Working Paper: NBER ID: w22604
Authors: Peter Cappelli; Shinjae Won
Abstract: Students receiving financial aid pay different amounts for equivalent education and do so in different ways: Grants, which do not have to be repaid, loans, which are paid back in the future, and work-study, pay-as-you-go. We examine the effects of need-based aid independent of study ability on student outcomes – grade point average in particular - controlling for student background and attributes they had prior to college. We also analyze grades within colleges. The results suggest that students receiving need-based grants do significantly better in college than those not receiving financial aid while those paying for college with loans perform significantly worse than students receiving other forms of aid.
Keywords: financial aid; student performance; college education; grants; loans; work-study
JEL Codes: D03; I21; I23; J38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Financial Aid (Grants) (I22) | Student Motivation and Effort (D29) |
| Financial Aid (Loans) (I22) | Student Motivation and Effort (D29) |
| Financial Aid (Need-based Grants) (I22) | Student Performance (Grades) (D29) |
| Financial Aid (Loans) (I22) | Student Performance (Grades) (D29) |