A BEJEAP Topics article.

Abstract

To say that financial aid is a key component of the college admissions process is an understatement. For the student and her family, financial aid is a way to afford quality post-secondary education that otherwise may have been unobtainable. For the college, financial aid is a method to compete for the best and brightest students. For policymakers, financial aid is a subsidy for educational expenses where constituencies often differ over its merits. This research attempts to analyze the financial aid process by considering the ability of a student to act strategically. A game-theoretic model developed by Epple, Romano, Sarpca, and Sieg (2005) is utilized and evaluated using empirical evidence from the 1996 National Postsecondary Student Aid Study (NPSAS:96). It is shown that a student can maximize her financial aid offer by increasing the number of schools to which she has been accepted after controlling for ability, demographics, state fixed effects and institutional characteristics. A matching estimator to calculate average treatment effects and properly address endogeneity concerns.

Submitted: April 17, 2006 · Accepted: April 3, 2007 · Published: August 10, 2007

Recommended Citation

Lang, David M. (2007) "Financial Aid and Student Bargaining Power," The B.E. Journal of Economic Analysis & Policy: Vol. 7 : Iss. 1 (Topics), Article 37.
Available at: http://www.bepress.com/bejeap/vol7/iss1/art37