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To Apply or Not to Apply: FAFSA Completion and Financial Aid Gaps

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  • Michael S. Kofoed

    () (United States Military Academy)

Abstract

Abstract In the United States, college students must complete the Free Application for Student Federal Aid (FAFSA) to access federal aid. However, many eligible students do not apply and consequently forgo significant amounts of financial aid. If students have perfect information about aid eligibility, we would expect that all eligible students complete FAFSA and no aid would go unclaimed. Using data from the National Postsecondary Student Aid Survey, I estimate a multinomial logit model which controls for all variables that contribute to aid eligibility and other student characteristics that may deter FAFSA completion. I find that students who are lower middle income, white, male and independent from parents are less likely to complete FAFSA even when they are eligible for aid. Using propensity score matching, I find that each year applicants forgo $9,741.05 in total aid (including grant and loan aid) which includes $1,281.00 of Pell Grants, $2,439.50 of the balance subsidized student loans, $1,986.65 of the balance of unsubsidized student loans, and $1,016.04 of institutional grants. These aid totals aggregate to $24 billion annually.

Suggested Citation

  • Michael S. Kofoed, 2017. "To Apply or Not to Apply: FAFSA Completion and Financial Aid Gaps," Research in Higher Education, Springer;Association for Institutional Research, vol. 58(1), pages 1-39, February.
  • Handle: RePEc:spr:reihed:v:58:y:2017:i:1:d:10.1007_s11162-016-9418-y
    DOI: 10.1007/s11162-016-9418-y
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    Citations

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    Cited by:

    1. Herber, Stefanie P. & Kalinowski, Michael, 2016. "Non-take-up of Student Financial Aid: A Microsimulation for Germany," Annual Conference 2016 (Augsburg): Demographic Change 145727, Verein für Socialpolitik / German Economic Association.
    2. Frauke H. Peter & Vaishali Zambre, 2014. "Wer studiert, ist informiert?: Studienentscheidungen und Informationsdefizite," DIW Roundup: Politik im Fokus 35, DIW Berlin, German Institute for Economic Research.
    3. Stefanie P. Herber & Michael Kalinowski, 2016. "Non-Take-Up of Student Financial Aid: A Microsimulation for Germany," SOEPpapers on Multidisciplinary Panel Data Research 844, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. repec:eee:labeco:v:47:y:2017:i:c:p:48-63 is not listed on IDEAS
    5. Herber, Stefanie P. & Kalinowski, Michael, 2016. "Non-take-up of student financial aid: A microsimulation for Germany," BERG Working Paper Series 109, Bamberg University, Bamberg Economic Research Group.
    6. Bergman, Peter & Denning, Jeffrey T. & Manoli, Dayanand, 2017. "Broken Tax Breaks? Evidence from a Tax Credit Information Experiment with 1,000,000 Students," IZA Discussion Papers 10997, Institute for the Study of Labor (IZA).
    7. Benjamin L. Castleman & Lindsay C. Page, 2016. "Freshman Year Financial Aid Nudges: An Experiment to Increase FAFSA Renewal and College Persistence," Journal of Human Resources, University of Wisconsin Press, vol. 51(2), pages 389-415.
    8. Kelli Bird & Benjamin L. Castleman, 2016. "Here Today, Gone Tomorrow? Investigating Rates and Patterns of Financial Aid Renewal Among College Freshmen," Research in Higher Education, Springer;Association for Institutional Research, vol. 57(4), pages 395-422, June.
    9. repec:spr:reihed:v:58:y:2017:i:7:d:10.1007_s11162-017-9447-1 is not listed on IDEAS

    More about this item

    Keywords

    Student financial aid; FAFSA completion; Economics of higher education; Propensity score matching;

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education

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