Financial Aid and Student Bargaining Power

Lang David M ()
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Lang David M: California State University, Sacramento

The B.E. Journal of Economic Analysis & Policy, 2007, vol. 7, issue 1, 21

Abstract: To say that financial aid is a key component of the college admissions process is an understatement. For the student and her family, financial aid is a way to afford quality post-secondary education that otherwise may have been unobtainable. For the college, financial aid is a method to compete for the best and brightest students. For policymakers, financial aid is a subsidy for educational expenses where constituencies often differ over its merits. This research attempts to analyze the financial aid process by considering the ability of a student to act strategically. A game-theoretic model developed by Epple, Romano, Sarpca, and Sieg (2005) is utilized and evaluated using empirical evidence from the 1996 National Postsecondary Student Aid Study (NPSAS:96). It is shown that a student can maximize her financial aid offer by increasing the number of schools to which she has been accepted after controlling for ability, demographics, state fixed effects and institutional characteristics. A matching estimator to calculate average treatment effects and properly address endogeneity concerns.

Keywords: financial aid; bargaining (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (1)

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DOI: 10.2202/1935-1682.1605

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