Borrowing Trouble? Human Capital Investment with Opt-In Costs and Implications for the Effectiveness of Grant Aid
Open accessAbstract
We estimate the effect of grant aid on City University of New York (CUNY) students' borrowing and attainment using a regression discontinuity/kink design based on the federal Pell Grant formula. Each dollar of grant aid reduces loans by $1.80 among borrowers. We only find crowd-out of this magnitude in colleges that, like CUNY, “offer” no loan aid and require students to opt into borrowing. We develop and empirically support a model that shows opt-in or other fixed borrowing costs can lead grants to crowd out large amounts of loan aid, lowering some students' attainment by reducing their liquid resources. (JEL D14, I22, I23, I26, J24)
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Integrity signals
Registry
Cites
Statistics
Claims the paper makes
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Claims other papers make about this one
Each is checked against this paper’s own text: does it say what the citing paper says it does?
Students who just barely qualify for the minimum Pell Grant were less likely to take out a larger student loan, potentially having less cash on hand than students who did not qualify for the minimum Pell.
“Marx and Turner (2018) find that students who just barely qualify for the minimum Pell Grant were less likely to take out a larger student loan, meaning they could actually have less cash on hand than students who did not qualify for the minimum Pell.”
From College Costs, Financial Aid, and Student Decisions (2022) · cites this paper as Marx and Turner (2018)
Self-check
Percentages, sums and reported differences re-computed from the paper’s own numbers.
The self-check needs the paper’s full text.
Cites
Regression discontinuity designs in economics
Lee, D. S., & Lemieux, T. (2010) · Journal of Economic Literature · doi:10.1257/jel.48.2.281 · Cited by 4,534 · see citing works
Identification and estimation of local average treatment effects
Imbens, G. W., & Angrist, J. D. (1994) · Econometrica · doi:10.2307/2951620 · Cited by 4,101 · see citing works
The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior
Madrian, B. C., & Shea, D. F. (2001) · The Quarterly Journal of Economics · doi:10.1162/003355301753265543 · Cited by 3,045 · see citing works
Robust nonparametric confidence intervals for regression-discontinuity designs
Calonico, S., Cattaneo, M. D., & Titiunik, R. (2014) · Econometrica · doi:10.3982/ecta11757 · Cited by 3,036 · see citing works
Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design
Hahn, J., Todd, P., & Klaauw, W. (2001) · Econometrica · doi:10.1111/1468-0262.00183 · Cited by 2,679 · see citing works
Optimal Bandwidth Choice for the Regression Discontinuity Estimator
Imbens, G. W., & Kalyanaraman, K. (2011) · The Review of Economic Studies · doi:10.1093/restud/rdr043 · Cited by 2,135 · see citing works
Principal Stratification in Causal Inference
Frangakis, C., & Rubin, D. B. (2002) · Biometrics · doi:10.1111/j.0006-341x.2002.00021.x · Cited by 1,496 · see citing works
Bettinger, E. P., Long, B. T., Oreopoulos, P., & Sanbonmatsu, L. (2012) · The Quarterly Journal of Economics · doi:10.1093/qje/qjs017 · Cited by 953 · see citing works
Semiparametric instrumental variable estimation of treatment response models
Abadie, A. (2003) · Journal of Econometrics · doi:10.1016/s0304-4076(02)00201-4 · Cited by 905 · see citing works
Rdrobust: Software for Regression-discontinuity Designs
Calónico, S., Cattaneo, M. D., Farrell, M. H., & Titiunik, R. (2017) · The Stata Journal Promoting communications on statistics and Stata · doi:10.1177/1536867x1701700208 · Cited by 892 · see citing works
