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The Effect of Changes in the Composition of Financial Aid on College Enrollments

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  • Elizabeth Savoca

    (Smith College)

Abstract

This paper examines whether the shift in the composition of financial aid away from grants toward loans adversely affected college enrollments in the 1970s and 1980s. Multinomial logit estimates of individual college choice behavior show that the probability of attending college falls when loans replace grants, dollar-for-dollar, in the financial aid package. The estimates, however, also imply that this effect is small. Simulations of aggregate enrollment rates suggest that the increase in the proportion of aid comprised of loans provided only a minor negative inducement to enroll between 1972 and 1985.

Suggested Citation

  • Elizabeth Savoca, 1991. "The Effect of Changes in the Composition of Financial Aid on College Enrollments," Eastern Economic Journal, Eastern Economic Association, vol. 17(1), pages 109-121, Jan-Mar.
    • Handle: RePEc:eej:eeconj:v:17:y:1991:i:1:p:109-121
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume17/V17N1P109_121.pdf
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    Citations

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    Cited by:

    1. Diamantides, Jerry & Weaver, Thomas F., 1993. "The Future Of The Land Grant University System," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 22(2), pages 1-7, October.
    2. Rebecca J. Acosta, 2001. "How Do Colleges Respond to Changes in Federal Student Aid?," UCLA Economics Working Papers 808, UCLA Department of Economics.
    3. David M. Linsenmeier & Harvey Rosen & Cecilia Rouse, 2001. "Financial Aid Packages and College Enrollment Decisions: An Econometric Case Study," Working Papers 838, Princeton University, Department of Economics, Industrial Relations Section..
    4. Elizabeth Becker & Cotton M. Lindsay & Gary Grizzle, 2003. "The derived demand for faculty research," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(8), pages 549-567.
    5. David M. Linsenmeier & Harvey S. Rosen & Cecilia Elena Rouse, 2001. "Financial Aid Packages and College Enrollment Decisions: An Econometric Case Study," Working Papers 838, Princeton University, Department of Economics, Industrial Relations Section..
    6. Macunovich, D.J., 1996. "Cohort Size Effects on US Enrollment Decisions," Williams Project on the Economics of Higher Education DP-36, Department of Economics, Williams College.
    7. Hilmer, Michael J., 2001. "Redistributive fee increases, net attendance costs, and the distribution of students at the public university," Economics of Education Review, Elsevier, vol. 20(6), pages 551-562, December.
    8. Hilmer, Michael J., 2001. "A comparison of alternative specifications of the college attendance equation with an extension to two-stage selectivity-correction models," Economics of Education Review, Elsevier, vol. 20(3), pages 263-278, June.

    More about this item

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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