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The Long-Run Impacts of Financial Aid: Evidence from California's Cal Grant

Author

Listed:
  • Eric Bettinger
  • Oded Gurantz
  • Laura Kawano
  • Bruce Sacerdote
  • Michael Stevens

Abstract

We examine the long-term impacts of California's state-based financial aid by tracking educational and labor force outcomes for up to 14 years after high school graduation. We identify program impacts by exploiting variation in eligibility rules using GPA and family income cutoffs that are ex ante unknown to applicants. Aid eligibility increases undergraduate and graduate degree completion, and for some subgroups, raises longer-run annual earnings and the likelihood that young adults reside in California. These findings suggest that the net cost of financial aid programs may frequently be overstated, though our results are too imprecise to provide exact cost-benefit estimates.

Suggested Citation

  • Eric Bettinger & Oded Gurantz & Laura Kawano & Bruce Sacerdote & Michael Stevens, 2019. "The Long-Run Impacts of Financial Aid: Evidence from California's Cal Grant," American Economic Journal: Economic Policy, American Economic Association, vol. 11(1), pages 64-94, February.
    • Handle: RePEc:aea:aejpol:v:11:y:2019:i:1:p:64-94
    Note: DOI: 10.1257/pol.20170466
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    Citations

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    Cited by:

    1. Molina, Teresa & Rivadeneyra, Ivan, 2020. "The Schooling and Labor Market Effects of Eliminating University Tuition in Ecuador," IZA Discussion Papers 13638, Institute of Labor Economics (IZA).
    2. 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).
    3. George Bulman & Robert Fairlie & Sarena Goodman & Adam Isen, 2016. "Parental Resources and College Attendance: Evidence from Lottery Wins," NBER Working Papers 22679, National Bureau of Economic Research, Inc.
    4. Denning, Jeffrey T. & Eide, Eric R. & Warnick, Merrill, 2019. "Why Have College Completion Rates Increased?," IZA Discussion Papers 12411, Institute of Labor Economics (IZA).
    5. Wright, Nicholas A., 2020. "Perform better, or else: Academic probation, public praise, and students decision-making," Labour Economics, Elsevier, vol. 62(C).
    6. Matsuda, Kazushige, 2020. "Optimal timing of college subsidies: Enrollment, graduation, and the skill premium," European Economic Review, Elsevier, vol. 129(C).

    More about this item

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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