NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Long Run Impacts of Merit Aid: Evidence from California's Cal Grant

Eric Bettinger, Oded Gurantz, Laura Kawano, Bruce Sacerdote

NBER Working Paper No. 22347
Issued in June 2016, Revised in June 2018
NBER Program(s):Children, Economics of Education, Labor Studies, Public Economics

We examine the long-term impacts of California’s state-based financial aid by tracking students’ educational and labor force outcomes for up to 14 years after high school graduation. We identify program impacts by exploiting variation in eligibility rules using GPA and family income cutoffs that are ex ante unknown to applicants. Aid eligibility increases undergraduate and graduate degree completion, and for some subgroups, raises longer-run annual earnings and the likelihood that young adults reside in California. Aid eligibility has no impact on take-up of the Pell or federal tax credits for higher education. These findings suggest that the net cost of financial aid programs may frequently be overstated, though our results are too imprecise to provide exact cost-benefit estimates.

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Document Object Identifier (DOI): 10.3386/w22347

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