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Financial Aid and Student Bargaining Power

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  • Lang David M

    (California State University, Sacramento)

Abstract

To say that financial aid is a key component of the college admissions process is an understatement. For the student and her family, financial aid is a way to afford quality post-secondary education that otherwise may have been unobtainable. For the college, financial aid is a method to compete for the best and brightest students. For policymakers, financial aid is a subsidy for educational expenses where constituencies often differ over its merits. This research attempts to analyze the financial aid process by considering the ability of a student to act strategically. A game-theoretic model developed by Epple, Romano, Sarpca, and Sieg (2005) is utilized and evaluated using empirical evidence from the 1996 National Postsecondary Student Aid Study (NPSAS:96). It is shown that a student can maximize her financial aid offer by increasing the number of schools to which she has been accepted after controlling for ability, demographics, state fixed effects and institutional characteristics. A matching estimator to calculate average treatment effects and properly address endogeneity concerns.

Suggested Citation

  • Lang David M, 2007. "Financial Aid and Student Bargaining Power," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-21, August.
    • Handle: RePEc:bpj:bejeap:v:7:y:2007:i:1:n:37
    DOI: 10.2202/1935-1682.1605
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    Cited by:

    1. Heather Antecol & Janet Kiholm Smith, 2012. "The Early Decision Option in College Admission and Its Impact on Student Diversity," Journal of Law and Economics, University of Chicago Press, vol. 55(1), pages 217-249.

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    Keywords

    financial aid; bargaining;

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