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Abstract

Studies of community college finance often focus on revenue sources from the state and local government, private foundations, and tuition. While these resources are important, an often-neglected source of revenue is employer-sponsored educational assistance benefits for students. Given the dearth of literature on the benefits of this funding source, especially for community college students, our study shines light on the topic. Specifically, this study reports on the impacts of Section 127 of the Internal Revenue Code, employer-sponsored educational assistance benefits, on degree-seeking public community college student outcomes based on a propensity score matching analytic strategy. Our results suggest that the majority of two-year public college students (over 90%) do not receive these educational assistance benefits, but those who do have better retention and attainment outcomes than a comparable group that do not. Because we did not find an impact of employer-sponsored educational assistance benefits for more immediate outcomes (such as GPA and total credit hours by the end of students’ first year), the evidence suggests that employer-sponsored educational assistance benefits positively impact longer-term student outcomes rather than more immediate ones. Our findings have potential implications for student aid policies, especially as they relate to improving the awareness, advocacy and availability of employer-sponsored educational assistance benefits and support, as well as encouraging further investment from employers or legislation promoting to promote its use.

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