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Cited by 281Higher Education Research StudiesSchool Choice and PerformanceIntergenerational and Educational Inequality Studies

The Behavioral and Distributional Implications of Aid for College

Dynarski, Susan·2002·American Economic Review
DOI 10.1257/000282802320189401
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Abstract

Subsidizing the cost of education is one of the most common, and expensive, activities of governments. While primary and secondary schooling is available tuition-free in the United States, among post-secondary students the direct cost of schooling is quite heterogeneous. First, tuition prices vary widely across schools. During the 2000-2001 academic year, college tuitions varied from zero at some community colleges to over $27,000 at Ivy League institutions. Second, institutions heavily discount these sticker prices for many students, using detailed information on family finances and academic merit to engage in finely tuned price discrimination.' Third, the federal and state governments provide individual subsidies, such as the Pell Grant and low-interest Stafford loan, that are portable across institutions. The standard model of human capital clearly predicts that such cost subsidies will raise the optimal level of schooling. While the theoretical predictions are clear, it is an empirical question how much a given dollar of subsidy affects behavior. Answering this empirical question is a challenge, since eligibility for subsidies is certainly not random and, in fact, is likely to be correlated with many other determinants of schooling. As a result, estimates based on the cross-sectional correlation of aid eligibility with schooling are subject to multiple sources of bias. This paper examines work that has used quasi-experimental methodology to isolate exogenous sources of va…

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  • Early studies of need-based aid lack an explicit design to deal with omitted variable bias or reverse causation.

    “These studies lack an explicit design to deal with omitted variable bias or reverse causation (see Leslie & Brinkman, 1988 for a summary of this early research; see Dynarski, 2002 for a critique of its methodology).”

    From College Costs, Financial Aid, and Student Decisions (2022) · cites this paper as Dynarski, 2002

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Authors
Dynarski, S.
Affiliations
Harvard University (US)
Corresponding author
Dynarski, Susan
Venue
American Economic Review
Publisher
American Economic Association
Published
2002-04-01
Volume
92
Issue
2
Pages
279-285
ISSN
0002-8282 (ISSN-L)
DOI
10.1257/000282802320189401
OpenAlex
W2037481182
Cited by
281
References
13
Citations by year
2026: 5 · 2025: 5 · 2024: 5 · 2023: 5 · 2022: 9 · 2021: 6 · 2020: 10 · 2019: 12 · 2018: 9 · 2017: 19 · 2016: 18 · 2015: 14 · 2014: 16 · 2013: 20 · 2012: 20
FWCI
30.44
Type
journal article
Language
en
Open access
closed
Locations
  • American Economic Review (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
Topics
  • Social Sciences › Education › Higher Education Research Studies
  • Social Sciences › Education › School Choice and Performance
  • Social Sciences › Sociology and Political Science › Intergenerational and Educational Inequality Studies
Keywords
student financial aid, Pell grants, Stafford loans, college enrollment decisions, human capital

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