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Estimating the relationship between calculated financial need and actual aid received using quarter of birth instruments

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  • Shao, Ling

Abstract

When calculating financial need, the FAFSA does not consider the parental income of students who turn 24 years old. This paper uses the student's quarter of birth interacted with the treated cohort to instrument for financial need. Using the interaction mitigates many of the concerns regarding quarter of birth instruments. A dollar increase in financial need is associated with 15 cents in federal grants and 47 cents in loans. However, the relationship between financial need and institutional aid is, on average, small and statistically insignificant. The exception is that institutions with large endowments do allocate more aid to more-needy students.

Suggested Citation

  • Shao, Ling, 2014. "Estimating the relationship between calculated financial need and actual aid received using quarter of birth instruments," Economics of Education Review, Elsevier, vol. 42(C), pages 165-174.
  • Handle: RePEc:eee:ecoedu:v:42:y:2014:i:c:p:165-174
    DOI: 10.1016/j.econedurev.2014.07.003
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    References listed on IDEAS

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    More about this item

    Keywords

    Student financial aid; Educational finance;

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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