NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Christian Belzil, Arnaud Maurel, Modibo Sidibé

NBER Working Paper No. 23641
Issued in August 2017
NBER Program(s):Economics of Education, Labor Studies

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.

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Document Object Identifier (DOI): 10.3386/w23641

 
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