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

Listed author(s):
  • Christian Belzil
  • Arnaud Maurel
  • Modibo Sidibé

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, and relate it to parental socio-economic background, individual skills, risk and time preferences. Our results point out that a considerable share of prospective students are affected by credit constraints. We find that 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 6.6 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 this variation.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 23641.

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Date of creation: Aug 2017
Handle: RePEc:nbr:nberwo:23641
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