Working Paper: NBER ID: w30275
Authors: Susan Dynarski; Lindsay C. Page; Judith Scott-Clayton
Abstract: The increasing tension between the perceived necessity of a college degree and the challenge of paying for it has led to a proliferation of financial aid policy in the U.S. and around the world. More students are receiving more aid today, and more different types of aid, than ever before. Half a century of policy experimentation has led to an equally impressive accumulation of research evidence, facilitated by methodological advances and the widespread availability of student-level administrative data. In this chapter, we present the economic rationale for financial aid, a summary of how aid works in the U.S. context, and common methodological challenges in the study of financial aid. We then review the evidence from both inside and outside the U.S. on the causal impact of a variety of financial aid policies and programs on students’ college decisions, attainment, and post-college outcomes, and summarize the overarching themes with respect to margins of impact, mechanisms, and heterogeneity. We conclude with a discussion of future directions for research.
Keywords: No keywords provided
JEL Codes: I22; I23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Financial aid reduces financial barriers (I22) | Influences students' perceptions of affordability (I24) |
| Increased financial aid (I22) | College enrollment decisions (I23) |
| Need-based grants (I24) | Higher college attendance rates (I23) |
| Financial aid (I22) | Improved post-college outcomes (I23) |
| Merit-based aid (I22) | Enrollment among high-achieving students (I23) |
| Financial aid (I22) | Employment rates (J68) |
| Financial aid (I22) | Earnings (J31) |