Bound, J., Lovenheim, M. F., & Turner, S. (2010) · American Economic Journal: Applied Economics · doi:10.1257/app.2.3.129 · Cited by 687 · see citing works
Optimal Defaults and Active Decisions*
Carroll, G. D., Choi, J. J., Laibson, D., Madrian, B. C., & Metrick, A. (2009) · The Quarterly Journal of Economics · doi:10.1162/qjec.2009.124.4.1639 · Cited by 670 · see citing works
Active vs. Passive Decisions and Crowd-Out in Retirement Savings Accounts: Evidence from Denmark *
Chetty, R., Friedman, J. N., Leth‐Petersen, S., Nielsen, T. H., & Olsen, T. (2014) · The Quarterly Journal of Economics · doi:10.1093/qje/qju013 · Cited by 667 · see citing works
Estimation of Educational Borrowing Constraints Using Returns to Schooling
Cameron, S. V., & Taber, C. R. (2004) · Journal of Political Economy · doi:10.1086/379937 · Cited by 536 · see citing works
Cellini, S. R., Ferreira, F., & Rothstein, J. (2010) · Quarterly Journal of Economics · doi:10.1162/qjec.2010.125.1.215 · Cited by 532 · see citing works
Constrained after college: Student loans and early-career occupational choices
Rothstein, J., & Rouse, C. E. (2011) · Journal of Public Economics · doi:10.1016/j.jpubeco.2010.09.015 · Cited by 506 · see citing works
Student Loans: Do College Students Borrow Too Much—Or Not Enough?
Avery, C., & Turner, S. (2012) · Journal of Economic Perspectives · doi:10.1257/jep.26.1.165 · Cited by 385 · see citing works
The nature of credit constraints and human capital
Lochner, L. J., & Monge-Naranjo, A. (2011) · American Economic Review · doi:10.1257/aer.101.6.2487 · Cited by 347 · see citing works
Back to School: Federal Student Aid Policy and Adult College Enrollment
Seftor, N. S., & Turner, S. E. (2002) · The Journal of Human Resources · doi:10.2307/3069650 · Cited by 272 · see citing works
Inference on Causal Effects in a Generalized Regression Kink Design
Card, D., Lee, D. S., Pei, Z., & Weber, A. M. (2015) · Econometrica · doi:10.3982/ecta11224 · Cited by 269 · see citing works
Field, E. (2009) · American Economic Journal: Applied Economics · doi:10.1257/app.1.1.1 · Cited by 268 · see citing works
Dynarski, S. M., & Scott-Clayton, J. E. (2006) · National Tax Journal · doi:10.17310/ntj.2006.2.07 · Cited by 267 · see citing works
Small Differences That Matter: Mistakes in Applying to College
Pallais, A. (2015) · Journal of Labor Economics · doi:10.1086/678520 · Cited by 177 · see citing works
Kline, P., & Tartari, M. (2016) · American Economic Review · doi:10.1257/aer.20130824 · Cited by 90 · see citing works
4Complexity and Targeting in Federal Student Aid: A Quantitative Analysis
Dynarski, S., & Scott-Clayton, J. (2008) · Tax Policy and the Economy · doi:10.1086/651217 · Cited by 80 · see citing works
Can Self-Control Explain Avoiding Free Money? Evidence from Interest-Free Student Loans
Cadena, B., & Keys, B. J. (2013) · Review of Economics and Statistics · doi:10.1162/rest_a_00321 · Cited by 66 · see citing works
Wiederspan, M. (2016) · Economics of Education Review · doi:10.1016/j.econedurev.2015.06.007 · Cited by 60 · see citing works
The Pell and the Poor: A Regression-Discontinuity Analysis of On-Time College Enrollment
Rubin, R. B. (2011) · Research in Higher Education · doi:10.1007/s11162-011-9215-6 · Cited by 52 · see citing works
Instrumental Variables with Unrestricted Heterogeneity and Continuous Treatment
Kasy, M. (2014) · The Review of Economic Studies · doi:10.1093/restud/rdu018 · Cited by 33 · see citing works
Flagged first, then by citations
Cited by
Sorted by citations
A unified welfare analysis of government policies.
Hendren, N., & Sprung-Keyser, B. (2020) · The Quarterly Journal of Economics · doi:10.1093/qje/qjaa006 · Cited by 571 · see citing works
Student Loans: Do College Students Borrow Too Much—Or Not Enough?
