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Financial Aid Packages and College Enrollment Decisions: An Econometric Case Study

Author

Listed:
  • David M. Linsenmeier

    (Princeton University)

  • Harvey S. Rosen

    (Princeton University and NBER)

  • Cecilia Elena Rouse

    (Princeton University and NBER)

Abstract

We study the effects of a change in financial aid policy introduced by a Northeastern university in 1998. Prior to that time, the university s financial aid packages for low income students consisted of grants, loans, and campus jobs. After the change, the entire loan portion of the package for low-income students was replaced with grants. We find the program increased the likelihood of matriculation by low-income students by about 3 percentage points, although the effect is not statistically significant. The effect among low-income minority students was about twice that size and statistically significant at the 10 percent level.

Suggested Citation

  • David M. Linsenmeier & Harvey S. Rosen & Cecilia Elena Rouse, 2001. "Financial Aid Packages and College Enrollment Decisions: An Econometric Case Study," Working Papers 838, Princeton University, Department of Economics, Industrial Relations Section..
    • Handle: RePEc:pri:indrel:459
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    References listed on IDEAS

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    1. Dynarski, Susan, 2000. "Hope for Whom? Financial Aid for the Middle Class and Its Impact on College Attendance," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(3), pages 629-662, September.
    2. Ronald G. Ehrenberg & Daniel R. Sherman, 1984. "Optimal Financial Aid Policies for a Selective University," Journal of Human Resources, University of Wisconsin Press, vol. 19(2), pages 202-230.
    3. Susan M. Dynarski, 2003. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," American Economic Review, American Economic Association, vol. 93(1), pages 279-288, March.
    4. van der Klaauw, Wilbert, 1997. "A Regression-Discontinuity Evaluation of the Effect of Financial Aid Offers on College Enrollment," Working Papers 97-10, C.V. Starr Center for Applied Economics, New York University.
    5. Elizabeth Savoca, 1991. "The Effect of Changes in the Composition of Financial Aid on College Enrollments," Eastern Economic Journal, Eastern Economic Association, vol. 17(1), pages 109-121, Jan-Mar.
    6. Schwartz, J. Brad, 1985. "Student financial aid and the college enrollment decision: the effects of public and private grants and interest subsidies," Economics of Education Review, Elsevier, vol. 4(2), pages 129-144, April.
    7. Hoenack, Stephen A, 1971. "The Efficient Allocation of Subsidies to College Students," American Economic Review, American Economic Association, vol. 61(3), pages 302-311, June.
    8. Feldstein, Martin, 1995. "College Scholarship Rules and Private Saving," American Economic Review, American Economic Association, vol. 85(3), pages 552-566, June.
    9. Kane, Thomas J, 1994. "College Entry by Blacks since 1970: The Role of College Costs, Family Background, and the Returns to Education," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 878-911, October.
    10. McPherson, Michael S & Schapiro, Morton Owen, 1991. "Does Student Aid Affect College Enrollment? New Evidence on a Persistent Controversy," American Economic Review, American Economic Association, vol. 81(1), pages 309-318, March.
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    Cited by:

    1. Thomas Kane, 2004. "Evaluating the Impact of the D.C. Tuition Assistance Grant Program," NBER Working Papers 10658, National Bureau of Economic Research, Inc.
    2. Susan Dynarski, 2002. "The Behavioral and Distributional Implications of Aid for College," American Economic Review, American Economic Association, vol. 92(2), pages 279-285, May.

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    More about this item

    Keywords

    financial aid; grants; loans; jobs;
    All these keywords.

    JEL classification:

    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment

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