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  3. American Economic Journal: Economic Policy
  4. February 2019
  5. The Long-Run Impacts of Financial Aid: Evidence from California's Cal Grant

The Long-Run Impacts of Financial Aid: Evidence from California's Cal Grant

  • Eric Bettinger
  • Oded Gurantz
  • Laura Kawano
  • Bruce Sacerdote
  • Michael Stevens
American Economic Journal: Economic Policy
vol. 11, no. 1, February 2019
(pp. 64-94)
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Abstract

We examine the long-term impacts of California's state-based financial aid by tracking educational and labor force outcomes for up to 14 years after high school graduation. We identify program impacts by exploiting variation in eligibility rules using GPA and family income cutoffs that are ex ante unknown to applicants. Aid eligibility increases undergraduate and graduate degree completion, and for some subgroups, raises longer-run annual earnings and the likelihood that young adults reside in California. These findings suggest that the net cost of financial aid programs may frequently be overstated, though our results are too imprecise to provide exact cost-benefit estimates.

Citation

Bettinger, Eric, Oded Gurantz, Laura Kawano, Bruce Sacerdote, and Michael Stevens. 2019. "The Long-Run Impacts of Financial Aid: Evidence from California's Cal Grant." American Economic Journal: Economic Policy, 11 (1): 64-94. DOI: 10.1257/pol.20170466

Additional Materials

JEL Classification

  • H75 State and Local Government: Health; Education; Welfare; Public Pensions
  • I21 Analysis of Education
  • I22 Educational Finance; Financial Aid
  • I23 Higher Education; Research Institutions
  • I26 Returns to Education
  • I28 Education: Government Policy
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