Essays in the Economics of Education

Abstract

This dissertation studies several education policies that relate to labor economics, public economics, and the economics of education using various econometric techniques. This dissertation studies the effects of universal FAFSA policies on student outcomes, inequalities in federal higher education funding, and two of the largest changes to Pell Grant eligibility over the past two decades. This dissertation uses privileged administrative data from the United States Department of Education’s Office of Federal Student Aid, as well as publicly available data from the Integrated Postsecondary Education Data System (IPEDS), Integrated Public Use Microdata Series (IPUMS), and National Center for Education Statistics (NCES). The first chapter in the dissertation focuses on universal FAFSA policies that require students to apply to the FAFSA as a high school graduation requirement. These policies intended to increase application rates to the Free Application for Federal Student Aid (FAFSA). This paper explores this policy in seven different states (Louisiana, Illinois, Alabama, Colorado, Texas, Maryland, and California) and uses synthetic difference-in-differences and synthetic controls to study the effects of this policy on various student outcomes. The paper presents both staggered results that consider the overall effect of these policies as well as evaluations of each state individually. The staggered results demonstrate that universal FAFSA policies have a 7.7 percentage point increase on FAFSA application rates in “strict” states that establish high school graduation requirements that require students to submit a FAFSA application. Reduced form estimates demonstrate that states that adopt a universal FAFSA policy experience an increase in college enrollment rates of about three percentage points by recent high school graduates. The second chapter focuses on the federal funding of higher education to universities and institutions. This paper presents four descriptive facts about revenue and expenses in higher education. Two important takeaways from this paper are that Ivy+ universities receive roughly 15% of the overall share of federal higher education funding (excluding Pell Grants). Twelve colleges which make up less than 1.5% of the overall share of full-time enrolled students receive almost ten times that amount in federal funding. Second, highly selective public universities are greater net investors in research expenditures than Ivy+ universities. The third chapter studies two changes to Pell Grant eligibility that occurred in 2012 as part of the Consolidated Appropriations Act, 2012. These two changes represent some of the largest changes to Pell Grant eligibility over the past 20 years. The paper uses various donut regression discontinuity designs to evaluate how small changes in the amounts of Pell Grants distributed to students at two different margins affected their behavior. The paper finds that students on the margin of losing all their Pell Grants, despite the absolute amount being quite low ($305), change their enrollment intensity. Students that lost all their Pell Grant eligibility experienced a 9.3 percentage point decrease in full-time enrollment rates. Additionally, students that lost their Pell Grant eligibility were on average more likely to borrow loans from the federal government. On average students borrowed more than five times ($1,387) the amount they lost in Pell Grants ($305). The increase in borrowing behavior was driven by students earlier in their college experience, while students in their later years withdrew at statistically significant higher rates. Students on the margin of losing a small amount relative to their total Pell Grant award did not change their behavior in terms of their enrollment intensity or borrowing behavior.