Estimating the Value of Higher Education Financial Aid: Evidence from a Field Experiment

56 Pages Posted: 11 Aug 2017 Last revised: 5 Feb 2022

See all articles by Christian Belzil

Christian Belzil

Ecole Polytechnique, Paris - Department of Economic Sciences; National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE); Institute for the Study of Labor (IZA); Center for Interuniversity Research and Analysis on Organization (CIRANO)

Arnaud Maurel

Duke University - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Modibo Sidibe

Duke University

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Date Written: August 2017

Abstract

Using data from a Canadian field experiment on the financial barriers to higher education, we estimate the distribution of the value of financial aid for prospective students, and relate it to parental socio-economic background, individual skills, risk and time preferences. Our results point out that a considerable share of prospective students are affected by credit constraints. We find that most of the individuals are willing to pay a sizable interest premium above the prevailing market rate for the option to take up a loan, with a median interest rate wedge equal to 6.6 percentage points for a $1,000 loan. The willingness-to-pay for financial aid is highly heterogeneous across students, with preferences and in particular discount factors, playing a key role in accounting for this variation.

Suggested Citation

Belzil, Christian and Maurel, Arnaud and Sidibe, Modibo, Estimating the Value of Higher Education Financial Aid: Evidence from a Field Experiment (August 2017). NBER Working Paper No. w23641, Available at SSRN: https://ssrn.com/abstract=3016831

Christian Belzil (Contact Author)

Ecole Polytechnique, Paris - Department of Economic Sciences ( email )

Ecole Polytechnique
Department of Economics
Paris, 75005
France

National Institute of Statistics and Economic Studies (INSEE) - National School for Statistical and Economic Administration (ENSAE)

92245 Malakoff Cedex
France

Institute for the Study of Labor (IZA)

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

Center for Interuniversity Research and Analysis on Organization (CIRANO)

2020 rue University, 25th Floor
Montreal, Quebec H3C 3J7
Canada

Arnaud Maurel

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Institute for the Study of Labor (IZA) ( email )

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

Modibo Sidibe

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

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