Avery, C., & Turner, S. (2012) · Journal of Economic Perspectives · doi:10.1257/jep.26.1.165 · Cited by 385 · see citing works
Nguyen, T. D., Kramer, J. W., & Evans, B. J. (2019) · Review of Educational Research · doi:10.3102/0034654319877156 · Cited by 132 · see citing works
Student Loan Nudges: Experimental Evidence on Borrowing and Educational Attainment
Marx, B. M., & Turner, L. J. (2019) · American Economic Journal: Economic Policy · doi:10.1257/pol.20180279 · Cited by 129 · see citing works
Self-citationProPelled: The Effects of Grants on Graduation, Earnings, and Welfare
Denning, J. T., Marx, B. M., & Turner, L. J. (2019) · American Economic Journal: Applied Economics · doi:10.1257/app.20180100 · Cited by 126 · see citing works
Self-citationHitting Where it Hurts Most: Covid-19 and Low-Income Urban College Students
Rodríguez‐Planas, N. (2020) · Economics of Education Review · doi:10.1016/j.econedurev.2022.102233 · Cited by 111 · see citing works
A Unified Welfare Analysis of Government Policies
Hendren, N., & Sprung-Keyser, B. (2019) · National Bureau of Economic Research · doi:10.3386/w26144 · Cited by 88 · see citing works
Parental Resources and College Attendance: Evidence from Lottery Wins
Bulman, G. B., Fairlie, R. W., Goodman, S. F., & Isen, A. M. (2021) · American Economic Review · doi:10.1257/aer.20171272 · Cited by 68 · see citing works
College Costs, Financial Aid, and Student Decisions
Dynarski, S., Page, L., & Scott-Clayton, J. (2022) · National Bureau of Economic Research · doi:10.3386/w30275 · Cited by 56 · see citing works
The Distributional Effects of Student Loan Forgiveness
Catherine, S., & Yannelis, C. (2023) · Journal of Financial Economics · doi:10.1016/j.jfineco.2022.10.003 · Cited by 48 · see citing works
Black, S., Denning, J., Dettling, L., Goodman, S., & Turner, L. (2020) · doi:10.3386/w27658 · Cited by 48 · see citing works
Self-citationFraming effects, earnings expectations, and the design of student loan repayment schemes
Abraham, K. G., Filiz‐Ozbay, E., Ozbay, E. Y., & Turner, L. J. (2020) · Journal of Public Economics · doi:10.1016/j.jpubeco.2019.104067 · Cited by 44 · see citing works
Self-citationNot whether, but where? Pell grants and college choices
Carruthers, C. K., & Welch, J. G. (2019) · Journal of Public Economics · doi:10.1016/j.jpubeco.2018.11.006 · Cited by 39 · see citing works
Black, S. E., Denning, J. T., Dettling, L. J., Goodman, S. F., & Turner, L. J. (2023) · American Economic Review · doi:10.1257/aer.20210926 · Cited by 41 · see citing works
Self-citationMeasuring the Effect of Student Loans on College Persistence
Card, D., & Solis, A. (2022) · Education Finance and Policy · doi:10.1162/edfp_a_00342 · Cited by 36 · see citing works
Student Loans and Borrower Outcomes
Yannelis, C., & Tracey, G. (2022) · Annual Review of Financial Economics · doi:10.1146/annurev-financial-111720-092601 · Cited by 37 · see citing works
Murphy, R., & Wyness, G. (2023) · Journal of Labor Economics · doi:10.1086/719995 · Cited by 34 · see citing works
College costs, financial aid, and student decisions
Dynarski, S., Page, L. C., & Scott-Clayton, J. (2023) · Handbook of the economics of education · doi:10.1016/bs.hesedu.2023.03.006 · Cited by 36 · see citing works
Do Promise Programs Reduce Student Loans? Evidence from Tennessee Promise
Odle, T. K., Lee, J. C., & Gentile, S. P. (2021) · The Journal of Higher Education · doi:10.1080/00221546.2021.1888674 · Cited by 33 · see citing works
