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Cited by 110Higher Education Research StudiesSchool Choice and PerformanceIntergenerational and Educational Inequality Studies

The Long-Run Impacts of Financial Aid: Evidence from California’s Cal Grant

Open access
Bettinger, Eric, Gurantz, Oded, Kawano, Laura, Sacerdote, Bruce, Stevens, Michael·2019·American Economic Journal: Economic Policy
DOI 10.1257/pol.20170466
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Abstract

We examine the long-term impacts of California’s state-based financial aid by tracking educational and labor force outcomes for up to 14 years after high school graduation. We identify program impacts by exploiting variation in eligibility rules using GPA and family income cutoffs that are ex ante unknown to applicants. Aid eligibility increases undergraduate and graduate degree completion, and for some subgroups, raises longer-run annual earnings and the likelihood that young adults reside in California. These findings suggest that the net cost of financial aid programs may frequently be overstated, though our results are too imprecise to provide exact cost-benefit estimates. (JEL H75, I21, I22, I23, I26, I28)

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Crossref · 10.1257/pol.20170466

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  • Bettinger et al. (2019) find no significant effects for higher-income, higher-GPA students bound by the Cal Grant income cutoff.

    “For the higher-income, higher-GPA students bound by the income cutoff, they find no significant effects.”

    From College Costs, Financial Aid, and Student Decisions (2022) · cites this paper as Bettinger et al., 2019

    In A. College Attendance and Completion (page unavailable), the paper reports that degree-completion effects at the income threshold were not statistically significant at the 5 percent level. But the same section reports a statistically significant 5.6-percentage-point increase in private-college attendance and significant decreases in public-college attendance. Thus, 'no significant effects' is too broad. (LLM, conf=0.90)

    Experimental — accuracy not yet measured

  • The evidence on heterogeneity by students' incoming academic performance and race/ethnicity is not entirely consistent, but is suggestive of possibly larger effects for lower-achieving and/or minoritized groups.

    “The evidence on heterogeneity by students' incoming academic performance and race/ethnicity is not entirely consistent, but is suggestive of possibly larger effects for lower-achieving and/or minoritized groups.”

    From College Costs, Financial Aid, and Student Decisions (2022) · cites this paper as Bettinger et al. 2019

    The Cost-Benefit Discussion reports a larger response for lower-income students with modest GPAs, supporting the cautious suggestion about lower-achieving students. The Results describe differences between groups at the GPA and income eligibility thresholds, which also differ in income; the passages do not establish an effect of academic performance alone. No passage found in our copy reports effects by race or ethnicity (searched: racial and ethnic groups, Black, Hispanic, and minority students). (LLM, conf=0.85)

    Experimental — accuracy not yet measured

  • The evidence on heterogeneity by family income is suggestive of larger effects for low-income students, all else equal.

    “The evidence on heterogeneity by family income is suggestive of larger effects for low-income students, all else equal.”

    From College Costs, Financial Aid, and Student Decisions (2022) · cites this paper as Bettinger et al., 2019

    The Cost-Benefit Discussion reports a larger response among lower-income, modest-GPA students, supporting a suggestive difference. But the Results section says the comparison groups differ in both income and academic preparation, so it does not establish a larger effect by family income *all else equal*. (LLM, conf=0.84)

    Experimental — accuracy not yet measured

  • Bettinger et al. (2019) find positive effects on BA completion, graduate degree completion, and post-college earnings for lower-income, lower-GPA students bound by the Cal Grant GPA cutoff.

    “For the lower-income, lower-GPA students bound by the GPA cutoff, they find positive effects on BA completion, graduate degree completion, and post-college earnings.”

    From College Costs, Financial Aid, and Student Decisions (2022) · cites this paper as Bettinger et al., 2019

  • Several studies find larger effects for lower-achieving students.

    “Several studies find larger effects for lower-achieving students (including Angrist, Autor, & Pallais, 2021;Carruthers, Fox, & Jepsen 2020;Bettinger et al. 2019)”

    From College Costs, Financial Aid, and Student Decisions (2022) · cites this paper as Bettinger et al. 2019

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Cites

Flagged first, then by citations

Research works printed but not linked: 9

  1. Bettinger, Eric. 2004. "How Financial Aid Affects Persistence." In College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, edited by Caroline M. Hoxby, 207-33. Chicago: University of Chicago Press.
  2. Bettinger, Eric, Oded Gurantz, Laura Kawano, Bruce Sacerdote, and Michael Stevens. 2019. "The Long-Run Impacts of Financial Aid: Evidence from California's Cal Grant: Dataset." American Economic Journal: Economic Policy. https://doi.org/10.1257/pol.20170466.
  3. Chetty, Raj, David Grusky, Maximilian Hell, Nathaniel Hendren, Robert Manduca, and Jimmy Narang. 2017. "The fading American dream: Trends in absolute income mobility since 1940." Science http://science.sciencemag.org/content/early/2017/04/21/science.aal4617.
  4. Denning, Jeffrey, Benjamin Marx, and Lesley Turner. Forthcoming. "ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare." American Economic Journal: Applied Economics.
  5. Dynarski, Susan. 2004. "The New Merit Aid." In College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, edited by Caroline M. Hoxby, 63-100. Chicago: University of Chicago Press.
  6. Hanushek, Eric A., and Ludger Woessmann. 2015. The Knowledge Capital of Nations: Education and the Economics of Growth. Cambridge, MA: MIT Press.
  7. Patricia Beeson, Daniele Coen-Pirani, Jessica La Voice, Marla Ripoll. 2023. Matching Pell Grants: Implications for College Debt and Parental Transfers. AEA Papers and Proceedings 113, 524-529.
  8. Kazushige Matsuda, Karol Mazur. 2020. College Education and Income Contingent Loans in Equilibrium: Theory and Quantitative Evaluation. SSRN Electronic Journal 127. . [Crossref] · DOI
  9. Patrick Chuard, Veronica Grassi. 2020. Switzer-Land of Opportunity: Intergenerational Income Mobility in the Land of Vocational Education. SSRN Electronic Journal 33. . [Crossref] · DOI

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Related

Authors
Bettinger, E., Gurantz, O., Kawano, L., Sacerdote, B., & Stevens, M.
Affiliations
  • Stanford University (US)
  • University of Missouri (US)
  • University of Michigan (US)
  • Dartmouth College (US)
  • United States Department of the Treasury (US)
ORCID
Venue
American Economic Journal: Economic Policy
Publisher
American Economic Association
Published
2019-02-01
Volume
11
Issue
1
Pages
64-94
ISSN
  • 1945-7731 (ISSN-L)
  • 1945-774X
DOI
10.1257/pol.20170466
OpenAlex
W2913202492
Cited by
110
References
40
Citations by year
2026: 8 · 2025: 19 · 2024: 11 · 2023: 11 · 2022: 17 · 2021: 17 · 2020: 15 · 2019: 9 · 2018: 2 · 2013: 1
FWCI
39.12
Type
journal article
Language
en
Open access
Locations
  • American Economic Journal Economic Policy (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
Funders
  • Smith Richardson Foundation
  • Sid W. Richardson Foundation
  • Spencer Foundation
  • Williams College
  • U.S. Department of the Treasury
  • Federal Student Aid
  • Institute of Education Sciences (#R305B090016)
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
state financial aid, student aid eligibility, graduation, earnings, college persistence, California

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