The Equalizer: How Internships Close the Post-Collegiate Earnings Gap for Pell Grant Recipients

Key Takeaways

  • The Internship Rate Gap: The research found a clear internship participation gap, with non-Pell Grant students having an internship participation rate 6.4% higher than that of Pell Grant recipients.
  • The Internship Equalizer: Pell Grant recipients who did complete an internship start their careers with salaries that are statistically equivalent to those of their non-Pell peers (regardless of internship status). Because the study found that annual salary growth rates are similar for these groups, this parity effectively eliminates the post-collegiate earnings gap at career entry and preserves it over time.
  • The Persistent Earnings Gap: University of Minnesota baccalaureate graduates who received a Pell Grant but did not complete an internship start their careers with significantly lower salaries than their non-Pell peers (regardless of internship status) and Pell Grant recipients who completed an internship. This salary gap persists over time.
  • The Policy Implication: Closing the internship participation gap is a powerful lever to promote equitable post-graduation earnings for students from economically disadvantaged backgrounds.

The Challenge: Ensuring Equitable Returns on a University of Minnesota Baccalaureate Degree

A baccalaureate credential from the University of Minnesota is a valuable investment that provides significant returns in post-collegiate earnings. However, our own internal analyses have shown that inequities in initial earnings and salary growth exist, particularly for students from disadvantaged economic backgrounds.

This brief summarizes new longitudinal research that answers a critical follow-up question: Can work-based, integrated learning experiences, specifically internships, reduce or eliminate earnings inequities for students who come from disadvantaged backgrounds? This study1 focuses on Pell Grant recipients as a proxy for undergraduate students from economically disadvantaged backgrounds, tracking their earnings for a decade after graduation. 

The Harvard Project on Workforce, citing a comprehensive review of over 530 academic papers on career development interventions, recommends internships as a proven intervention, directly linking the experience of gaining practical, hands-on skills and work-related experience to positive labor market outcomes and higher post-graduation earnings2. A 2021 Chronicle of Higher Education report3 summarizing research in this area stressed the importance of internships for low-income students, arguing that these experiences level the playing field by offering networking opportunities and development of social capital, attributes that disadvantaged students often lack. A recent report4 by the Burning Glass Institute and the Strada Institute for the Future of Work (2024) found a strong connection between internships and college-level employment after graduation. After controlling for factors such as gender, race/ethnicity, and institutional characteristics, the odds of underemployment for graduates who had at least one internship are 48.5 percent lower than for those who had no internships, and the benefits associated with completing an internship are relatively strong across degree fields.


What We Did: Tracking Graduates Over a Decade

This study linked data from three key sources: 

  • Internal UMN data to identify Pell Grant recipients.
  • 2010-2015 Student Experience in the Research University (SERU) survey data to identify internship participation.
  • Longitudinal earnings data (2011-2022) from the Minnesota Unemployment Insurance program.

The final analysis focused on a sample of 2,931 UMN-Twin Cities baccalaureate recipients whose baccalaureate degree was their terminal degree, meaning they did not pursue further education. All earnings data were adjusted for inflation to 2024 dollars. The SERU survey is only administered on the Twin Cities campus of the UMN.

Using a longitudinal linear mixed-effects regression model, researchers analyzed the starting salaries and annual salary growth for four distinct groups of graduates:

  1. Internship & No Pell Grant
  2. Internship & Pell Grant
  3. No Internship & No Pell Grant
  4. No Internship & Pell Grant

In addition, cumulative GPA and a measure of students’ satisfaction with the value of their education were included as covariates.


What We Found: Internships Level the Playing Field at Career Launch

The analysis yielded three primary findings that highlight the critical role of internships in promoting equitable outcomes.

Finding 1: The Internship Participation Gap

Overall, 36.5% of non-Pell Grant students participated in an internship compared to only 30.1% of Pell Grant recipients, representing a significant participation gap. More recent estimates from the 2024 SERU Survey show that the gap, though still present, has narrowed to 5.3% (43% non-Pell vs. 37.7% Pell). Note that these rates include all class levels; rates for seniors only would be significantly higher.

Finding 2: Internships Provide a Significant Boost to Starting Salaries, Eliminating the Gap for Pell Recipients

The most significant finding relates to expected starting salaries at entry into the workforce after graduation. Students who completed an internship—regardless of their Pell status—started their careers with significantly higher earnings, on average.

  • Pell recipients with an internship started with $4,592 more on average than their Pell peers without one, and by year 10 that difference is expected to be $9,103.
  • Pell recipients without an internship are expected to earn $5,629 less on average than non-Pell students who had one, and by year 10 that difference is expected to be $11,553.

Critically, there was no statistically significant difference in starting salary between Pell recipients with an internship and non-Pell students, regardless of whether the non-Pell students had an internship or not. The internship experience effectively "leveled the playing field" at the point of labor market entry.

