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Title: Financial Assistance and College Attainment
Citation Type: Miscellaneous
Publication Year: 2012
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Abstract: High school graduates from low-income families are much less likely to attend and complete college. Financial assistance is a major policy lever to influence their educational choices. However, there is mixed evidence regarding its effects on low-income students. In this paper, I estimate the effects of student subsidies, student loan access, and family income transfers on college attendance and completion. I use an Instrumental Variables approach based on a large set of laws involving Guaranteed Student Loans, Pell Grants, Aid to Families with Dependent Children, and Social Security. These laws treated different families in different ways, based on family structure, size, state and income. I have three main findings. First, using policy variation in the Pell, AFDC and Social Security student benefit programs, I find that attendance changes by 1.0 - 1.2 percentage points per $1000 in annual student subsidies, which is considerably below the conclusions of prior literature reviews. I do not find significantly different effects across programs or subgroups. I find a smaller effect of subsidies on college completion. I estimate that these programs spent about $40,000 per student induced to attend, as most recipients would have attended anyway. Second, using state-by-year variation in the introduction of Guaranteed Student Loan programs, I do not find an effect of student loan access on overall attendance or on attendance of low-income students. Third, I find an insignificant effect of family AFDC and Social Security income on attendance.
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Authors: Ramsey, Daniel
Publisher: University of Chicago
Data Collections: IPUMS CPS
Topics: Education
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