Skip to main content
Springer Nature Link
Log in

Exploring the Effects of Student Expectations about Financial Aid on Postsecondary Choice: A Focus on Income and Racial/Ethnic Differences

  • Published:
Research in Higher Education Aims and scope Submit manuscript

Abstract

This study investigates how the expectations of different types of financial aid affect the student college choice process from application through enrollment. We find that students from different race and income groups respond differentially to aid packages in their application and enrollment decisions depending on their levels of aid expectations. In application behavior, Asians at all income levels increase their likelihood of application at a greater rate in response to an increase in their aid expectations than other racial groups. Simulations indicate that enrollment probabilities decline more for African American and Hispanic students than whites and Asians when they expect to receive financial aid but do not. The findings suggest the particular importance of financial aid packages in the college choice process for underrepresented minority students.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Subscribe and save

Springer+ Basic
€32.70 /Month
  • Get 10 units per month
  • Download Article/Chapter or eBook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price includes VAT (Finland)

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6

Similar content being viewed by others

Notes

  1. For detailed explanations of the random utility model (RUM), see Manski (1977), McFadden (1976), or Parsons (2000).

  2. For explanations about each variable, see Table 1.

  3. The estimation of expectations about each type of financial aid is discussed in the Model Specification section.

  4. The list of regressors in the application model is presented in the next section.

  5. Expectations about each type of financial aid can be obtained by taking the products of: Grant = (1)*(5), Loan = (2)*(6), Work-study = (3)*(7), and Outside Aid = (4)*(8).

  6. Admissions Index Score (AIS) is defined as a weighted average of the ACT Composite and high school rank percentile: [(2*ACT) + High School Rank Percentile].

  7. Estimating the expected amount of each aid type is discussed above.

  8. For the variables not shown in Table 3, see the application model indicated in the Model Specification section.

  9. p-values are based on Chi-square tests using the variance––covariance matrix derived from the bootstrap replications.

  10. For the specific amount of aid expectations by type, see Table 4 (in Appendix).

References

  • Abraham, K. G., & Clark, M. A. (2006). Financial aid and students’ college decisions: Evidence from the District of Columbia tuition assistance grant program. The Journal of Human Resources, 41(3), 578–610.

    Google Scholar 

  • Arbona, C., & Nora, A. (2007). The influence of academic and environmental factors on Hispanic college degree attainment. The Review of Higher Education, 30(3), 247–269.

    Article  Google Scholar 

  • Avery, C., & Hoxby, C. M. (2004). Do and should financial aid packages affect students’ college choices? In C. M. Hoxby (Ed.), College choices: The economics of where to go, when to go, and how to pay for it. Chicago: University of Chicago Press.

    Google Scholar 

  • Braunstein, A., McGrath, M., & Pescatrice, D. (1999). Measuring the impact of income and financial aid offers on college enrollment decisions. Research in Higher Education, 40(3), 247–259.

    Article  Google Scholar 

  • Cabrera, A. F., & La Nasa, S. M. (2000). Understanding the college-choice process. New Directions for Institutional Research, 107, 5–21.

    Article  Google Scholar 

  • Cabrera, A. F., & La Nasa, S. M. (2001). On the path to college: Three critical tasks facing America’s disadvantaged. Research in Higher Education, 42(2), 119–149.

    Article  Google Scholar 

  • Curs, B., & Singell, L. D. (2002). An analysis of the application and enrollment processes for in-state and out-of-state students at a large public university. Economics of Education Review, 21(2), 111–124.

    Article  Google Scholar 

  • DesJardins, S. L., Ahlburg, D. A., & McCall, B. P. (2006). An integrated model of application, admission, enrollment, and financial aid. Journal of Higher Education, 77(3), 381–429.

    Article  Google Scholar 

  • Dynarski, S. M. (2003). Does aid matter? Measuring the effect of student aid on college attendance and completion. American Economic Review, 93(1), 279–288.

    Article  Google Scholar 

  • Efron, B., & Tibshirani, R. J. (1993). An introduction to the bootstrap. In monographs on statistics and applied probability (Vol. 57). New York: Chapman & Hall.

    Google Scholar 

  • Ellwood, D., & Kane, T. J. (2000). Who is getting a college education: Family background and the growing gaps in enrollment. In S. Danziger & J. Waldfogel (Eds.), Securing the future: Investing in children from birth to college. New York: Russell Sage Foundation.

    Google Scholar 

  • Flint, T. (1993). Early awareness of college financial aid: Does it expand choice? The Review of Higher Education, 16(3), 309–327.

