Working Paper: NBER ID: w14535
Authors: Helena Skyt Nielsen; Torben Sørensen; Christopher R. Taber
Abstract: In this paper, we investigate the responsiveness of the demand for college to changes in student aid arising from a Danish reform. We separately identify the effect of aid from that of other observed and unobserved variables such as parental income. We exploit the combination of a kinked aid scheme and a reform of the student aid scheme to identify the effect of direct costs on college enrollment. To allow for heterogeneous responses due to borrowing constraints, we use detailed information on parents' assets. We find that enrollment is less responsive than found in other studies and that the presence of borrowing constraints only deters college enrollment to a minor extent.
Keywords: student aid; college enrollment; Danish reform; borrowing constraints
JEL Codes: I22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Parental income (D31) | Aid eligibility (F35) |
| Direct costs (J30) | College enrollment (I23) |
| Borrowing constraints (F34) | College enrollment (I23) |
| Reform of the Danish student aid scheme (I28) | College enrollment (I23) |
| $1,000 increase in yearly stipend (I23) | College enrollment (I23) |