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Estimating the Value of Higher Education Financial Aid: Evidence from a Field Experiment

Christian Belzil (), Arnaud Maurel () and Modibo Sidibé ()
Additional contact information
Modibo Sidibé: Duke University

No 13096, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using data from a Canadian field experiment on the financial barriers to higher education, we estimate the distribution of the value of financial aid for prospective students. Our results point out that a considerable share of prospective students are affected by credit constraints. We find that most of the individuals are willing to pay a sizable interest premium above the prevailing market rate for the option to take up a loan, with a median interest rate wedge equal to 6.8 percentage points for a $1,000 loan. The willingness-to-pay for financial aid is highly heterogeneous across students, with preferences and in particular discount factors, playing a key role in accounting for this variation.

Keywords: higher education financing; time and risk preferences; field experiment (search for similar items in EconPapers)
JEL-codes: I22 I23 J24 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2020-03
New Economics Papers: this item is included in nep-edu and nep-exp
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Forthcoming in: Journal of Labor Economics

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Related works:
Working Paper: Estimating the Value of Higher Education Financial Aid: Evidence from a Field Experiment (2020) Downloads
Working Paper: Estimating the Value of Higher Education Financial Aid: Evidence from a Field Experiment (2017) Downloads
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