreover, there are lifelong negative effects of delaying college for this group of students:

Attending college may be an important “turning point” in the lives of delinquent youths, on par with marriage or employment (Sampson and Laub 1990, Uggen 2000); education, in particular post-secondary education, is strongly correlated with desistance from crime (Nuttall et al. 2003, Johnson 2001, Clark 1991).  By restricting access to financial aid, HEA98 may have inadvertently harmed the long-run life outcomes of these at-risk students. Indeed, in our sample students with drug convictions are 0.8 of a percentage point (se=0.5), or 60%, more likely to be convicted of another drug crime in the three years after high school graduation if they are subject to the HEA98 financial aid restrictions.