Borrowing Trouble? Human Capital Investment with Opt-In Costs and Implications for the Effectiveness of Grant Aid

• 成果类型: Article
• 署名作者: Marx, Benjamin M.; Turner, Lesley J.
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign; University System of Maryland; University of Maryland College Park; National Bureau of Economic Research; Leibniz Association; Ifo Institut
• 刊物名称: AMERICAN ECONOMIC JOURNAL-APPLIED ECONOMICS
• ISSN/ISSBN: 1945-7782
• DOI: 10.1257/app.20160127
• 发表日期: 2018
• 页码: 163-201
• 关键词: regression-discontinuity designs; federal student aid; decisions; school; loans; identification; constraints; complexity; ECONOMICS; inference

摘要

We estimate the effect of grant aid on City University of New York (CUNY) students' borrowing and attainment using a regression discontinuity/kink design based on the federal Pell Grant formula. Each dollar of grant aid reduces loans by $1.80 among borrowers. We only find crowd-out of this magnitude in colleges that, like CUNY, offer no loon aid and require students to opt into borrowing. We develop and empirically support a model that shows opt-in or other fixed borrowing costs can lead grants to crowd out large amounts of loan aid, lowering some students' attainment by reducing their liquid resources.