TY - JOUR
T1 - Financial aid, debt management, and socioeconomic outcomes
T2 - Post-college effects of merit-based aid
AU - Scott-Clayton, Judith
AU - Zafar, Basit
N1 - Funding Information:
Authors are listed alphabetically and are equally responsible for the research presented herein, which was supported by the Spencer Foundation (Grant #201500101). We are especially grateful to Neal Holly, David Bennett, and Chancellor Paul Hill of the West Virginia Higher Education Policy Commission, and to Henry Korytkowski of Equifax, for facilitating data access, and to Qiao Wen of Teachers College, Jacob French of ASU, and Katherine Strair of the FRBNY for essential programming and research assistance. Angela Bell provided essential early support for the project during her time at WVHEPC. Elizabeth Mason of FRBNY and Sandra Spady of Teachers College provided essential support with negotiating the data agreements, and Anna Wen of Teachers College provided top-notch assistance cleaning the WVHEPC data. We thank Sarah Cohodes, Raji Chakrabarti, Josh Goodman, and participants at the Association for Education Finance and Policy 2016 spring meetings, NBER Education Fall 2016 meetings, Ohio State University, University of Chicago (Harris School), Princeton University Education Seminar Series, and Federal Reserve Bank of New York brown bag seminars for comments. The views expressed in this paper do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System as a whole nor do they necessarily reflect the views of WVHEPC. Any errors herein are the responsibility of the authors alone. Authors are listed alphabetically and are equally responsible for the research presented herein, which was supported by the Spencer Foundation (Grant # 201500101). We are especially grateful to Neal Holly, David Bennett, and Chancellor Paul Hill of the West Virginia Higher Education Policy Commission, and to Henry Korytkowski of Equifax, for facilitating data access, and to Qiao Wen of Teachers College, Jacob French of ASU, and Katherine Strair of the FRBNY for essential programming and research assistance. Angela Bell provided essential early support for the project during her time at WVHEPC. Elizabeth Mason of FRBNY and Sandra Spady of Teachers College provided essential support with negotiating the data agreements, and Anna Wen of Teachers College provided top-notch assistance cleaning the WVHEPC data. We thank Sarah Cohodes, Raji Chakrabarti, Josh Goodman, and participants at the Association for Education Finance and Policy 2016 spring meetings, NBER Education Fall 2016 meetings, Ohio State University, University of Chicago (Harris School), Princeton University Education Seminar Series, and Federal Reserve Bank of New York brown bag seminars for comments. The views expressed in this paper do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System as a whole nor do they necessarily reflect the views of WVHEPC. Any errors herein are the responsibility of the authors alone.
Publisher Copyright:
© 2019 Elsevier B.V.
PY - 2019/2
Y1 - 2019/2
N2 - Prior research has demonstrated that financial aid can influence both college enrollments and completions, but less is known about its post-college consequences. This study is the first to link college and financial aid information to credit bureau data later in life, enabling us to examine the impacts of grant aid on homeownership, neighborhood characteristics, and credit outcomes. We use a regression-discontinuity (RD) strategy to identify causal effects of the WV PROMISE scholarship, a broad-based state merit aid program, up to 10 years after college-entry. The RD is imperfect because our sample is limited to college students and the scholarship program increased enrollment, but there is little evidence of selection on observables at the threshold. We find that scholarship recipients near the test score cutoff for eligibility are more likely to earn a graduate degree, are more likely to own a home and live in higher-income neighborhoods. Effects on annual earnings and credit outcomes are similarly positive, but imprecise. These positive effects are primarily due to substantial reductions in time to degree, rather than to reduced student debt upon graduation.
AB - Prior research has demonstrated that financial aid can influence both college enrollments and completions, but less is known about its post-college consequences. This study is the first to link college and financial aid information to credit bureau data later in life, enabling us to examine the impacts of grant aid on homeownership, neighborhood characteristics, and credit outcomes. We use a regression-discontinuity (RD) strategy to identify causal effects of the WV PROMISE scholarship, a broad-based state merit aid program, up to 10 years after college-entry. The RD is imperfect because our sample is limited to college students and the scholarship program increased enrollment, but there is little evidence of selection on observables at the threshold. We find that scholarship recipients near the test score cutoff for eligibility are more likely to earn a graduate degree, are more likely to own a home and live in higher-income neighborhoods. Effects on annual earnings and credit outcomes are similarly positive, but imprecise. These positive effects are primarily due to substantial reductions in time to degree, rather than to reduced student debt upon graduation.
KW - Education policy
KW - Educational outcomes
KW - Financial aid
KW - Higher education
UR - http://www.scopus.com/inward/record.url?scp=85062626363&partnerID=8YFLogxK
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U2 - 10.1016/j.jpubeco.2019.01.006
DO - 10.1016/j.jpubeco.2019.01.006
M3 - Article
AN - SCOPUS:85062626363
SN - 0047-2727
VL - 170
SP - 68
EP - 82
JO - Journal of Public Economics
JF - Journal of Public Economics
ER -