Three Essays on the Economics of Higher Education: How Students and Colleges Respond to Financial Aid Programs
Date of Award
Doctor of Philosophy
Celeste K. Carruthers
Donald J. Bruce, Scott M. Gilpatric, Phillip R. Daves
This dissertation consists of three chapters that examine the impact of financial aid programs on students' enrollment decisions, student outcomes, and colleges' financial decisions. In the first chapter, I use discontinuities in eligibility criteria for a large merit scholarship program to examine the impact of aid on community college students' outcomes both during and after college. Community colleges enroll a large share of first-time freshmen but represent a much smaller share of financial aid research. Furthermore, researchers have focused on the impact of aid on enrollment and outcomes during college, but none have yet considered the impact of aid on earnings after college. The findings suggest that reducing the cost of community college does not impact persistence, academic performance, degree completion, expected earnings, or short-term earnings after college for marginally eligible students. In the second chapter, I examine whether colleges are sensitive to state-sponsored merit aid programs. Previous research has emphasized demand-side effects such as how merit aid impacts enrollment and post-matriculation outcomes. Yet much less is known about how merit aid programs affect the supply side of higher education. Using differences-in-differences identification, I collectively analyze multiple programs and explore numerous college-level outcomes. Results suggest that colleges do not capture state-funded merit scholarships through significant increases in published tuition, and colleges increase expenditures on students in response to merit aid programs. Lastly, in the third essay, we use discontinuities in Pell grant eligibility to examine the effect of the Pell grant on college enrollment and college choice. Consistent with prior work, we find no evidence that marginal Pell eligibility increases college-going. We go on to show that just meeting the Pell cut-off has little bearing on where students choose to enroll, in terms of sector or quality dimensions. Below the threshold, where applicants are needier and the grant is more generous, students sort into colleges with modestly higher published tuition, but no other measure of college quality or college selectivity significantly diverges from the counterfactual. We conclude that students do not use the Pell grant as a tool to shop among college options in ways that systemically improve enrollment outcomes.
Welch, Jilleah Gayle, "Three Essays on the Economics of Higher Education: How Students and Colleges Respond to Financial Aid Programs. " PhD diss., University of Tennessee, 2015.