Borrowing Constraints, College Aid, and Intergenerational Mobility

Eric Hanushek, Charles Leung and Kuzey Yilmaz

Journal of Human Capital, 2014, vol. 8, issue 1, 1 - 41

Abstract: This paper provides a consistent comparison of general tuition subsidies, need-based student aid, merit-based student aid, and income-contingent loans (ICL). Each of these policies is analyzed through a dynamic general equilibrium model in which individuals differ in family wealth and opportunities of completing college. The overlapping-generation structure of the model permits evaluation of different aid schemes in their implications on the aggregate outcomes, income distribution, and intergenerational mobility. Compared to current US tuition and loan policies, the ICL and need-based policies are most effective in promoting aggregate efficiency and income equality, while merit-based policies are least effective.

Date: 2014
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Related works:
Working Paper: Borrowing Constraints, College Aid, and Intergenerational Mobility (2014)
Working Paper: Borrowing Constraints, College Aid, and Intergenerational Mobility (2014)
Working Paper: Borrowing Constraints, College Aid, and Intergenerational Mobility (2004)
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