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When financial aid is scarce: The challenge of allocating college aid where it is needed most

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  • Anderson, Drew M.

Abstract

Inequality in college completion by income is a persistent problem, often addressed through financial aid to lower-income students. Prior research has found mixed effects of financial aid, but research designs have not identified effects for the poorest students who may benefit the most. This study exploits an eligibility cutoff induced by first-come first-served allocation of funds in the state of Wisconsin. The analysis focuses on two-year technical colleges, where there was a large funding shortage affecting students at all income levels. I find positive effects of grant aid in reducing dropout and supporting degree completion, with larger positive effects for the poorest students.

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  • Anderson, Drew M., 2020. "When financial aid is scarce: The challenge of allocating college aid where it is needed most," Journal of Public Economics, Elsevier, vol. 190(C).
    • Handle: RePEc:eee:pubeco:v:190:y:2020:i:c:s0047272720301171
    DOI: 10.1016/j.jpubeco.2020.104253
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    Cited by:

    1. Celeste K. Carruthers & Christopher Jepsen, 2020. "Vocational Education: An International Perspective," CESifo Working Paper Series 8718, CESifo.
    2. Veronica Rattini, 2022. "The Effects of Financial Aid on Graduation and Labor Market Outcomes: New Evidence from Matched Education-Labor Data," CESifo Working Paper Series 10010, CESifo.
    3. Miller, Lois & Park, Minseon, 2022. "Making college affordable? The impacts of tuition freezes and caps," Economics of Education Review, Elsevier, vol. 89(C).

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    More about this item

    Keywords

    Financial aid; Community colleges; Inequality; Regression discontinuity;
    All these keywords.

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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