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Estimating the Value of Higher Education Financial Aid : Evidence from a Field Experiment

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  • Christian Belzil
  • Arnaud Maurel
  • Modibo Sidibé

Abstract

Using data from a Canadian field experiment on the financial barriers to higher education, we estimate the distribution of the value of financial aid for prospective students. We find that a considerable share of prospective students perceive significant credit constraints. Most of the individuals are willing to pay a sizable interest premium above the prevailing market rate for the option to take up a loan, with a median interest rate wedge equal to 6.8 percentage points for a $1,000 loan. The willingness-to-pay for financial aid is highly heterogeneous across students, with preferences and in particular discount factors playing a key role in accounting for the variation.

Suggested Citation

  • Christian Belzil & Arnaud Maurel & Modibo Sidibé, 2020. "Estimating the Value of Higher Education Financial Aid : Evidence from a Field Experiment," CIRANO Working Papers 2020s-38, CIRANO.
    • Handle: RePEc:cir:cirwor:2020s-38
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    Cited by:

    1. Belzil, Christian & Pernaudet, Julie & Poinas, François, 2021. "Estimating Coherency between Survey Data and Incentivized Experimental Data," IZA Discussion Papers 14594, Institute of Labor Economics (IZA).
    2. Belzil, Christian & Sidibé, Modibo, 2016. "Internal and External Validity of Experimental Risk and Time Preferences," IZA Discussion Papers 10348, Institute of Labor Economics (IZA).
    3. Christian Belzil & Jörgen Hansen & Julie Pernaudet, 2024. "Les déterminants cognitifs et non-cognitifs du choix de filière et leur impact sur la phase initiale du cycle professionnel," CIRANO Project Reports 2024rp-06, CIRANO.
    4. Jérôme Adda & Christian Dustmann & Joseph-Simon Görlach, 2022. "The Dynamics of Return Migration, Human Capital Accumulation, and Wage Assimilation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(6), pages 2841-2871.
    5. Jeffrey T. Denning & Benjamin M. Marx & Lesley J. Turner, 2019. "ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare," American Economic Journal: Applied Economics, American Economic Association, vol. 11(3), pages 193-224, July.
    6. Sandra E. Black & Jeffrey T. Denning & Lisa J. Dettling & Sarena Goodman & Lesley J. Turner, 2023. "Taking It to the Limit: Effects of Increased Student Loan Availability on Attainment, Earnings, and Financial Well-Being," American Economic Review, American Economic Association, vol. 113(12), pages 3357-3400, December.
    7. Xavier D'Haultfoeuille & Christophe Gaillac & Arnaud Maurel, 2021. "Rationalizing rational expectations: Characterizations and tests," Quantitative Economics, Econometric Society, vol. 12(3), pages 817-842, July.
    8. Xavier D'Haultfoeuille & Christophe Gaillac & Arnaud Maurel, 2018. "Rationalizing Rational Expectations? Tests and Deviations," NBER Working Papers 25274, National Bureau of Economic Research, Inc.
    9. Christian Belzil, 2018. "Évaluation de la valeur économique de l’aide financière pour l’éducation supérieure au Québec et en Ontario," CIRANO Project Reports 2018rp-08, CIRANO.
    10. Tomáš Jagelka, 2024. "Are Economists’ Preferences Psychologists’ Personality Traits? A Structural Approach," Journal of Political Economy, University of Chicago Press, vol. 132(3), pages 910-970.

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    More about this item

    Keywords

    Higher Education; Financing; Time and Risk Preferences; Field Experiment;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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