Financial Aid Policies and Enrollment Behavior in Higher Education
Birch, Matthew R
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We investigate relationships between several financial aid policies and student enrollment behavior. Chapters 1 and 2 (co-authored with Robert Rosenman) use proprietary data from a public research university to address institution level policies affecting enrollment. Chapter 3 (co-authored with Benjamin Cowan) utilizes government data address a change in federal financial aid policy. In chapter 1, we analyze the impact of a campus visit program for admitted students on enrollment. Differences in visitation behavior and financial aid information allow us to decompose the effect of the program into its component parts of visitation and receiving a scholarship. Our results indicate a substantial effect of visiting on the likelihood of matriculation. The visitation effect is substantially larger when we account for endogeneity than in the simple probit model. The scholarship effect is smaller, but still significant for most subpopulations. In chapter 2, we investigate the relationship between merit-based aid and enrollment. We use a regression discontinuity (RD) framework to test an institution-level merit aid program at a public research university and find that the merit aid program successfully increases the likelihood of enrollment. We then add to the RD a structure that accounts for the probability that specific students would enroll (or not enroll) with certainty. This richer model identifies students who are less certain about enrolling, and indicates the merit aid is much more effective in convincing such students to enroll, although a significant amount of merit aid goes to students who would enroll without it. In chapter 3, we develop a simple model to analyze student choices of human-capital investment and college consumption amenities in the face of credit constraints. We then exploit variation in federal student loan programs around 2008 to analyze hypotheses from this model. We find that lower income students increase consumption amenities spending and educational investment relative to their higher income peers. The human capital effects are larger than the consumption amenities effects. These results suggest that credit constraints may play a significant role in US higher education as relaxing credit constraints narrows the income gap distributions of consumption amenities spending and human capital investment.