Working Paper: NBER ID: w23641
Authors: Christian Belzil; Arnaud Maurel; Modibo Sidibé
Abstract: Using data from a Canadian field experiment on the financial barriers to higher education, we estimate the distribution of the value of financial aid for prospective students, and relate it to parental socio-economic background, individual skills, risk and time preferences. Our results point out that a considerable share of prospective students are affected by credit constraints. We find that most of the individuals are willing to pay a sizable interest premium above the prevailing market rate for the option to take up a loan, with a median interest rate wedge equal to 6.6 percentage points for a $1,000 loan. The willingness-to-pay for financial aid is highly heterogeneous across students, with preferences and in particular discount factors, playing a key role in accounting for this variation.
Keywords: Higher Education; Financial Aid; Field Experiment; Credit Constraints
JEL Codes: I22; I23; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| credit constraints (E51) | willingness to pay for financial aid (I22) |
| individual preferences (D11) | willingness to pay for financial aid (I22) |
| family background characteristics (J12) | willingness to pay for financial aid (I22) |
| credit constraints (E51) | educational outcomes (I26) |
| individual preferences (D11) | educational outcomes (I26) |
| family background characteristics (J12) | educational outcomes (I26) |