Tax Loss Carrybacks as Firm Fiscal Stimulus: A Tale of Two Recessions
Dobridge, C. L. (2021) · The Accounting Review · doi:10.2308/tar-2019-0371 · Cited by 31 · see citing works
Aid after enrollment: Impacts of a statewide grant program at public two-year colleges
Anderson, D. M., & Goldrick‐Rab, S. (2018) · Economics of Education Review · doi:10.1016/j.econedurev.2018.10.008 · Cited by 30 · see citing works
Pricing the priceless child 2.0: children as human capital investment
Bandelj, N., & Spiegel, M. (2022) · Theory and Society · doi:10.1007/s11186-022-09508-x · Cited by 29 · see citing works
Evans, B. J., & Nguyen, T. D. (2019) · Economics of Education Review · doi:10.1016/j.econedurev.2019.02.004 · Cited by 27 · see citing works
Labor Market Returns to Student Loans for University: Evidence from Chile
Bucarey, A., Contreras, D., & Muñoz, P. (2020) · Journal of Labor Economics · doi:10.1086/706486 · Cited by 30 · see citing works
Where Do Students Go When For-Profit Colleges Lose Federal Aid?
Cellini, S. R., Darolia, R., & Turner, L. J. (2020) · American Economic Journal Economic Policy · doi:10.1257/pol.20180265 · Cited by 25 · see citing works
Self-citationWhen financial aid is scarce: The challenge of allocating college aid where it is needed most
Anderson, D. M. (2020) · Journal of Public Economics · doi:10.1016/j.jpubeco.2020.104253 · Cited by 27 · see citing works
Framing and Labeling Effects in Preferences for Borrowing for College: An Experimental Analysis
Evans, B. J., Boatman, A., & Soliz, A. (2018) · Research in Higher Education · doi:10.1007/s11162-018-9518-y · Cited by 24 · see citing works
Pell Grants and Student Success: Evidence from the Universe of Federal Aid Recipients
Eng, A., & Matsudaira, J. (2021) · Journal of Labor Economics · doi:10.1086/712556 · Cited by 26 · see citing works
Rosinger, K. O., Meyer, K. E., & Wang, J. (2021) · Journal of Behavioral Public Administration · doi:10.30636/jbpa.42.197 · Cited by 22 · see citing works
College Education and Income Contingent Loans in Equilibrium
Matsuda, K., & Mazur, K. (2020) · Journal of Monetary Economics · doi:10.1016/j.jmoneco.2022.08.005 · Cited by 22 · see citing works
Where Do Students Go When For-Profit Colleges Lose Federal Aid?
Cellini, S. R., Darolia, R., & Turner, L. (2017) · Working paper · doi:10.21799/frbp.wp.2017.12 · Cited by 18 · see citing works
Self-citationCollege Financing Choices and Academic Performance
Stoddard, C., Urban, C., & Schmeiser, M. D. (2018) · Journal of Consumer Affairs · doi:10.1111/joca.12175 · Cited by 16 · see citing works
Paralysis by analysis? Effects of information on student loan take-up
Marx, B., & Turner, L. J. (2020) · Economics of Education Review · doi:10.1016/j.econedurev.2020.102010 · Cited by 15 · see citing works
Self-citationMontalbán, J. (2022) · The Economic Journal · doi:10.1093/ej/ueac062 · Cited by 14 · see citing works
Parental Resources and College Attendance: Evidence from Lottery Wins
Bulman, G. B., Fairlie, R. W., Goodman, S. F., & Isen, A. M. (2016) · National Bureau of Economic Research · doi:10.3386/w22679 · Cited by 15 · see citing works
The Multiplier Effect of Education Expenditure
de Ridder, M., Hannon, S. M., & Pfajfar, D. (2020) · Finance and Economics Discussion Series · doi:10.17016/feds.2020.058 · Cited by 13 · see citing works
Rattini, V. (2023) · Economics of Education Review · doi:10.1016/j.econedurev.2023.102444 · Cited by 11 · see citing works
Where Do Students Go when For-Profit Colleges Lose Federal Aid?
