The Effects of Financial Aid Policy
Current Projects and Working Papers
We examine the effects of the Florida Student Access Grant (FSAG) using a regression-discontinuity strategy and exploiting the cut-off used to determine eligibility. We find grant eligibility had a positive effect on attendance, particularly at public four-year institutions. We also extend the literature by investigating the impact of aid on college success and find that eligibility for FSAG increased early persistence and the cumulative number of college-level credits students earned in their first four years. Most importantly, we find that FSAG increased the likelihood of bachelor’s degree receipt within six years at a public college or university by 4.6 percentage points, which translates into a 22 percent increase among students near the eligibility cut-off. The results are robust to sensitivity analyses.
Boatman, Angela and B. T. Long. “Does Financial Aid Impact College Student Engagement? The Effects of the Gates Millennium Scholarship on Academic and Extracurricular Behaviors.”
Long, B. T. How Needy are You? The Financial Incentives Created by the Student Financial Aid System.
Grants and Tuition Subsidies
This paper examines the importance of format in aid programs focusing on state appropriations to public postsecondary institutions. While these funds subsidize costs for in-state students, they may also affect choices between institutions due to their in-kind format. Using the conditional logistic choice model and extensive match-specific information, the paper approximates the choice between nearly 2,700 college options to examine the impact of several dissimilar state systems. Moreover, it simulates how decisions would change if the aid were fungible.
Boatman, Angela and B. T. Long. “Does Financial Aid Impact College Student Engagement? The Effects of the Gates Millennium Scholarship on Academic and Extracurricular Behaviors.”
Loans and Tax Credits
This paper attempts to provide additional information on the impact of loans on college decisions by focusing on the period during which college loans were made available to all families, regardless of financial need. The major shift in aid policy occurred due to the 1992 Higher Education Reauthorization Act (HEA92). By exploiting this 1992 policy change as a natural experiment, this paper examines the impact of introducing a student loan program on college enrollment and choice. The analysis uses the Consumer Expenditure Survey (CES) to detail how the number of students in college (e.g., the access question) and the amount of money spent on higher education and related expenses (e.g., the choice question or "how much" education was bought) changed after the policy change.
Long, B. T. and Erin K. Riley. (2007) “The Demand Side of Loans: The Changing Face of Borrowers.” In Frederick Hess, Ed. Footing the Tuition Bill: The New Student Loan Sector. Washington, D.C.: American Enterprise Institute.
Long, B. T. "How does the Availability of Loans affect College Access? Learning from the History of Loan Limits."
With substantial private and social returns, higher education has become an important national investment. However, access is questionable for many due to the inability to secure the funds necessary to pay tuition. Therefore, since the 1960s, the Federal government has offered students loans through the Stafford, Perkins, and PLUS Loan Programs. In recent years, loans have become the primary form of financial aid with over $47.7 billion being dispersed during the 2002-03 school year. However, little is understood about how the availability of these resources has impacted college participation and persistence. Moreover, policy-makers currently debate whether the loan limits set over ten years ago are sufficiently high enough to enable attendance given the price of college today. This paper addresses these issues by analyzing the impact of a substantial increase in the Federal loan limit. Using the October Current Population Survey, I exploit several treatment groups employing a differences-in-differences methodology.
The 1997 creation of the Hope and Lifetime Learning Tax Credits marked a dramatic shift in the way in which federal support for college expenses is distributed to students and their families. However, unlike other aid programs, the tax credits have exceptionally broad eligibility requirements, and there is a significant delay between when a recipient enrolls in college and when they receive the benefit. This study examines the impact of the tax credits on students, families, colleges, and states.