    Google Scholar 

  • Griffith, A., & Rask, K. (2007). The influence of the US News and World Report collegiate rankings on the matriculation decision of high-ability students: 1995–2004. Economics of Education Review, 26(2), 244–255.

    Article  Google Scholar 

  • Hearn, J. C. (1984). The relative roles of academic, ascribed, and socioeconomic characteristics in college destinations. Sociology of Education, 57(1), 22–30.

    Article  Google Scholar 

  • Hearn, J. C. (1988). Attendance at higher-cost colleges: Ascribed, socioeconomic, and academic influences on student enrollment patterns. Economics of Education Review, 7(1), 65–76.

    Article  Google Scholar 

  • Heller, D. E. (1997). Student price response in higher education: An update to Leslie and Brinkman. Journal of Higher Education, 68(6), 624–657.

    Article  Google Scholar 

  • Heller, D. E. (1999). The effects of tuition and state financial aid on public college enrollment. Review of Higher Education, 23(1), 65–89.

    Google Scholar 

  • Hossler, D., Braxton, J., & Coopersmith, G. (1989). Understanding college choice higher education: Handbook of theory and research (Vol. 5, pp. 231–288) (Vol. 5, pp. 231–288). New York: Agathon.

    Google Scholar 

  • Hossler, D., & Gallagher, K. (1987). Studying student college choice: A three-phase model and the implications for policymakers. College and University, 62(3), 207–221.

    Google Scholar 

  • Hossler, D., Schmit, J., & Vesper, N. (1999). Going to college: How social, economic, and educational factors influence the decisions students make. Baltimore: Johns Hopkins University Press.

    Google Scholar 

  • Hossler, D., & Stage, F. K. (1992). Family and high school experience influences on the postsecondary educational plans of ninth-grade students. American Educational Research Journal, 29(2), 425–451.

    Google Scholar 

  • Hu, S., & Hossler, D. (2000). Willingness to pay and preference for private institutions. Research in Higher Education, 41(6), 685–701.

    Article  Google Scholar 

  • Jackson, G. A. (1982). Public efficiency and private choice in higher education. Educational Evaluation and Policy Analysis, 4(2), 237–247.

    Google Scholar 

  • Kane, T. J. (2003). A quasi-experimental estimate of the impact of financial aid on college-going. NBER Working Paper No. 9703.

  • Kane, T. J. (2007). Evaluating the impact of the D.C. tuition assistance grant program. Journal of Human Resources, 42(3), 555–582.

    Google Scholar 

  • Kim, D. (2004). The effect of financial aid on students’ college choice: Differences by racial groups. Research in Higher Education, 45(1), 43–70.

    Article  Google Scholar 

  • Kotler, P., & Fox, K. (1985). Strategic marketing for educational institutions. Englewood Cliffs, NJ: Prentice-Hall.

    Google Scholar 

  • Leslie, L. L., & Brinkman, P. T. (1987). Student price response in higher education: The student demand studies. Journal of Higher Education, 58(2), 181–204.

    Article  Google Scholar 

  • Linsenmeier, D. M., Rosen, H. S., & Rouse, C. E. (2006). Financial aid packages and college enrollment decisions: An econometric case study. Review of Economics and Statistics, 88(1), 126–145.

    Google Scholar 

  • Litten, L. H. (1982). Different strokes in the applicant pool: Some refinements in a model of student college choice. The Journal of Higher Education, 53(4), 383–402.

    Article  Google Scholar 

  • Long, J. S. (1997). Regression models for categorical and limited dependent variables. Thousand Oaks, CA: Sage Publications.

    Google Scholar 

  • Manski, C. F. (1977). The structure of random utility models. Theory and Decision, 8(3), 229–254.

    Article  Google Scholar 

  • Manski, C. F., & Wise, D. A. (1983). College choice in America. Cambridge, Mass: Harvard University Press.

    Google Scholar 

  • McDonough, P. M. (1994). Buying and selling higher education: The social construction of the college applicant. Journal of Higher Education, 65(4), 427–446.

    Article  Google Scholar 

  • McDonough, P. M. (1997). Choosing colleges: How social class and schools structure opportunity. Albany: State University of New York Press.

    Google Scholar 

  • McDonough, P. M., & Calderone, S. (2006). The meaning of money: Perceptual differences between college counselors and low-income families about college costs and financial aid. American Behavioral Scientist, 49(12), 1703–1718.

    Article  Google Scholar 

  • McFadden, D. (1976). Aggregate travel demand forecasting from disaggregated behavioral models. Transportation Research Record, 534, 24–37.

    Google Scholar 

  • McPherson, M. S., & Shapiro, M. O. (1998). The student aid game. Princeton, N. J.: Princeton University Press.

