Working Paper: NBER ID: w27834
Authors: Joshua Angrist; David Autor; Amanda Pallais
Abstract: Financial aid from the Susan Thompson Buffett Foundation (STBF) provides exceptionally generous support to a college population similar to that served by a host of state aid programs. In conjunction with STBF, we randomly assigned aid awards to thousands of Nebraska high school graduates from low-income, minority, and first-generation college households. Randomly- assigned STBF awards boost bachelor's (BA) degree completion for students targeting four-year schools by about 8 points. Degree gains are concentrated among four-year applicants who would otherwise have been unlikely to pursue a four-year program. Degree effects are mediated by award-induced increases in credits earned towards a BA in the first year of college. The extent of initial four-year college engagement explains heterogeneous effects by target campus and across covariate subgroups. Most program spending is a transfer, reducing student debt without affecting degree attainment. Award-induced marginal spending is modest. The projected lifetime earnings impact of awards exceeds marginal educational spending for all of the subgroups examined in the study. Projected earnings gains exceed funder costs for low-income, non-white, urban, and first-generation students, and for students with relatively weak academic preparation.
Keywords: financial aid; college completion; randomized controlled trial; low-income students
JEL Codes: H52; I22; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| early college engagement (A21) | BA completion rates (M49) |
| STBF awards (Y10) | BA completion rates (M49) |
| STBF awards (Y10) | credits earned during the first year of college (A21) |
| credits earned during the first year of college (A21) | BA completion rates (M49) |
| STBF awards (Y10) | student debt (G51) |
| STBF awards (Y10) | lifetime earnings impact (J17) |