Conversely, Pell recipients without an internship started with the lowest salaries of any group.

The table below presents the expected mean starting salary, salary one year and 10 years after graduation for each group.   

A critical note on these dollar figures in the table: Because the earnings data were transformed into a logarithmic scale for the analysis, converting them back to dollars produces geometric means. These are generally lower than the arithmetic means (or 'averages') you might typically see. Therefore, it is essential to focus on the direction and magnitude of the differences between the groups rather than the exact dollar numbers.

Expected Salaries After Graduation by Group (Estimates Expressed in Dollars)

Group Expected Average Starting Salary (Intercept)* Expected Average Salary One Year After Graduation Expected Average Salary Ten Years After Graduation
Internship & No Pell Grant $39,847 $42,709 $79,720
Internship & Pell Grant $38,810 $41,576 $77,270
No Internship & No Pell Grant $37,148 $39,965 $77,143
No Internship & Pell Grant $34,218 $36,659 $68,167

*Note: The intercept represents the predicted geometric average starting salary at the time of graduation (year 0). Because the salary data were collected from one to ten years after graduation, this value is a mathematical extrapolation that serves as the model’s baseline. When interpreting the results, the focus should again be on the size of the differences between the groups rather than the specific dollar amounts.


Finding 3: Annual Salary Growth Rates Are Similar for All Groups, Meaning Initial Gaps Persist

The study also modeled the annual salary growth (the slope) for all four groups over a 10-year period. The results showed that all groups experienced similar annual salary growth, ranging from  7.1% to  7.6%.

There were no statistically significant differences in the growth rates between any of the groups. As the graph below illustrates, all groups experienced similar salary growth (parallel lines), thus indicating that the initial earnings gap for Pell recipients without an internship persists throughout the first decade of their careers. This finding is crucial. Because the growth rates are essentially the same, the initial earnings disparities are maintained over time. Pell Grant students who did not complete an internship never "catch up" to their peers in terms of absolute earnings.

Line graph titled ‘Predicted Annual Salary by Year After Graduation.’ X-axis shows 0–10 years; y-axis shows annual salary on a log scale. Four upward, nearly parallel lines compare internship and Pell Grant groups. Three groups cluster with higher starting salaries, while Pell recipients without internships start noticeably lower and remain lowest across all years.

Policy Implications: A Call to Action for Equitable Opportunity

The findings from this study offer a clear and actionable policy directive: 

  • Internships as a Powerful Equalizer: The data provides strong evidence that work-based, experiential learning is a high-impact practice that levels the playing field. The immediate wage boost is so significant that it effectively closes the salary gap between Pell and non-Pell students at career launch. This confirms the immense value of these experiences.
  • The Cost of the Participation Gap: The data also reveals the disproportionate impact of not having an internship, which is borne most heavily by students from disadvantaged backgrounds. Because salary growth remains parallel over time, this initial earnings disadvantage effectively becomes a career-long disparity.
  • A Focus on High-Impact Investment: This research suggests that investing in programs to increase Pell-eligible students' participation in internships could yield significant returns on equity. Strategies for decreasing the internship rate gap could include:
    • Offering stipends to replace lost wages from work.
    • Providing targeted coaching and application support.
    • Expanding on-campus programs that intentionally build career readiness, like the University's Work+ program. This program offers a scalable solution by integrating flexible, 30-minute "milestone" activities about once a month into the work plan. Work+ connects on-campus jobs to career competencies and teaches the "hidden rules" of workplace culture without requiring heavy administrative lifting.
  • Training faculty members to integrate career competencies into their teaching.
  • The Power of Collaboration: These findings underscore the importance of collaboration among Career Services, academic departments, and industry partners. Working together, these key stakeholders can create, promote, and facilitate more pathways into these critical experiences for Pell-eligible and other underrepresented students.

Ultimately, the study shows that reducing the internship participation gap is a direct and effective way to help close the post-collegiate earnings gap.

 

  1. Original findings were presented at the 2025 SERU Symposium, University of California, Berkeley. The methodology, full model results, and sample descriptions can be found in the presentation section of the Policy and Research page on the IDR website.

  2. Deming, D., Fuller, J. B., Lipson, R., McKittrick, K., Epstein, A., & Catalfamo, E. (2023). Delivering on the Degree: The college-to-jobs playbook. Harvard Kennedy School. See Publication (ext. link)

  3. Chronicle Intelligence. (2021).  Trends snapshot: Connecting low-income students to careers. The Chronicle of Higher Education. Download File (PDF)

  4. The Burning Glass Institute and Strada Institute for the Future of Work. (2024). Talent disrupted: Underemployment, college graduates, and the way forward (2024). Download File (PDF)