Is Free College the Solution to Student Debt Woes? Studying the Heterogeneous Impacts of Merit Aid Programs

Rajashri Chakrabarti, William Nober and Wilbert van der Klaauw

No 20191010, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: The rising cost of a college education has become an important topic of discussion among both policymakers and practitioners. At least eleven states have recently introduced programs to make public two-year education tuition free, including New York, which is rolling out its Excelsior Scholarship to provide tuition-free four-year college education to low-income students across the SUNY and CUNY systems. Prior to these new initiatives, New York, had already instituted merit scholarship programs that subsidize the cost of college conditional on academic performance and in-state attendance. Given the rising cost of college and the increased prevalence of tuition-subsidy programs, it?s important for us to understand the effects of such programs on students, and whether these effects vary by income and race. While a rich body of work has studied the effects of merit scholarship programs on educational attainment, the same is not true for the effects on financial outcomes of students, such as debt and repayment. This blog post reports preliminary findings from ongoing work, which is one of the first research initiatives to understand such effects.

Keywords: Financial aid; Student Loan; default (search for similar items in EconPapers)
Date: 2019-10-10
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