Monetary substitution of loans,earnings, and need-based aid in postsecondary education: The impact of Pell Grant eligibility |
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| Institution: | 1. Peabody College, Vanderbilt University, PMB 414, 230 Appleton Place, Nashville, TN 37212, United States;2. College of Education, Kansas State University, 006 Bluemont Hall, 1114 Mid-Campus Drive North, Manhattan, KS 66506, United States;1. Division of Health Policy and Administration, School of Public Health, University of Illinois, Chicago 1603W. Taylor Street, Room 755, Chicago, IL, 60612, United States;2. Economics Department, University of Colorado Denver, Campus Box 181, P.O. Box 173364, Denver, CO, United States, 80217-3364;3. O''Neill School of Public and Environmental Affairs, Indiana University Bloomington, 1315 East 10th Street Bloomington, IN, 47405, United States;4. National Bureau of Economic Research, 1050 Massachusetts Ave, Cambridge, MA, 02138, United States;1. King’s Business School, King’s College London, United Kingdom;2. Centre for Vocational Education Research, United Kingdom;3. National Institute of Economic and Social Research, 2 Dean Trench Street, London SW1P 3HE, United Kingdom;1. Uppsala University, IFAU, and UCLS, Sweden;2. Uppsala University, UCLS, Sweden;3. University of Gothenburg, Sweden |
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| 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. |
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