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Marginal Effects of Merit Aid for Low-Income Students

Author

Listed:
  • Joshua Angrist
  • David Autor
  • Amanda Pallais

Abstract

Financial aid from the Susan Thompson Buffett Foundation (STBF) provides exceptionally generous support to a college population similar to that served by a host of state aid programs. In conjunction with STBF, we randomly assigned aid awards to thousands of Nebraska high school graduates from low-income, minority, and first-generation college households. Randomly- assigned STBF awards boost bachelor's (BA) degree completion for students targeting four-year schools by about 8 points. Degree gains are concentrated among four-year applicants who would otherwise have been unlikely to pursue a four-year program. Degree effects are mediated by award-induced increases in credits earned towards a BA in the first year of college. The extent of initial four-year college engagement explains heterogeneous effects by target campus and across covariate subgroups. Most program spending is a transfer, reducing student debt without affecting degree attainment. Award-induced marginal spending is modest. The projected lifetime earnings impact of awards exceeds marginal educational spending for all of the subgroups examined in the study. Projected earnings gains exceed funder costs for low-income, non-white, urban, and first-generation students, and for students with relatively weak academic preparation.

Suggested Citation

  • Joshua Angrist & David Autor & Amanda Pallais, 2020. "Marginal Effects of Merit Aid for Low-Income Students," NBER Working Papers 27834, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27834
    Note: ED LS PE
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    Cited by:

    1. Katy Bergstrom & Berk Özler, 2023. "Improving the Well-Being of Adolescent Girls in Developing Countries," The World Bank Research Observer, World Bank, vol. 38(2), pages 179-212.
    2. Harrison H. Li & Art B. Owen, 2022. "A general characterization of optimal tie-breaker designs," Papers 2202.12511, arXiv.org, revised Oct 2022.
    3. Behlen, Lars & Himmler, Oliver & Jaeckle, Robert, 2022. "Can defaults change behavior when post-intervention effort is required? Evidence from education," MPRA Paper 112962, University Library of Munich, Germany.
    4. Brad J. Hershbein & Isabel McMullen & Brian Pittelko & Bridget Timmeney, 2021. "Beyond degrees: Longer term outcomes of the Kalamazoo Promise," Upjohn Working Papers 21-350, W.E. Upjohn Institute for Employment Research.
    5. Adrianna Kezar & Rosemary J. Perez & Elise Swanson, 2022. "The potential of and mechanisms for a hub of innovation on campus to support changes for low-income, first generation, and racially minoritized college students," Research in Higher Education, Springer;Association for Institutional Research, vol. 63(7), pages 1237-1260, November.
    6. Firoozi, Daniel, 2022. "The impact of post-admission merit scholarships on enrollment decisions and degree attainment: Evidence from randomization," Economics of Education Review, Elsevier, vol. 86(C).

    More about this item

    JEL classification:

    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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