Test-Optional Admissions and Student Debt
30 Pages Posted: 27 Jul 2020 Last revised: 19 Oct 2022
Date Written: September 13, 2022
Moving to a test-optional admissions policy alters admissions, enrollment, and, potentially, pricing and financial aid offers by four-year colleges. With less academic information about applicants and test-optional market segmentation, those admitted under a test-optional policy may face higher prices and incur more debt. Using two-way fixed effects and the Callaway and Sant' Anna (2021) estimator with multiple time-period treatments, we find that private college graduates admitted under a test-optional policy borrow between $1,010 and $1,387 (2016$), or 4 to 5 percent, more than those required to submit their scores.
Keywords: Student Debt; Test-Optional Admissions; Four-Year Colleges, Standardized Tests, College Tuition, Market Power
JEL Classification: G51; I21, 22, I23, L13
Suggested Citation: Suggested Citation