Cellini, S. R., Darolia, R., & Turner, L. (2016) · National Bureau of Economic Research · doi:10.3386/w22967 · Cited by 10 · see citing works
Self-citationCollege Costs, Financial Aid, and Student DecisionsPreprint
Dynarski, S., Page, L. C., & Scott-Clayton, J. (2022) · SSRN Electronic Journal · doi:10.2139/ssrn.4171452 · Cited by 10 · see citing works
Evans, B. J., Nguyen, T. D., Tener, B. B., & Thomas, C. L. (2017) · Journal of Student Financial Aid · doi:10.55504/0884-9153.1636 · Cited by 8 · see citing works
Student Loans and Social MobilityPreprint
Ebrahimian, M. (2020) · SSRN Electronic Journal · doi:10.2139/ssrn.3680159 · Cited by 7 · see citing works
Household financial decision making
Agarwal, S. D., & Mannil, N. (2023) · Edward Elgar Publishing eBooks · doi:10.4337/9781802204179.00033 · Cited by 8 · see citing works
Mabel, Z. (2020) · Research in Higher Education · doi:10.1007/s11162-020-09600-0 · Cited by 7 · see citing works
Anderson, D. M., & Zaber, M. A. (2021) · RAND Corporation eBooks · doi:10.7249/rra101-1 · Cited by 5 · see citing works
Covid-19 prevalence and empty college seats
Mulholland, S. E. (2021) · Applied Economics · doi:10.1080/00036846.2020.1841884 · Cited by 4 · see citing works
Progressive Taxation versus College Subsidies with College Dropout
Matsuda, K. (2022) · Journal of money credit and banking · doi:10.1111/jmcb.12989 · Cited by 3 · see citing works
Changing Undergraduate Funding Mix and Graduate Degree Attainment
Oh, B., & Kim, C. (2023) · The Journal of Higher Education · doi:10.1080/00221546.2023.2171210 · Cited by 3 · see citing works
Kenedi, G. (2023) · SSRN Electronic Journal · doi:10.2139/ssrn.4344580 · Cited by 3 · see citing works
Tuition Reduction and Student Loan Debt: Evidence from the North Carolina Promise
Zahran, W., & Klasik, D. (2025) · Research in Higher Education · doi:10.1007/s11162-025-09853-7 · Cited by 2 · see citing works
Eide, E. R., & Showalter, M. H. (2020) · Elsevier eBooks · doi:10.1016/b978-0-12-815391-8.00041-0 · Cited by 2 · see citing works
Zaber, M. A., Steiner, E. D., Gebremariam, H., Spears, A., Tariq, Z. H., & Carman, K. G. (2023) · RAND Corporation eBooks · doi:10.7249/rra2649-1 · Cited by 2 · see citing works
Mabel, Z. (2017) · SSRN Electronic Journal · doi:10.2139/ssrn.3054789 · Cited by 2 · see citing works
A Family Affair: The Effects of College on Parent and Student Finances
Bhargava, P., Black, S., Denning, J. T., Fairlie, R. W., & Gurantz, O. (2025) · National Bureau of Economic Research · doi:10.3386/w33497 · Cited by 2 · see citing works
Essel, B. K. C., Donkor, E., Ullah, A., Adams, F., & Bavorová, M. (2026) · Journal of International Development · doi:10.1002/jid.70070 · Cited by 1 · see citing works
Regression Discontinuity Design: Theoretical Developments and Extended Applications
Liu, C., Zhu, Y., & Li, H. (2022) · 经济学报. · doi:10.26599/cje.2022.9300312 · Cited by 1 · see citing works
Student Loans, Employment Readiness, and Labor Market Outcomes
Hull, T. J., Krishnan, K., & Rhodes, J. E. (2023) · Journal of Applied Business and Economics · doi:10.33423/jabe.v25i4.6345 · Cited by 1 · see citing works
Is rising student debt affecting retirement savings? Evidence from the survey of consumer finances
