National Postsecondary Student Aid Survey Research Articles

How Big is the Ballpark? Assessing Variation in Grant Aid Awards within Net Price Calculator Student Profiles

Abstract Net Price Calculators (NPCs) are online tools designed to increase transparency in college pricing by presenting students with individualized estimates of net prices to attend a given postsecondary institution. The federal template NPC predicts identical aid awards for similarly-profiled students attending the same institution. Using the 2012 National Postsecondary Student Aid Survey, we use regression analysis to assess variation in actual financial aid awards among students predicted by the federal template NPC to receive identical awards. We find estimated aid, derived from the federal template NPC, accounts for 70 percent of the variation in actual grant aid received by students. We then consider modifications to the federal template NPC that include an additional upper income bracket option and indicators of both high school grade point average and Free Application for Federal Student Aid filing time. These modifications explain an additional 16 percentage points, or more than half, of the unexplained variation in actual grant aid awards across all institutional sectors. These findings are especially relevant as legislators consider policy efforts to bring greater transparency to college cost and pricing, including creating a universal NPC in which prospective students can enter information once to receive net price estimates at any institution.

Does the House Always Win? An Analysis of Barriers to Wealth Building and College Borrowing

The racial differences in student loan debt must be interpreted through a lens of wealth building inequality. Black individuals in particular are negatively affected by official and unofficial policies that create barriers to building wealth. Financial aid policies then exacerbate this inequality with an Expected Family Contribution (EFC) formula that protects the majority of family assets from being used as required educational contributions. Using the 2011-12 National Postsecondary Student Aid Survey (NPSAS:12) , we examined differences in student loan debt based on wealth building barriers (students’ access to banks, father’s education, and mother’s education). Our ANOVA models show cumulative loan debt is highest amongst students who experience barriers to wealth building (students who do not have bank accounts, students whose fathers have less than a Bachelor’s degree, and students whose mothers have less than a Bachelor’s degree) (p < .05). In addition, a greater percentage of black students than white experience these wealth building barriers.

To Apply or Not to Apply: FAFSA Completion and Financial Aid Gaps

In the United States, college students must complete the Free Application for Student Federal Aid (FAFSA) to access federal aid. However, many eligible students do not apply and consequently forgo significant amounts of financial aid. If students have perfect information about aid eligibility, we would expect that all eligible students complete FAFSA and no aid would go unclaimed. Using data from the National Postsecondary Student Aid Survey, I estimate a multinomial logit model which controls for all variables that contribute to aid eligibility and other student characteristics that may deter FAFSA completion. I find that students who are lower middle income, white, male and independent from parents are less likely to complete FAFSA even when they are eligible for aid. Using propensity score matching, I find that each year applicants forgo $9,741.05 in total aid (including grant and loan aid) which includes $1,281.00 of Pell Grants, $2,439.50 of the balance subsidized student loans, $1,986.65 of the balance of unsubsidized student loans, and $1,016.04 of institutional grants. These aid totals aggregate to $24 billion annually.

For-Profit and Traditional Colleges: Institutional Control and Financial Aid Allocation

I examine differences in the competitive behavior between for-profit and traditional universities by modeling how these institutions allocate financial aid packages and set net cost according to differing objective functions. I test the implications of the model using data from the 2003-2004 and 2007-2008 waves of the National Postsecondary Student Aid Survey. I use an exponential regression model and correct for self-selection of students into institutions to estimate differences in pricing behavior. For-profit universities annually offer $819.69 less in institutional aid, while their students take on $1,978.45 more in unsubsidized student loans and pay a higher net price of $3,713.58.

To Apply or Not to Apply: FAFSA Completion and Financial Aid Gaps

In the United States, college students must complete the Free Application for Student Federal Aid (FAFSA) to access all forms of federal aid. However, many eligible students do not apply and consequently forgo significant amounts of financial aid. Using data from the 1999-2000, 2003-2004, and 2007-2008 National Postsecondary Student Aid Survey, I examine characteristics that influence whether an eligible student fails to complete FAFSA, and how much financial aid non-applicants could have received. From a nationally representative sample, I find that 13.5 percent of eligible students who attend college do not complete FAFSA. These students tend to be lower to middle income, white, and male. Using propensity score matching, I find that each year, on average, applicants forgo $9,741.05 in total aid which aggregates to $24 billion. Forgone aid includes Pell Grants, subsidized student loans, work-study, and state aid programs.

