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The Effect of Student Aid on the Duration of Study

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  • Daniela Glocker

Abstract

In this paper I evaluate the effect of student aid on the success of academic studies. I focus on two dimensions, the duration of study and the probability of actually graduating with a degree. While there is an extensive literature on the impact of student aid on its intended outcome, the uptake of tertiary education, the impact on the outcome and on study incentives has been mainly ignored. But introducing student aid changes the students' budget constraint. The increase in the budget-set might lead to shorter time-to-degree if paid work is substituted by study time. I analyze the effect of financial student aid granted by the German Federal Education and Training Assistance Act (BAfoeG). To determine its impact, I estimate a discrete-time duration model allowing for competing risks to account for different exit states (graduation and dropout) using individual level panel data from the German Socio-Economic Panel (SOEP) for the years 1984-2007. My findings suggest that the duration of study is responsive to the type of financial support a student receives. There are three main results. First, student aid recipients finish faster than comparable students who are supported by the same amount of parental/private transfers only. Second, although higher financial aid does on average not affect the duration of study, this effect is (third) dominated by the increased probability of actually finishing university successfully.

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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 893.

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Length: 36 p.
Date of creation: 2009
Date of revision:
Handle: RePEc:diw:diwwpp:dp893

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Keywords: academic outcomes; student aid; duration of study; BAfoeG; German Socio-Economic Panel;

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References

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  1. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
  2. Ronald G. Ehrenberg & Daniel R. Sherman, 1987. "Employment While in College, Academic Achievement, and Postcollege Outcomes: A Summary of Results," Journal of Human Resources, University of Wisconsin Press, vol. 22(1), pages 1-23.
  3. Martin Heineck & Mathias Kifmann & Normann Lorenz, 2006. "A Duration Analysis of the Effects of Tuition Fees for Long-Term Students in Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 226(1), pages 82-109, January.
  4. Jaap H. Abbring & Gerard J. van den Berg, 2003. "The identifiability of the mixed proportional hazards competing risks model," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 65(3), pages 701-710.
  5. Pietro Garibaldi & Francesco Giavazzi & Andrea Ichino & Enrico Rettore, 2012. "College Cost and Time to Complete a Degree: Evidence from Tuition Discontinuities," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 699-711, August.
  6. John Siegfried & Wendy A. Stock, 2000. "So You Want to Earn a Ph.D. in Economics: How Long Do You Think it Will Take?," Vanderbilt University Department of Economics Working Papers 0037, Vanderbilt University Department of Economics.
  7. Glocker, Daniela, 2011. "The effect of student aid on the duration of study," Economics of Education Review, Elsevier, Elsevier, vol. 30(1), pages 177-190, February.
  8. Ronald G. Ehrenberg & Panagiotis G. Mavros, 1992. "Do Doctoral Students' Financial Support Patterns Affect Their Times-to-Degree and Completion Probabilities," NBER Working Papers 4070, National Bureau of Economic Research, Inc.
  9. Dynarski, Susan, 2001. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," Working Paper Series, Harvard University, John F. Kennedy School of Government rwp01-034, Harvard University, John F. Kennedy School of Government.
  10. Todd R. Stinebrickner & Ralph Stinebrickner, 2007. "The Effect of Credit Constraints on the College Drop-Out Decision: A Direct Approach Using a New Panel Study," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers, University of Western Ontario, CIBC Centre for Human Capital and Productivity 20071, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  11. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, Econometric Society, vol. 52(2), pages 271-320, March.
  12. Stephen L. DesJardins & Dennis A. Ahlburg & Brian P. McCall, 2002. "Simulating the Longitudinal Effects of Changes in Financial Aid on Student Departure from College," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 653-679.
  13. Michael P. Keane & Kenneth I. Wolpin, 1995. "The career decisions of young men," Working Papers, Federal Reserve Bank of Minneapolis 559, Federal Reserve Bank of Minneapolis.
  14. Carneiro, Pedro & Heckman, James J., 2002. "The Evidence on Credit Constraints in Post-Secondary Schooling," IZA Discussion Papers 518, Institute for the Study of Labor (IZA).
  15. Han, Aaron & Hausman, Jerry A, 1990. "Flexible Parametric Estimation of Duration and Competing Risk Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 5(1), pages 1-28, January-M.
  16. Keane, Michael P & Wolpin, Kenneth I, 2001. "The Effect of Parental Transfers and Borrowing Constraints on Educational Attainment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 1051-1103, November.
  17. Sophia Rabe-Hesketh & Anders Skrondal & Andrew Pickles, 2004. "GLLAMM Manual," U.C. Berkeley Division of Biostatistics Working Paper Series, Berkeley Electronic Press 1160, Berkeley Electronic Press.
  18. DesJardins, S. L. & Ahlburg, D. A. & McCall, B. P., 1999. "An event history model of student departure," Economics of Education Review, Elsevier, Elsevier, vol. 18(3), pages 375-390, June.
  19. Stephen V. Cameron & Christopher Taber, 2004. "Estimation of Educational Borrowing Constraints Using Returns to Schooling," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 112(1), pages 132-182, February.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Student aid and duration and success of study
    by Economic Logician in Economic Logic on 2009-06-03 08:30:00
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Cited by:
  1. Tommaso Agasisti & Samuele Murtinu, 2013. "Are we wasting public money? No! The effects of grants on Italian university students’ performances," Working Papers 2013/33, Institut d'Economia de Barcelona (IEB).
  2. Fossen, Frank M. & Glocker, Daniela, 2014. "Stated and revealed heterogeneous risk preferences in educational choice," Discussion Papers 2014/3, Free University Berlin, School of Business & Economics.
  3. Carmen Aina, 2010. "The Determinants of Success and Failure of Italian University Students. Evidence from administrative data," Working Papers, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont 131, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
  4. Booij, Adam S. & Leuven, Edwin & Oosterbeek, Hessel, 2012. "The role of information in the take-up of student loans," Economics of Education Review, Elsevier, Elsevier, vol. 31(1), pages 33-44.
  5. Daniela Glocker, 2009. "The Effect of Student Aid on the Duration of Study," Discussion Papers of DIW Berlin 893, DIW Berlin, German Institute for Economic Research.
  6. Carmen Aina & Eliana Baici & Giorgia Casalone, 2010. "Time-to-Degree: Students' Abilities, University Characteristics or What Else? Evidence from Italy," Working Papers, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont 130, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
  7. Frank Fossen & Daniela Glocker, 2011. "Expected future earnings, taxation, and university enrollment," International Tax and Public Finance, Springer, Springer, vol. 18(6), pages 688-723, December.

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