Batkeyev, B., Ertugrul, M., Krishnan, K., & Wang, P. (2024) · Financial Review · doi:10.1111/fire.12386 · Cited by 1 · see citing works
State-Level Common Application Policies and College Enrollment
Delaney, J. A., & Odle, T. K. (2024) · Education Finance and Policy · doi:10.1162/edfp_a_00439 · Cited by 1 · see citing works
Attainment Effects of Student Loans and Pell Grants
Marx, B., & Turner, L. J. (2019) · AEA Papers and Proceedings · doi:10.1257/pandp.20191015 · Cited by 1 · see citing works
Self-citationChemmanur, T. J., Krishnan, K., Rajaiya, H., & Wang, P. (2018) · SSRN Electronic Journal · doi:10.2139/ssrn.3240607 · Cited by 1 · see citing works
Zhang, L. (2023) · The Journal of Higher Education · doi:10.1080/00221546.2023.2171215 · Cited by 1 · see citing works
The Effects of Losing Pell Grant Eligibility on Student OutcomesPreprint
Kim, S. (2025) · SSRN Electronic Journal · doi:10.2139/ssrn.5260377 · Cited by 1 · see citing works
Odle, T. K. (2020) · Scholarly Commons (University of Pennsylvania)
Matching Pell Grants: Implications for College Debt and Parental Transfers
Beeson, P. E., Coen‐Pirani, D., LaVoice, J., & Ripoll, M. P. (2023) · AEA Papers and Proceedings · doi:10.1257/pandp.20231080
Cox, J. C., Kreisman, D., & Lambert, S. S. (2024) · SSRN Electronic Journal · doi:10.2139/ssrn.4812167
Harris, D. N., & Mills, J. (2025) · American Economic Journal Economic Policy · doi:10.1257/pol.20230100
Buying time: Financial aid allows college students to work less while enrolled
Anderson, D. M., & Zaber, M. A. (2025) · Economics of Education Review · doi:10.1016/j.econedurev.2025.102686
Chan, M., & Heller, B. (2025) · Educational Evaluation and Policy Analysis · doi:10.3102/01623737251357282
Spatial Sources of Inequalities and Determinants of Redistribution
Brunetti, R. (2022) · theses.fr (ABES) · doi:10.70675/2fada326z8b36z4ee1zae0dz5a1f255260f3
- Authors
- Marx, B. M., & Turner, L. J.
- Affiliations
- University of Illinois Urbana-Champaign (US)
- University of Maryland, College Park (US)
- ORCID
- Marx, Benjamin M.
- Venue
- American Economic Journal: Applied Economics
- Publisher
- American Economic Association
- Published
- 2018-04-01
- Volume
- 10
- Issue
- 2
- Pages
- 163-201
- ISSN
- 1945-7782 (ISSN-L)
- 1945-7790
- OpenAlex
- W2793258051
- Cited by
- 69
- References
- 29
- Citations by year
- 2026: 1 · 2025: 6 · 2024: 3 · 2023: 10 · 2022: 8 · 2021: 8 · 2020: 14 · 2019: 9 · 2018: 4 · 2017: 3 · 2016: 3
- FWCI
- 28.38
- Type
- journal article
- Language
- en
- Open access
- green
- www.aeaweb.org
- Locations
- American Economic Journal Applied Economics (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Funders
- City University of New York
- Australian Government
- Federal Student Aid
- Topics
- Social Sciences › Education › Higher Education Research Studies
- Social Sciences › Education › School Choice and Performance
- Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy, Pension, Retirement Analysis
- Keywords
- student loan borrowing, grants, crowding out, Pell grants, academic performance, higher education funding, City University of New York, student debt
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
Are you an author, or do you see a problem with this page? Request a review