Enrollment in Distance Education Classes is Associated with Fewer Enrollment Gaps Among Independent Undergraduate Students in the US

The purpose of this research is to determine whether nontraditional undergraduate students in the US who enroll in distance education classes are less likely to have an enrollment gap (enrollment gap=part year enrollment). Previous research has shown that preference for distance education classes is significantly greater among nontraditional than among traditional undergraduate students; nontraditional students invariably have a greater number of competing demands (work and family) on their time. Since distance education courses provide students with more convenient and flexible class schedules, nontraditional students, who have time or location constraints that prevent them from enrolling in face-to-face classes during a semester or quarter, may be more likely to enroll in distance education classes in order to stay enrolled for the entire academic year. Based upon this rationale, we predicted that enrollment in distance education classes is significantly related to a decreased likelihood of an enrollment gap among nontraditional students. To test this prediction, we used data from the National Postsecondary Student Aid Survey (NPSAS) conducted in 2008. The NPSAS 2008 used a complex survey design to collect data from a nationally representative sample of about 113,500 postsecondary undergraduate students in the US. Results confirm our prediction, and show that enrollment in distance education is significantly related to a decreased likelihood of an enrollment gap among nontraditional students, but not among traditional students. Results also show that five of the seven dropout risk factors (identified by previous research to decrease 6-year graduation rates) are each significantly associated with an increased likelihood of an enrollment gap. These results suggest that the offer of distance education classes could increase degree progress and possibly completion rates for nontraditional undergraduates who are at high risk for dropout.

Does Institutional Aid Compensate for or Comply with State Policy?

To what extent does state policy for student financial aid affect the distribution of institutional aid awarded to students at public institutions? Using data from the National Postsecondary Student Aid Survey we employ a Tobit model to investigate the relationship between student characteristics, including family income and academic qualifications, and the amount of student financial aid awarded from institutional sources at public masters’ and bachelors’ degree granting institutions. We then ask if the institutional aid is awarded in a manner that complements or compensates for the student financial aid policy in the state. The results support our hypothesis that state policy for student financial aid affects the distribution of institutional aid, but instead of institutional compensation for state policy, we observe what appears to be compliance.

Risk and Career Choice

Abstract Choosing a type of education is one of the largest financial decisions we make. Educational investment differs from other types of investment in that it is indivisible and non-tradable. These differences lead agents to demand a premium to enter careers with more idiosyncratic risk. Since the required premium will be smaller for wealthier agents, they will tend to enter careers with more idiosyncratic risk. After developing a model of career choice, we use data from the Panel Study of Income Dynamics (PSID) to estimate the risk associated with different careers. We find education, health care, and engineering careers to have relatively safe streams of labor income; business, sales, and entertainment careers are more risky. By choosing a college major, many students make a costly human capital investment that allows them to enter a specific career. To examine the link between wealth and college major choice implied by the model, we use data on choice of college major from the National Postsecondary Student Aid Survey (NPSAS). Controlling for observable measures of ability and background, we find evidence that wealthier students tend to choose riskier careers, particularly business.

Risk and Career Choice

Choosing a type of education is one of the largest financial decisions we make. Educational investment differs from other types of investment in that it is indivisible and non-tradable. These differences lead agents to demand a premium to enter careers with more idiosyncratic risk. Since the required premium will be smaller for wealthier agents, they will tend to enter careers with more idiosyncratic risk. After developing a model of career choice, we use data from the Panel Study of Income Dynamics (PSID) to estimate the risk associated with different careers. We find education, health care, and engineering careers to have relatively safe streams of labor income; business, sales, and entertainment careers are more risky. By choosing a college major, many students make a costly human capital investment that allows them to enter a specific career. To examine the link between wealth and college major choice implied by the model, we use data on choice of college major from the National Postsecondary Student Aid Survey (NPSAS). Controlling for observable measures of ability and background, we find evidence that wealthier students tend to choose riskier careers, particularly business.

