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Does the Format of a Financial Aid Program Matter? The Effect of State In-Kind Tuition Subsidies

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  • Bridget Terry Long

    (Harvard University, Graduate School of Education, and NBER)

Abstract

This paper examines the importance of format in aid programs, focusing on state appropriations to public postsecondary institutions. These funds subsidize costs for in-state students, but they may also influence choices between institutions due to their in-kind format. Using the conditional logistic choice model and extensive match-specific information, the paper approximates the choice between nearly 2700 college options to examine the effect of several dissimilar state systems. The results suggest that the level and distribution pattern of subsidies strongly affect decisions. If the aid could instead be applied to any in-state college, up to 29% more students would prefer to attend private four-year colleges. © 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Bridget Terry Long, 2004. "Does the Format of a Financial Aid Program Matter? The Effect of State In-Kind Tuition Subsidies," The Review of Economics and Statistics, MIT Press, vol. 86(3), pages 767-782, August.
  • Handle: RePEc:tpr:restat:v:86:y:2004:i:3:p:767-782
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    References listed on IDEAS

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    1. Ganderton, Philip T., 1992. "The effect of subsidies in kind on the choice of a college," Journal of Public Economics, Elsevier, vol. 48(3), pages 269-292, August.
    2. John M. Quigley & Daniel L. Rubinfeld, 1993. "Public Choices in Public Higher Education," NBER Chapters,in: Studies of Supply and Demand in Higher Education, pages 243-284 National Bureau of Economic Research, Inc.
    3. Thomas J. Kane, 1995. "Rising Public College Tuition and College Entry: How Well Do Public Subsidies Promote Access to College?," NBER Working Papers 5164, National Bureau of Economic Research, Inc.
    4. Peltzman, Sam, 1973. "The Effect of Government Subsidies-in-Kind on Private Expenditures: The Case of Higher Education," Journal of Political Economy, University of Chicago Press, vol. 81(1), pages 1-27, Jan.-Feb..
    5. Terry Long, B.Bridget, 2004. "How have college decisions changed over time? An application of the conditional logistic choice model," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 271-296.
    6. Pechman, Joseph A, 1972. "Note on the Intergenerational Transfer of Public Higher-Education Benefits," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages 256-259, Part II, .
    7. Sonstelie, Jon, 1982. "The Welfare Cost of Free Public Schools," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 794-808, August.
    8. Johnson, George E, 1984. "Subsidies for Higher Education," Journal of Labor Economics, University of Chicago Press, vol. 2(3), pages 303-318, July.
    9. Caroline M. Hoxby & Bridget Terry, 1999. "Explaining Rising Income and wage Inequality Among the College Educated," NBER Working Papers 6873, National Bureau of Economic Research, Inc.
    10. Daniel McFadden, 1977. "Quantitative Methods for Analyzing Travel Behaviour of Individuals: Some Recent Developments," Cowles Foundation Discussion Papers 474, Cowles Foundation for Research in Economics, Yale University.
    11. Allen, Robert F. & Shen, Jianshou, 1999. "Some new evidence of the character of competition among higher education institutions," Economics of Education Review, Elsevier, vol. 18(4), pages 465-470, October.
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    Citations

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    Cited by:

    1. Eric P. Bettinger & Bridget Terry Long, 2009. "Addressing the Needs of Underprepared Students in Higher Education: Does College Remediation Work?," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
    2. Eric Bettinger & Oded Gurantz & Laura Kawano & Bruce Sacerdote, 2016. "The Long Run Impacts of Merit Aid: Evidence from California’s Cal Grant," NBER Working Papers 22347, National Bureau of Economic Research, Inc.
    3. Dickson, Lisa & Pender, Matea, 2013. "Do in-state tuition benefits affect the enrollment of non-citizens? Evidence from universities in Texas," Economics of Education Review, Elsevier, vol. 37(C), pages 126-137.
    4. Broner, Fernando A. & Gaston Gelos, R. & Reinhart, Carmen M., 2006. "When in peril, retrench: Testing the portfolio channel of contagion," Journal of International Economics, Elsevier, vol. 69(1), pages 203-230, June.
    5. Lindsay C. Page & Judith Scott-Clayton, 2015. "Improving College Access in the United States: Barriers and Policy Responses," NBER Working Papers 21781, National Bureau of Economic Research, Inc.
    6. Page, Lindsay C. & Scott-Clayton, Judith, 2016. "Improving college access in the United States: Barriers and policy responses," Economics of Education Review, Elsevier, vol. 51(C), pages 4-22.
    7. Chakrabarti, Rajashri & Roy, Joydeep, 2013. "Merit aid, student mobility, and the role of college selectivity," Staff Reports 641, Federal Reserve Bank of New York.
    8. Eric Bettinger & Bridget Terry Long, 2004. "Shape Up or Ship Out: The Effects of Remediation on Students at Four-Year Colleges," NBER Working Papers 10369, National Bureau of Economic Research, Inc.
    9. Hurwitz, Michael & Goodman, Joshua Samuel & Smith, Jonathan & Fox, Julia, 2015. "The relationship between siblings’ college choices: Evidence from one million SAT-taking families," Scholarly Articles 22805380, Harvard Kennedy School of Government.
    10. George B. Bulman & Caroline M. Hoxby, 2015. "The Returns to the Federal Tax Credits for Higher Education," Tax Policy and the Economy, University of Chicago Press, vol. 29(1), pages 13-88.
    11. Monks, James, 2009. "The impact of merit-based financial aid on college enrollment: A field experiment," Economics of Education Review, Elsevier, vol. 28(1), pages 99-106, February.
    12. Hashem Dezhbakhsh & John A. Karikari, 2010. "Enrollment At Highly Selective Private Colleges: Who Is Left Behind?," Contemporary Economic Policy, Western Economic Association International, vol. 28(1), pages 94-109, January.
    13. Bridget Terry Long, 2003. "The Impact of Federal Tax Credits for Higher Education Expenses," NBER Working Papers 9553, National Bureau of Economic Research, Inc.
    14. Niu, Sunny Xinchun & Tienda, Marta & Cortes, Kalena, 2006. "College selectivity and the Texas top 10% law," Economics of Education Review, Elsevier, vol. 25(3), pages 259-272, June.
    15. Bridget Terry Long, 2014. "The Financial Crisis and College Enrollment: How Have Students and Their Families Responded?," NBER Chapters,in: How the Financial Crisis and Great Recession Affected Higher Education, pages 209-233 National Bureau of Economic Research, Inc.
    16. Gary T. Henry & Kevin C. Bastian & C. Kevin Fortner & David C. Kershaw & Kelly M. Purtell & Charles L. Thompson & Rebecca A. Zulli, 2014. "Teacher Preparation Policies and Their Effects on Student Achievement," Education Finance and Policy, MIT Press, vol. 9(3), pages 264-303, July.

    More about this item

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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