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How Financial Aid Affects Persistence

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  • Eric Bettinger

Abstract

The Pell Grant program is the largest means-tested financial assistance available to postsecondary students across the United States, yet researchers have only limited evidence on the causal effects of these grants. This paper examines the effect of Pell grants on student persistence after the first year. The paper uses unique, student-level data from all public colleges in Ohio. The data include detailed financial data which allow me to identify small discontinuities in the Pell grant formula. I exploit these discontinuities to identify the causal effects of the voucher. The results based on discontinuity approaches suggest that Pell grants reduce college drop-out behavior. The results in this paper support other evidence that find a relationship between need-based aid and college completion (e.g. Dynarski 2002, Turner and Bound 2002).

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File URL: http://www.nber.org/papers/w10242.pdf
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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10242.

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Date of creation: Jan 2004
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Publication status: published as Eric Bettinger. "How Financial Aid Affects Persistence," in Caroline M. Hoxby, editor, "College Choices: The Economics of Where to Go, When to Go, and How to Pay For It" University of Chicago Press (2004)
Handle: RePEc:nbr:nberwo:10242

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References

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  1. Manski, C.F., 1991. "Adolescent Econometricians : How Do Youth Infer the Returns to Schooling," Working papers 9110, Wisconsin Madison - Social Systems.
  2. DesJardins, S. L. & Ahlburg, D. A. & McCall, B. P., 1999. "An event history model of student departure," Economics of Education Review, Elsevier, vol. 18(3), pages 375-390, June.
  3. Dynarski, Susan, 2001. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," Working Paper Series rwp01-034, Harvard University, John F. Kennedy School of Government.
  4. Joshua Angrist, 1988. "Grouped Data Estimation and Testing in Simple Labor Supply Models," Working Papers 614, Princeton University, Department of Economics, Industrial Relations Section..
  5. Jaeger, David A & Page, Marianne E, 1996. "Degrees Matter: New Evidence on Sheepskin Effects in the Returns to Education," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 733-40, November.
  6. John Bound & Sarah Turner, 2002. "Going to War and Going to College: Did World War II and the G.I. Bill Increase Educational Attainment for Returning Veterans?," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 784-815, October.
  7. Ronald G. Ehrenberg & Daniel R. Sherman, 1984. "Optimal Financial Aid Policies for a Selective University," NBER Working Papers 1014, National Bureau of Economic Research, Inc.
  8. Neil S. Seftor & NSarah E. Turner, 2002. "Back to School: Federal Student Aid Policy and Adult College Enrollment," Journal of Human Resources, University of Wisconsin Press, vol. 37(2), pages 336-352.
  9. 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.
  10. Tobias, J.L., 2000. "Are Return to Schooling Concentrated Among the Most Able? A Semiparametric Analysis of the Ability-Earnings Relationship," Papers 00-01-12, California Irvine - School of Social Sciences.
  11. Thomas J. Kane, 1995. "Rising Public College Tuition and College Entry: How Well Do Public Subsidies Promote Access to College?," NBER Working Papers 5164, National Bureau of Economic Research, Inc.
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Cited by:
  1. Susan Dynarski & Judith E. Scott-Clayton, 2008. "Complexity and Targeting in Federal Student Aid: A Quantitative Analysis," NBER Working Papers 13801, National Bureau of Economic Research, Inc.
  2. Elliott, William & Friedline, Terri, 2013. "“You pay your share, we’ll pay our share”: The college cost burden and the role of race, income, and college assets," Economics of Education Review, Elsevier, vol. 33(C), pages 134-153.
  3. Dynarski, Susan & Scott-Clayton, Judith, 2006. "The Cost of Complexity in Federal Student Aid: Lessons from Optimal Tax Theory and Behavioral Economics," Working Paper Series rwp06-013, Harvard University, John F. Kennedy School of Government.
  4. David Deming & Susan Dynarski, 2009. "Into College, Out of Poverty? Policies to Increase the Postsecondary Attainment of the Poor," NBER Working Papers 15387, National Bureau of Economic Research, Inc.
  5. Larry Singell & Mark Stater, 2006. "Going, going, gone: the effects of aid policies on graduation at three large public institutions," Policy Sciences, Springer, vol. 39(4), pages 379-403, December.
  6. Loyalka, Prashant & Song, Yingquan & Wei, Jianguo & Zhong, Weiping & Rozelle, Scott, 2013. "Information, college decisions and financial aid: Evidence from a cluster-randomized controlled trial in China," Economics of Education Review, Elsevier, vol. 36(C), pages 26-40.
  7. Solis, Alex, 2013. "Credit Access and College Enrollment," Working Paper Series 2013:12, Uppsala University, Department of Economics.
  8. Joshua Angrist & Daniel Lang & Philip Oreopoulos, 2006. "Lead Them to Water and Pay Them to Drink: An Experiment with Services and Incentives for College Achievement," NBER Working Papers 12790, National Bureau of Economic Research, Inc.
  9. Ehrenberg, R.G.Ronald G., 2004. "Econometric studies of higher education," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 19-37.
  10. Canton, Erik & Blom, Andreas, 2004. "Can student loans improve accessibility to higher education and student performance? An impact study of the case of SOFES, Mexico," Policy Research Working Paper Series 3425, The World Bank.
  11. Susan Dynarski, 2008. "Building the Stock of College-Educated Labor," Journal of Human Resources, University of Wisconsin Press, vol. 43(3), pages 576-610.
  12. Michèle Belot & Erik Canton & Dinand Webbink, 2007. "Does reducing student support affect scholastic performance? Evidence from a Dutch reform," Empirical Economics, Springer, vol. 32(2), pages 261-275, May.
  13. Erik Canton & A. Blom, 2004. "Do student loans improve accessibility to higher education and student performance? An impact study of the SOFES program in Mexico," CPB Discussion Paper 33, CPB Netherlands Bureau for Economic Policy Analysis.
  14. David Deming & Susan Dynarski, 2010. "College Aid," NBER Chapters, in: Targeting Investments in Children: Fighting Poverty When Resources are Limited, pages 283-302 National Bureau of Economic Research, Inc.
  15. Friedline, Terri & Elliott, William & Chowa, Gina A.N., 2013. "Testing an asset-building approach for young people: Early access to savings predicts later savings," Economics of Education Review, Elsevier, vol. 33(C), pages 31-51.

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