The short term effect of educational debt on job decisions

This paper studies the effect of educational debt on a college attendee's future wage and wage growth. I hypothesize that those who took larger loans to pay for college are subject to higher borrowing interest rates and thus prefer income profiles with higher initial earnings, sacrificing future income growth, relative to those who did not take on large educational debt. Using data for men in the 1987 National Postsecondary Student Aid Survey, I find that higher educational debt is associated with higher initial wage rate the year after finishing school and lower wage growth over the next 4 years.

For-profit post-secondary education and civic engagement

Theorists such as Gumport (2000) suggest thatdifferent conceptions of higher education mayhave important consequences for students andsociety. We explore this possibility byconsidering a specific research question: Dostudents who attend for-profit post-secondaryschools show lower levels of civic engagementthan students who attend non-profit communitycolleges, either at the beginning of theirstudy or two years later? Using longitudinal data from the U.S. NationalCenter for Education Statistics (NCES)National Post-secondary Student Aid Survey(NPSAS90) and Beginning Post-secondary Survey(BPS), we test the hypothesis that students whoattend for-profit, post-secondary vocationalschools will show lower levels of civicengagement on several measures than similarstudents in community colleges. Studentsattending the two types of schools are alike intheir levels of civic engagement at thebeginning of their post-secondary education,but different four years later. We considerwhether observed differences in civic behaviorare due to variations in who attends thedifferent types of schools or to identifiableexperiences students may have in theirprograms, such as interactions with faculty orother students. The effect of proprietary school attendance onseven out of the ten different types of civicengagement measured here appears to be direct,rather than being mediated by measurableeducational experiences. We reflect further onprocesses that might explain the differencesand consider the policy implications of thesefindings for educational decision-makers.

WITHIN-YEAR PERSISTENCE OF STUDENTS AT TWO-YEAR COLLEGES

Two previous studies have used the National Postsecondary Student Aid Survey ( NPSAS ) to examine the persistence of two-year college students. We used NPSAS:96 and found that tuition had a small negative effect on within-year persistence. Debtload was significant and negatively associated with persistence at low and middle levels of debt, but significant and positively associated with persistence at high levels of debt. We explored the implications of these findings and compared our research to the previous studies. This study used NPSAS:96 to research the persistence of two-year college students. We found that, while background and college experience variables influenced persistence, students were 0.18% less likely to persist for each $100increase intuition, more likely to persist if they received subsidies, and 15.96% more likely to persist for every $1,000 in student loan debt outstanding.

A Comparison of the Influence of Debtload on the Persistence of Students at Public and Private Colleges

This study used the National Postsecondary Student Aid Survey (NPSAS:87 and NPSAS:93) to examine how debtload influences undergraduate persistence decisions at both public and private colleges. Tuition prices continued to have a significant negative effect on persistence; however, that effect decreased from 198 7 to 1993 in all cases. At every level, private school students were more sensitive to the effects of debtload than public school students. This finding was especially significant in the 1993 model.

Institutional Need-based and Non-need Grants: Trends and Differences Among College and University Sectors

This study uses data from the National Postsecondary Student Aid Survey to analyze the use of need-based versus non-need financial aid awarded by colleges and universities in 1989 and 1995. Descriptive and trend analyses were used to examine differences in the use of these types of aid among varying institutional types, and to examine how financial aid awards have changed for full-time undergraduate students from different income backgrounds.

THE INFLUENCE OF COSTS ON PERSISTENCE BY TRADITIONAL COLLEGE‐AGE STUDENTS IN COMMUNITY COLLEGES

The impact of costs and cost subsidies (grants, loans, and work study) on persistence by community college students has never been separately examined. This study uses the National Postsecondary Student Aid Survey of 1986‐87 to assess the impact of tuition charges and the amount of student aid awarded on persistence by traditional college‐age students enrolled in community colleges. Its findings include: 1) Traditional college‐age community college students are highly responsive to tuition charges; and 2) available grant dollars are not sufficient to mitigate the negative influence of tuition on persistence.

Who Gets Student Aid?: Variations in Access to Aid

Data from the National Postsecondary Student Aid Survey (NPSAS) reveal substantial differences among types of institutions in how likely their students are to receive financial aid, including federal aid. Students in proprietary vocational schools are much more likely than others to receive aid, while those attending community colleges are much less likely. Because community college students are especially sensitive to costs and because evidence indicates that financial aid is more effective in two-year colleges than in four-year colleges, this pattern is cause for concern.