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Financial Aid and Student Bargaining Power

  • Lang David M

    ()

    (California State University, Sacramento)

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    To say that financial aid is a key component of the college admissions process is an understatement. For the student and her family, financial aid is a way to afford quality post-secondary education that otherwise may have been unobtainable. For the college, financial aid is a method to compete for the best and brightest students. For policymakers, financial aid is a subsidy for educational expenses where constituencies often differ over its merits. This research attempts to analyze the financial aid process by considering the ability of a student to act strategically. A game-theoretic model developed by Epple, Romano, Sarpca, and Sieg (2005) is utilized and evaluated using empirical evidence from the 1996 National Postsecondary Student Aid Study (NPSAS:96). It is shown that a student can maximize her financial aid offer by increasing the number of schools to which she has been accepted after controlling for ability, demographics, state fixed effects and institutional characteristics. A matching estimator to calculate average treatment effects and properly address endogeneity concerns.

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    File URL: http://www.degruyter.com/view/j/bejeap.2007.7.1/bejeap.2007.7.1.1605/bejeap.2007.7.1.1605.xml?format=INT
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    Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

    Volume (Year): 7 (2007)
    Issue (Month): 1 (August)
    Pages: 1-21

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    Handle: RePEc:bpj:bejeap:v:7:y:2007:i:1:n:37
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