    Google Scholar 

  • Moore, R. L., Studenmund, A. H., & Slobko, T. (1991). The effect of the financial aid package on the choice of a selective college. Economics of Education Review, 10(4), 311–321.

    Article  Google Scholar 

  • Nora, A., Barlow, L., & Crisp, G. (2006). Examining the tangible and psychosocial benefits of financial aid with student access, engagement, and degree attainment. American Behavioral Scientist, 49(12), 1636–1651.

    Article  Google Scholar 

  • Olivas, M. A. (1985). Financial aid packaging policies. Access and ideology. The Journal of Higher Education, 56, 462–475.

    Article  Google Scholar 

  • Parsons, G. R. (2000). Narrow choice sets in a random utility model of recreation demand fishing in maine. Land Economics, 76(1), 86–99.

    Article  Google Scholar 

  • Paulsen, M. B. (1998). Recent research on the economics of attending college: Returns on investment and responsiveness to price. Research in Higher Education, 39(4), 471–487.

    Article  Google Scholar 

  • Paulsen, M. B., & St. John, E. P. (2002). Social class and college costs: Examining the financial nexus between college choice and persistence. Journal of Higher Education, 73(2), 189–236.

    Article  Google Scholar 

  • Perna, L. W. (2000). Differences in the decision to attend college among African Americans, Hispanics, and Whites. The Journal of Higher Education, 71(2), 117–141.

    Article  Google Scholar 

  • Perna, L. W., & Titus, M. A. (2004). Understanding differences in the choice of college attended: The role of state public policies. The Review of Higher Education, 27(4), 501–526.

    Article  Google Scholar 

  • Perna, L. W., & Titus, M. A. (2005). The Relationship between parental involvement as a social capital and college enrollment: An examination of racial/ethnic group differences. The Journal of Higher Education, 76(5), 485–518.

    Article  Google Scholar 

  • Savoca, E. (1991). The effect of changes in the composition of financial aid on college enrollments. Eastern Economic Journal, 17(1), 109–121.

    Google Scholar 

  • Shadish, W. R., Cook, T. D., & Campbell, D. T. (2002). Experimental and quasi-experimental designs for generalized causal inference. Boston, MA: Houghton-Mifflin.

    Google Scholar 

  • St. John, E. P., Cabrera, A. F., Nora, A., & Asker, E. H. (2000). How can finance research inform the reconceptualization of persistence models? In J. M. Braxton (Ed.), Reworking the student departure puzzle. Nashville: Vanderbilt University Press.

    Google Scholar 

  • St. John, E. P., Paulsen, M. B., & Starkey, J. B. (1996). The nexus between college choice and persistence. Research in Higher Education, 37(2), 175–220.

    Article  Google Scholar 

  • Stage, F. K., & Hossler, D. (1989). Differences in family influences on college attendance plans for male and female ninth graders. Research in Higher Education, 30(3), 301–315.

    Article  Google Scholar 

  • Stampen, J. O., & Cabrera, A. F. (1988). The targeting and packaging of student aid and its effect on attrition. Economics of Education Review, 7(1), 29–46.

    Article  Google Scholar 

  • Van der Klaauw, W. (2002). Estimating the effect of financial aid offers on college enrollment: A regression-discontinuity approach. International Economic Review, 43(4), 1249–1287.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Center for the Study of Higher and Postsecondary Education, University of Michigan, 2117 School of Education Building, 610 E. University Ave., Ann Arbor, MI, 48109-1259, USA

    Jiyun Kim

  2. Center for the Study of Higher and Postsecondary Education, University of Michigan, 2108D School of Education Building, 610 E. University Ave., Ann Arbor, MI, 48109-1259, USA

    Stephen L. DesJardins

  3. Center for the Study of Higher and Postsecondary Education, University of Michigan, 2108B School of Education Building, 610 E. University Ave., Ann Arbor, MI, 48109-1259, USA

    Brian P. McCall

Authors
  1. Jiyun Kim
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Stephen L. DesJardins
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Brian P. McCall
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Jiyun Kim.

Appendix

Appendix

Table 2 Estimating the probability of admission
Full size table
Table 3 Estimating the probability of application and enrollment
Full size table
Table 4 Expected amounts of financial aid by type (in dollars)
Full size table

Rights and permissions

Reprints and permissions

About this article

Cite this article

Kim, J., DesJardins, S.L. & McCall, B.P. Exploring the Effects of Student Expectations about Financial Aid on Postsecondary Choice: A Focus on Income and Racial/Ethnic Differences. Res High Educ 50, 741–774 (2009). https://doi.org/10.1007/s11162-009-9143-x

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11162-009-9143-x

Keywords

Search

Navigation