scholarly journals Return on What Investment? The Behavioral Economics of Student Financial Aid

2019 ◽  
pp. 51-64
Author(s):  
McCall Pitcher Hopkin
Keyword(s):  
Behavioral Economics ◽  
Financial Aid ◽  
Low Income ◽  
Dropping Out ◽  
Low Income Students ◽  
Student Financial Aid ◽  
Program Complexity ◽  
Key Variables ◽  
Aid Programs ◽  
Low Income College Students

Each year, the federal government offers billions of dollars in need-based grant aid and loan subsidies to low-income college students. Concern is growing, however, around several system-wide problems that persist despite these federal investments: that many low-income students either 1) fail to take advantage of available aid; 2) are accepted to college but do not enroll; or 3) enroll but end up dropping out before graduating. While each of these decisions is informed by many factors, economists have identified program complexity and student behavioral bias as key variables—in other words, real humans do not always make the rational financial calculations policymakers expect of them when designing aid programs. This article reviews existing research on behavioral economics and student financial aid, examines access and completion barriers through a behavioral lens, and evaluates policy vehicles aimed to reverse students’ behavioral biases.

scholarly journals Upstream and Downstream Impacts of College Merit-Based Financial Aid for Low-Income Students: Ser Pilo Paga in Colombia

2020 ◽  
Vol 12 (2) ◽  
pp. 193-227
Author(s):  
Juliana Londoño-Vélez ◽  
Catherine Rodríguez ◽  
Fabio Sánchez
Keyword(s):  
Financial Aid ◽  
Low Income ◽  
Large Scale ◽  
High Achievers ◽  
Low Income Students ◽  
High Quality ◽  
Postsecondary Enrollment ◽  
Student Composition ◽  
New Evidence ◽  
Downstream Impacts

How does financial aid affect postsecondary enrollment, college choice, and student composition? We present new evidence based on a large-scale program available to high-achieving, low-income students for attending high-quality colleges in Colombia. RD estimates show financial aid eligibility raised immediate enrollment by 56.5 to 86.5 percent, depending on the complier population. This rise, driven by matriculation at private, high-quality colleges, closed the SES enrollment gap among high achievers. Moreover, a DID approach suggests enrollment of aid-ineligible students also improved because college supply expanded in response to heightened demand. With ability stratification largely replacing SES stratification, diversity increased 46 percent at private, high-quality colleges. (JEL I22, I23, I24, I26, J24, O15)

Financial Aid: A Broken Bridge to College Access?

2007 ◽  
Vol 77 (1) ◽  
pp. 39-63 ◽  
Author(s):  
BRIDGET TERRY LONG ◽  
ERIN RILEY
Keyword(s):  
Financial Aid ◽  
College Access ◽  
Low Income ◽  
Students Of Color ◽  
Unmet Need ◽  
Low Income Students ◽  
Financial Aid Policy ◽  
The Past ◽  
Aid Policy

In this article, Bridget Terry Long and Erin Riley argue that in recent years, U.S. financial aid policy has shifted its emphasis from expanding college access for lowincome students toward defraying the costs for middle- and upper-income families. They explain how loans, merit-based aid, and education tax breaks are increasingly replacing need-based aid and discuss how the declining role of grants may disproportionately disadvantage students already underrepresented in higher education. They document the rise in students' unmet financial needs over the past decade, showing that low-income students and students of color are especially likely to face substantial unmet need even after taking into account all available grants and loans, as well as family contributions. In response to these trends, the authors call for a greater emphasis on need-based aid, especially grants, to reduce the role of cost as a barrier to college access.

What High-Achieving Low-Income Students Know About College

2015 ◽  
Vol 105 (5) ◽  
pp. 514-517 ◽  
Author(s):  
Caroline M. Hoxby ◽  
Sarah Turner
Keyword(s):  
Decision Making ◽  
Randomized Controlled Trial ◽  
Financial Aid ◽  
Survey Data ◽  
Low Income ◽  
Controlled Trial ◽  
Low Income Students ◽  
Randomized Controlled ◽  
Selective Colleges ◽  
Selective Schools

Previous work demonstrates that low-income higher achievers fail to apply to selective colleges despite their being admitted at high rates and receiving financial aid so generous that they pay less than at non-selective schools. The Expanding College Opportunities project, a randomized controlled trial, provides individualized information about colleges' net prices, resources, curricula, students, and outcomes. Our prior study shows that the intervention raises students' applications to, admissions at, enrollment, and progress at selective colleges. Here we use survey data to show that it actually changes students' knowledge and decision-making. We highlight topics on which they are misinformed.

The Hidden Costs of Corroboration: Estimating the Effects of Financial Aid Verification on College Enrollment

2021 ◽  
pp. 016237372198930
Author(s):  
Jason C. Lee ◽  
Madison Dell ◽  
Manuel S. González Canché ◽  
Alex Monday ◽  
Amanda Klafehn
Keyword(s):  
Financial Aid ◽  
Low Income ◽  
College Enrollment ◽  
High School Graduates ◽  
Underserved Populations ◽  
Population Level ◽  
Department Of Education ◽  
Low Income Students ◽  
Student Aid ◽  
Percentage Points

Every year, the U.S. Department of Education selects hundreds of thousands of low-income students to provide additional documentation to corroborate their financial aid eligibility in a process known as verification. Although many are concerned about the potential deleterious effects of being selected, to date, studies are limited to descriptive analyses. To fill this gap in the literature, we use population-level, multicohort data to estimate the effects of financial aid verification on initial college enrollment for recent high school graduates in Tennessee. An entropy balance weighting approach indicates that students selected for verification are 3.8 percentage points (4.9%) less likely to enroll in college with underserved populations and late Free Application for Federal Student Aid (FAFSA) filers most negatively affected.

Quick Reads: Promising Partnerships: Gearing Up for Mathematics

2007 ◽  
Vol 13 (4) ◽  
pp. 220-223
Author(s):  
Charlotte Simmons ◽  
Jesse Byrne
Keyword(s):  
Higher Education ◽  
Financial Aid ◽  
Low Income ◽  
Gear Up ◽  
Low Income Students ◽  
Low Income Families

[M]ore low-income families will be well-informed of postsecondary options and financial aid, and take the steps necessary for admission into an institute of higher education. With GEAR UP, more low-income students will go to college and succeed. (Silver, n.d.)

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