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The effect of the financial aid package on the choice of a selective college
Authors:Robert L Moore  A H Studenmund  Thomas Slobko
Abstract:This paper examines the effects of financial aid on the decision to attend a selective liberal arts college using data obtained from applicants accepted to Occidental College in 1989. Patterned after a similar empirical investigation by Ehrenberg and Sherman for accepted freshmen at Cornell in 1981, logit probabilities of enrollment equations are estimated based on (1) observable characteristics of the individual students, (2) the net costs of attending Occidental and the various alternative colleges under consideration (including the financial aid packages offered) and (3) other characteristics of these alternative colleges. The results, like Ehrenberg and Sherman's, indicate that relative tuition and scholarships affect the probability of enrollment for financial aid applicants, but that loans and work study assistance have no statistically significant effect. Non-financial aid applicants — a group not investigated by Ehrenberg and Sherman — are much less sensitive to relative cost considerations.
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