Working Paper: NBER ID: w22347
Authors: Eric Bettinger; Oded Gurantz; Laura Kawano; Bruce Sacerdote
Abstract: We examine the long-term impacts of California’s state-based financial aid by tracking students’ educational and labor force outcomes for up to 14 years after high school graduation. We identify program impacts by exploiting variation in eligibility rules using GPA and family income cutoffs that are ex ante unknown to applicants. Aid eligibility increases undergraduate and graduate degree completion, and for some subgroups, raises longer-run annual earnings and the likelihood that young adults reside in California. Aid eligibility has no impact on take-up of the Pell or federal tax credits for higher education. These findings suggest that the net cost of financial aid programs may frequently be overstated, though our results are too imprecise to provide exact cost-benefit estimates.
Keywords: financial aid; Cal Grant; educational outcomes; labor force outcomes; regression discontinuity
JEL Codes: H2; H4; H41; H52; I2; I22; I23; I24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Cal Grant eligibility (I28) | undergraduate degree completion rates (Y40) |
| Cal Grant eligibility (I28) | graduate degree completion rates (Y40) |
| Cal Grant eligibility (I28) | long-run earnings (J31) |
| Cal Grant eligibility (I28) | average earnings between ages 28 and 32 (J31) |
| Cal Grant eligibility (I28) | likelihood of residing in California (J69) |
| Cal Grant eligibility (I28) | take-up of Pell Grants (I28) |
| Cal Grant eligibility (I28) | federal tax credits for higher education (I23) |