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Born Under a Lucky Star: Financial Aid, College Completion, Labor Supply, and Credit Constraints

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  • Jeffrey T. Denning

    (Brigham Young University)

Abstract

Higher education has experienced many changes since the 1970s, including an increase in the price of college, an increase in student employment during college, a decrease in college completion rates, and an increase in time to degree. This paper ties these trends together by causally linking changes in financial aid with time to degree and student employment during college. I find that additional financial aid accelerates graduation for university seniors because they increase credits attempted and reduce earnings while in college. In reaching this finding, I use administrative education and earnings data to examine a discrete change in the amount of federal financial aid available to financially independent students. The estimates in this paper imply that roughly 50 percent of the observed increase in time to degree can be explained by changes in tuition.

Suggested Citation

  • Jeffrey T. Denning, 2017. "Born Under a Lucky Star: Financial Aid, College Completion, Labor Supply, and Credit Constraints," Upjohn Working Papers and Journal Articles 17-267, W.E. Upjohn Institute for Employment Research.
  • Handle: RePEc:upj:weupjo:17-267
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    Cited by:

    1. Nicolas Ziebarth & Martin Gervais, 2017. "Life after Debt: Post-Graduation Consequences of Federal Student Loans," 2017 Meeting Papers 238, Society for Economic Dynamics.
    2. Stephanie R. Cellini & Rajeev Darolia & Lesley J. Turner, 2016. "Where Do Students Go when For-Profit Colleges Lose Federal Aid?," NBER Working Papers 22967, National Bureau of Economic Research, Inc.
    3. Jeffrey T. Denning & Benjamin M. Marx & Lesley J. Turner, 2017. "ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare," Upjohn Working Papers and Journal Articles 17-280, W.E. Upjohn Institute for Employment Research.
    4. 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).

    More about this item

    Keywords

    financial aid; labor supply; college completion;

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

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