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

Christian Belzil^1,2,3; Arnaud Maurel⁴; Modibo Sidibé^5,6

¹ Centre National de la Recherche Scientifique · ² Centre National pour la Recherche Scientifique et Technique (CNRST) · ³ Centre de Recherche en Économie et Statistique · ⁴ National Bureau of Economic Research · ⁵ Duke University · ⁶ Centre for Research in Engineering Surface Technology

Using data from a Canadian field experiment on financial barriers to higher education, we estimate the distribution of the value of financial aid for prospective students. We find that a considerable share of prospective students perceive significant credit constraints. Most 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 6.8 percentage points for a $1,000 loan. The willingness to pay for financial aid is heterogeneous across students, with discount factors playing a key role in accounting for this variation.

DOI

10.1086/710701

Volume

39 (2)

Pages

361-395

Language

en

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BibTeX

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