Ian Fillmore
Sean McMahon

Federal financial aid depends on a student's Expected Family Contribution (EFC)--the higher her EFC, the less aid she receives. We estimate the effects of increasing federal aid by leveraging an increase in the income threshold for an "automatic zero EFC," which qualifies students for the most generous federal aid. We find some evidence for crowd-out of federal student loans and greater enrollment but no effect on institutional grants, working while in school, or choosing a STEM major. We argue that volatility in federal aid from year to year is blunting the effect of greater aid generosity.

Publication Type
Working Paper
File Description
Second version, April 10, 2023
JEL Codes
H52: National Government Expenditures and Education
H81: Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
I22: Educational Finance
higher education
Federal grants
Pell grants
financial aid