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Not whether, but where? Pell grants and college choices

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  • Carruthers, Celeste K.
  • Welch, Jilleah G.

Abstract

Pell grants are the largest financial aid vehicle in the United States, and yet, their role in shaping students' college choices is not clear. Drawing on the enrollment decisions of four cohorts of Tennessee high school graduates and quasi-experimental Pell eligibility derived from federal formulas, we find little evidence that marginal Pell eligibility affects whether or where students enroll in college. Inframarginal estimates suggest that students sort into colleges with 11.6 cents higher tuition per dollar of Pell aid, although other measures of college quality do not significantly improve over the counterfactual. An investigation into mechanisms that might be muting student responses to Pell favors the application process itself over grant size or institutional aid flexibility.

Suggested Citation

  • Carruthers, Celeste K. & Welch, Jilleah G., 2019. "Not whether, but where? Pell grants and college choices," Journal of Public Economics, Elsevier, vol. 172(C), pages 1-19.
    • Handle: RePEc:eee:pubeco:v:172:y:2019:i:c:p:1-19
    DOI: 10.1016/j.jpubeco.2018.11.006
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    Cited by:

    1. Deven E. Carlson & Alex Schmidt & Sarah Souders & Barbara L. Wolfe, 2020. "The Effects of Need-Based Financial Aid on Employment and Earnings: Experimental Evidence from the Fund for Wisconsin Scholars," NBER Working Papers 27125, National Bureau of Economic Research, Inc.
    2. Matsuda, Kazushige & Mazur, Karol, 2022. "College education and income contingent loans in equilibrium," Journal of Monetary Economics, Elsevier, vol. 132(C), pages 100-117.
    3. Vivian Yuen Ting Liu, 2020. "Is School Out for the Summer? The Impact of Year-Round Pell Grants on Academic and Employment Outcomes of Community College Students," Education Finance and Policy, MIT Press, vol. 15(2), pages 241-269, Spring.
    4. Jaime Thomas & Naihobe Gonzalez & Nora Paxton & Andrew Wiegand & Leela Hebbar, "undated". "The Effects of Expanding Pell Grant Eligibility for Short Occupational Training Programs: Results from the Experimental Sites Initiative," Mathematica Policy Research Reports b814fa629b3642388f3c7ef10, Mathematica Policy Research.
    5. Veronica Rattini, 2022. "The Effects of Financial Aid on Graduation and Labor Market Outcomes: New Evidence from Matched Education-Labor Data," CESifo Working Paper Series 10010, CESifo.

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    More about this item

    Keywords

    Education policy; Higher education; Financial aid;
    All these keywords.

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare

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