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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Mendola, Mariapia / Requate, Till / Schirle, Tammy / de Vries, Frans / Zulehner, Christine

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Financial Aid and Student Bargaining Power

David M Lang
  • 1California State University, Sacramento,
Published Online: 2007-08-10 | DOI: https://doi.org/10.2202/1935-1682.1605


To say that financial aid is a key component of the college admissions process is an understatement. For the student and her family, financial aid is a way to afford quality post-secondary education that otherwise may have been unobtainable. For the college, financial aid is a method to compete for the best and brightest students. For policymakers, financial aid is a subsidy for educational expenses where constituencies often differ over its merits. This research attempts to analyze the financial aid process by considering the ability of a student to act strategically. A game-theoretic model developed by Epple, Romano, Sarpca, and Sieg (2005) is utilized and evaluated using empirical evidence from the 1996 National Postsecondary Student Aid Study (NPSAS:96). It is shown that a student can maximize her financial aid offer by increasing the number of schools to which she has been accepted after controlling for ability, demographics, state fixed effects and institutional characteristics. A matching estimator to calculate average treatment effects and properly address endogeneity concerns.

Keywords: financial aid; bargaining

Published Online: 2007-08-10

Citation Information: The B.E. Journal of Economic Analysis & Policy. Volume 7, Issue 1, ISSN (Online) 1935-1682, DOI: https://doi.org/10.2202/1935-1682.1605, August 2007

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