Working Paper: NBER ID: w25349
Authors: Susan Dynarski; CJ Libassi; Katherine Michelmore; Stephanie Owen
Abstract: High-achieving, low-income students attend selective colleges at far lower rates than upper-income students with similar achievement. Behavioral biases, intensified by complexity and uncertainty in the admissions and aid process, may explain this gap. In a large-scale experiment we test an early commitment of free tuition at a flagship university. The intervention did not increase aid: rather, students were guaranteed before application the same grant aid that they would qualify for in expectation after admission. The offer substantially increased application (68 percent vs 26 percent) and enrollment rates (27 percent vs 12 percent). The results suggest that uncertainty, present bias, and loss aversion loom large in students’ college decisions.
Keywords: tuition-free promise; college choices; low-income students; high-achieving students
JEL Codes: I20; I21; I22; I23; I24; I28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| HAIL scholarship offer (I22) | likelihood of applying to the University of Michigan (I23) |
| HAIL scholarship offer (I22) | enrollment rate at the University of Michigan (I23) |
| HAIL scholarship offer (I22) | college attendance among students who would not have attended any college (I23) |
| HAIL scholarship offer (I22) | no increase in enrollment at similarly selective institutions (I23) |