NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Rajeev Darolia

Truman School of Public Affairs
and College of Education
University of Missouri
216 Middlebush Hall
Columbia, MO 65211

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NBER Working Papers and Publications

December 2016Where Do Students Go when For-Profit Colleges Lose Federal Aid?
with Stephanie R. Cellini, Lesley J. Turner: w22967
Recent federal investigations and new regulations have resulted in restrictions on for-profit institutions’ access to federal student aid. We examine the enrollment effects of similar restrictions imposed on over 1,200 for-profit colleges in the 1990s. Using variation in regulations linked to student loan default rates, we estimate the impact of the loss of federal aid on the enrollment of Pell Grant recipients in sanctioned institutions and their local competitors. Enrollment in a sanctioned for-profit college declines by 53 percent in the five years following a sanction. For-profit sanctions result in negative spillovers on unsanctioned competitor for-profit colleges in the same county, which experience modest enrollment declines. These enrollment losses in the for-profit sector are offs...
 
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