Federal Financial Aid and Family Formation: Examining the Social Security Student Benefit Program

Abstract

A broad empirical literature asks if social policies designed to provide benefits to low-income families also affect family formation patterns. While most of the evidence suggests that family formation effects are small at best, and often nonexistent, recent research argues that policies that alter budget constraints considerably should have greater family formation impacts. We tested this hypothesis by investigating the Social Security Student Benefit Program (SSSBP), a program designed to provide large higher education subsidies for the children of disabled, retired, or deceased parents. Conditions for receipt of SSSBP created strong incentives to delay marriage. Utilizing data from the National Longitudinal Survey of Youth, 1979, and a difference-in-differences model, we found that women potentially qualifying for the SSSBP were much less likely to marry before age 22 and were older when they had children, while the program did not influence the probability of women ever marrying or having children. Impacts on men, however, were negligible.

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Notes

  1. 1.

    Throughout this article, all monetary values are reported in US dollars.

  2. 2.

    Except where noted, the legislative history described in this section comes from DeWitt (2001).

  3. 3.

    Dynarski (2003) reported that 90% of student beneficiaries in 1982 qualified for benefits based upon their father’s Social Security earnings history. Thus, survivor benefits are tied to the father’s life course in this analysis.

  4. 4.

    As another point of reference for the size of the benefit, in 1983, the mean weekly earnings in the sales occupational category was $259 for men and $166 for women (Mellor 1985).

  5. 5.

    Program details in this paragraph were taken from Dynarski (2003), Committee on Ways and Means (1979, 1982) and the Office of the Comptroller General (1979).

  6. 6.

    We assign cohorts to pre- and post-periods based on the spring in which they were enrolled in grade 12.

  7. 7.

    The children of retired and disabled parents also potentially qualified for the SSSBP. The NLSY did not record information on the disability or retirement status of the focal child’s parents, however. A recipient who qualified because his/her father was disabled or retired, therefore, will fall into the control group in our analyses. We have no estimate of the number of people who would have qualified through retirement or disability. To the extent that this is a problem, the coefficients we report should be considered lower bound estimates; these potential students force the program groups and control groups to appear to be more similar than they actually are.

  8. 8.

    These were coded using the standard nine Census Divisions plus one extra indicator variable for individuals with missing geographic information.

  9. 9.

    The t-test comes from the t-stat of \({\beta _3}\) taken from a regression model of the following form: \(variabl{e_{i,a}}=~\alpha +{\beta _1}{\left( {PRE} \right)_i}+{\beta _2}{\left( {DeceasedDad} \right)_i}+{\beta _3}{\left( {PRE*~DeceasedDad} \right)_i}+{\varepsilon _{i,a}}\).

  10. 10.

    The literature on the effects of teenage childbearing is unsettled where some authors found deleterious effects, while others did not (e.g., Fletcher 2012; Hotz et al. 2005).

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Acknowledgements

We are grateful for comments from Sarah Hamersma, Bob Bifulco, and Len Burman on an earlier version of this paper. The authors thank Susan Dynarski for sharing her Stata code from her 2003 article “Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion” published in the American Economic Review.

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Correspondence to Leonard M. Lopoo.

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Groves, L.H., Lopoo, L.M. Federal Financial Aid and Family Formation: Examining the Social Security Student Benefit Program. J Fam Econ Iss 39, 436–444 (2018). https://doi.org/10.1007/s10834-018-9568-5

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Keywords

  • Social Security Student Benefits Program
  • Tuition assistance
  • Family formation