Monetary substitution of loans, earnings, and need-based aid in postsecondary education: The impact of Pell Grant eligibility

Brent J. Evans and Tuan D. Nguyen

Economics of Education Review, 2019, vol. 70, issue C, 1-19

Abstract: By applying a regression discontinuity design to national data of students at four-year colleges, this study identifies the average substitution effects of exogenously received increases of grant aid on hours of paid labor, earnings, and borrowing while in college. Results confirm students substitute grant aid for both paid labor and borrowing. An average increase of $1100 in grant aid reduces weekly job hours by 1.5–2 h per week for women, corresponding to a decline in annual earnings of $850, and reduces borrowing by an average of $300–$400 dollars among all students. We find limited evidence of grant aid's impact on academic outcomes.

Keywords: Need-based grant aid; College persistence; Borrowing; Financial aid (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecoedu:v:70:y:2019:i:c:p:1-19

DOI: 10.1016/j.econedurev.2019.02.004

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