Born Under a Lucky Star: Financial Aid, College Completion, Labor Supply, and Credit Constraints

Upjohn Institute working paper; 17-267

53 Pages Posted: 22 Feb 2017

See all articles by Jeffrey T Denning

Jeffrey T Denning

Brigham Young University, Department of Economics; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 15, 2017

Abstract

Higher education has experienced many changes since the 1970s, including an increase in the price of college, an increase in student employment during college, a decrease in college completion rates, and an increase in time to degree. This paper ties these trends together by causally linking changes in financial aid with time to degree and student employment during college. I find that additional financial aid accelerates graduation for university seniors because they increase credits attempted and reduce earnings while in college. In reaching this finding, I use administrative education and earnings data to examine a discrete change in the amount of federal financial aid available to financially independent students. The estimates in this paper imply that roughly 50 percent of the observed increase in time to degree can be explained by changes in tuition.

Keywords: financial aid, labor supply, college completion

JEL Classification: I22, D14, H52

Suggested Citation

Denning, Jeffrey T, Born Under a Lucky Star: Financial Aid, College Completion, Labor Supply, and Credit Constraints (February 15, 2017). Upjohn Institute working paper; 17-267, Available at SSRN: https://ssrn.com/abstract=2921914 or http://dx.doi.org/10.2139/ssrn.2921914

Jeffrey T Denning (Contact Author)

Brigham Young University, Department of Economics ( email )

130 Faculty Office Bldg.
Provo, UT 84602-2363
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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