Who Benefits from College Grant Aid and Why? Evidence from Texas

I use rich administrative data and several quasi-experiments in Texas to study which students benefit most from college grant aid and why. For "extensive-margin" students, grant aid causes enrollment in college, and therefore has potentially large benefits relative to these students' no-college counterfactual. In contrast, "intensive-margin" students would attend college even in the absence of additional aid, but nevertheless may benefit from additional financial support. The goal of this paper is to compare the costs and benefits of aid targeted at different groups of students and college sectors, and to understand the contributions of the intensive and extensive margins in shaping aid's overall effects. To do so, I leverage discontinuities in grant award rules which create variation in aid targeting three distinct populations: middle-income applicants to four-year colleges, low-income applicants to four-year colleges, and low-income applicants to community colleges. While these discontinuities provide exogenous variation in grant awards, I still encounter a common missing-data problem: my data contains all enrolled students, not all applicants, meaning that discontinuities in outcomes at the eligibility cutoff may conflate the causal effects of grants with compositional changes in enrolled students. I develop a bounding approach to overcome sample selection bias stemming from this missing-data problem. I find that grant aid targeted at low-income applicants to four-year colleges has large impacts on academic outcomes and students' future earnings. In sharp contrast, there is little overall effect of additional aid on academic outcomes and future earnings among middle-income applicants to four-year colleges and low-income applicants to community colleges. Across all three treatment margins, extensive-margin effects do not play a large positive role in determining the overall effects of grant aid. [The dissertation citations contained here are published with the permission of ProQuest LLC. Further reproduction is prohibited without permission. Copies of dissertations may be obtained by Telephone (800) 1-800-521-0600. Web page: http://www.proquest.com/en-US/products/dissertations/individuals.shtml.]