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We explore the role of defaults and choice architecture on student loan decision-making, experimentally testing the impact pre-populating either decline or accept decisions compared to an active choice, no pre-population, decision. We demonstrate that the default choice presented does influence student loan borrowing decisions. Specifically, compared to active choice, students presented within a pre-populated decline decision were almost five percent less likely to accept all packaged loans and borrowed between 4.6 and 4.8 percent less in federal educational loans. The reductions in borrowing appears to be concentrated within unsubsidized loans with those assigned to the opt-in condition borrowing 8.3 percent less in unsubsidized loans. These changes in borrowing did not induce substitution towards private or Parent PLUS loans nor did they negatively impact enrollment, academic performance, or on-campus work outcomes in the same academic year.
Between 1935-1940 the Home Owners' Loan Corporation (HOLC) assigned A (minimal risk) to D (hazardous) grades to neighborhoods that reflected their "mortgage security" and visualized these grades on color-coded maps used by banks and other mortgage lenders to provide or deny home loans within residential neighborhoods. In this study, we leverage a spatial analysis of 144 HOLC-graded core-based statistical areas (CBSAs) to understand how historic HOLC maps relate to current patterns of school funding, racial diversity, and performance. We find districts and schools located today in historically redlined neighborhoods have less district-level per-pupil revenues, larger shares of Black and non-White student bodies, less diverse student populations, and worse average test scores relative to those located in A, B, and C neighborhoods. These nationwide results are consistent by region and when controlling for CBSA. Finally, we document a persistence in these patterns across time, with overall positive time trends regardless of HOLC grade but widening gaps between D vs. A, B, and C outcomes. These findings suggest that education policymakers need to consider the historical implications of redlining and past neighborhood inequality on neighborhoods today when designing modern interventions focused on improving life outcomes of students of color.
We use estimates across all known "credibly causal" studies to examine the distributions of the causal effects of public K12 school spending on test scores and educational attainment in the United States. Under reasonable assumptions, for each of the 31 included studies, we compute the same parameter estimate. Method of moments estimates indicate that, on average, a $1000 increase in per-pupil public school spending (for four years) increases test scores by 0.044 standard deviations, high-school graduation by 2.1 percentage points, and college-going by 3.9 percentage points. The pooled averages are significant at the 0.0001 level. When benchmarked against other interventions, test score impacts are much smaller than those on educational attainment -- suggesting that test-score impacts understate the value of school spending. The benefits to capital spending increases take about five-to-six years to materialize, but after this, one cannot reject that the average marginal effects differ across capital and non-capital spending types. The marginal spending impacts are much less pronounced for economically advantaged populations. Consistent with a cumulative effect, the educational attainment impacts are larger with more years of exposure to the spending increase. Average impacts are similar across a wide range of baseline spending levels -- providing little evidence of diminishing marginal returns at current spending levels.
To speak to generalizability, we estimate the variability across studies attributable to effect heterogeneity (as opposed to sampling variability). This heterogeneity explains about 40 and 70 percent of the variation across studies for educational attainment and test scores, respectively, which allows us to provide a range of likely policy impacts. A policy that increases per-pupil spending for four years will improve test scores 92 percent of the time, and educational attainment even more often. We find suggestive evidence consistent with small possible publication bias, but demonstrate that any effects on our estimates are minimal.
We examine the impact of wind energy installation on school district finances and student achievement using data on the timing, location, and capacity of the universe of U.S. installations from 1995 through 2017. Wind energy installation substantially increased district revenues, causing large increases in capital outlays, but only modest increases in current spending, and little to no change in class sizes or teacher salaries. We find zero impact on student test scores. Using administrative data from Texas, the country’s top wind energy producer, we find zero impact of wind energy installation on high school completion and other longer-run student outcomes.
We examine U.S. children whose parents won the lottery to trace out the effect of financial resources on college attendance. The analysis leverages federal tax and financial aid records and substantial variation in win size and timing. While per-dollar effects are modest, the relationship is weakly concave, with a high upper bound for amounts greatly exceeding college costs. Effects are smaller among low-SES households, not sensitive to how early in adolescence the shock occurs, and not moderated by financial aid crowd-out. The results imply that households derive consumption value from college and household financial constraints alone do not inhibit attendance.
How are teacher pension benefits funded? Under traditional plans, the full cost of a career teacher’s benefits far exceeds the contributions designated for them. The gap between the two has three pieces, which may (with some license) be mnemonically tagged the three R’s of pension funding: Redistribution, Return, and Risk. First, some contributions made for the benefits of short-term teachers are Redistributed to fund the benefits of career teachers. Second, pension plans assume rosy Returns on their investments, which push costs onto future teachers and taxpayers. Finally, the Risk inherent in providing guaranteed pensions carries other costs, tangible and intangible, notably including the non-trivial risk of insolvency, which would dramatically raise mandated contributions and endanger future teacher benefits. I quantify these three components of the gap between benefits and contributions using the same metric as annual contributions. Illustrating with the California plan, I find the full cost of a career teacher’s annual accumulation of benefits can be as high as 46.6 percent of earnings, nearly triple the corresponding contributions of 17.5 percent. To understand this gap, which fiscally impacts all areas of education policy, researchers and practitioners may find it helpful to think of the three R’s of pension funding: Redistribution, Return, and Risk.
This article asks whether small changes to community college courses and programs can help improve student outcomes. We use administrative data from the California Community College system, including millions of student records and detailed course-level information for most career-technical education programs in the state. We construct a summary measure of each program’s flexibility, incorporating many components of the availability and scheduling of its courses. We show considerable variation in this flexibility measure across programs and over time. An increase in a program’s flexibility is associated with increases in enrollment and completions, but not with changes in its completion rate.
For years Georgia's HOPE Scholarship program provided full tuition scholarships to high achieving students. State budgetary shortfalls reduced its generosity in 2011. Under the new rules, only students meeting more rigorous merit-based criteria would retain the original scholarship covering full tuition, now called Zell Miller, with other students seeing aid reductions of approximately 15 percent. We exploit the fact that two of the criteria were high school GPA and SAT/ACT score, which students could not manipulate when the change took place. We compare already-enrolled students just above and below these cutoffs, making use of advances in multi-dimensional regression discontinuity, to estimate effects of partial aid loss. We show that, after the changes, aid flowed disproportionately to wealthier students, and find no evidence that the financial aid reduction affected persistence or graduation for these students. The results suggest that high-achieving students, particularly those already in college, may be less price sensitive than their peers.
One frequently cited yet understudied channel through which money matters for college students is course availability- colleges may respond to budgetary pressure by reducing course offerings. Open admissions policies, binding class size constraints, and heavy reliance on state funding may make this channel especially salient at community colleges, which enroll 47% of U.S. undergraduates in public colleges and 55% of underrepresented minority students. We use administrative course registration data from a large community college in California to test this mechanism. By exploiting discontinuities in course admissions created by waitlists, we find that students stuck on a waitlist and shut out of a course section were 25% more likely to take zero courses that term relative to a baseline of 10%. Shutouts also increased transfer rates to nearby, but potentially lower quality, two-year colleges. These results document that course availability- even through a relatively small friction- can interrupt and distort community college students’ educational trajectories.