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AFFORDING THE DREAM: Student Debt and State Need-Based Grant Aid for Public University Students


  • Eaton, C.
  • Kulkarni, K.
  • Birgeneau, Robert
  • Brady, Henry
  • Hout, Michael


Public research universities are a key vehicle for educational mobility. Yet rising student debt for undergraduate students has created new risks, particularly for lower income students at lower ranked universities. We find that student loan default rates reached 35 percent for low-income students at public universities with low research rankings during the Great Recession. Given these troubling loan default rates, we find encouraging evidence that a few U.S. states have adopted robust need-based grant aid programs to make college more affordable for low-income students. Such grant programs can cover tuition, room, and board costs. California, Wyoming, and New Jersey now spend more than $4,000 per low-income student, more than the federal expenditure on Pell Grants for their state. More than 30 states, however, spend less than 25 percent of the federal Pell Grant expenditure. We find that generous state aid programs are associated with lower actual costs of attendance for low-income students

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  • Eaton, C. & Kulkarni, K. & Birgeneau, Robert & Brady, Henry & Hout, Michael, 2017. "AFFORDING THE DREAM: Student Debt and State Need-Based Grant Aid for Public University Students," University of California at Berkeley, Center for Studies in Higher Education qt24j8945b, Center for Studies in Higher Education, UC Berkeley.
  • Handle: RePEc:cdl:cshedu:qt24j8945b

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    References listed on IDEAS

    1. Raj Chetty & John N. Friedman & Emmanuel Saez & Nicholas Turner & Danny Yagan, 2017. "Mobility Report Cards: The Role of Colleges in Intergenerational Mobility," NBER Working Papers 23618, National Bureau of Economic Research, Inc.
    2. John Bound & Michael F. Lovenheim & Sarah Turner, 2012. "Increasing Time to Baccalaureate Degree in the United States," Education Finance and Policy, MIT Press, vol. 7(4), pages 375-424, September.
    3. Beth Akers & Matthew M. Chingos, 2016. "Game of Loans: The Rhetoric and Reality of Student Debt," Economics Books, Princeton University Press, edition 1, number 10810, March.
    4. Webber, Douglas A. & Ehrenberg, Ronald G., 2010. "Do expenditures other than instructional expenditures affect graduation and persistence rates in American higher education?," Economics of Education Review, Elsevier, vol. 29(6), pages 947-958, December.
    5. Bound, John & Turner, Sarah, 2007. "Cohort crowding: How resources affect collegiate attainment," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 877-899, June.
    6. Christopher Avery & Sarah Turner, 2012. "Student Loans: Do College Students Borrow Too Much--Or Not Enough?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 165-192, Winter.
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