Optimal Need-Based Financial Aid
Journal
Journal of Political Economy
ISSN
0022-3808
Type
journal article
Date Issued
2021
Author(s)
Abstract
We study the optimal design of student financial aid as a function of parental income. We derive optimal financial aid formulas in a general model. We estimate a model of selection into college for the United States that comprises multidimensional heterogeneity, endogenous parental transfers, dropout, labor supply in college, and uncertain returns. We quantify optimal financial aid in the estimated model and find it is strongly declining in parental income even without distributional concerns. Equity and efficiency go hand in hand.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Economic Policy
Refereed
Yes
Volume
129
Number
2
Start page
492
End page
533
Subject(s)
Eprints ID
269717
File(s)![Thumbnail Image]()
open.access
Name
need_based4.pdf
Size
1.09 MB
Format
Adobe PDF
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