Closing the Gap: The Effect of Reducing Complexity and Uncertainty in College Pricing on the Choices of Low-Income Students
Susan Dynarski, Katherine Michelmore, CJ Libassi, and Stephanie Owen. 2021. American Economic Review.
High-achieving, low-income students attend selective colleges at far lower rates than upper-income students with similar achievement. Behavioral biases, intensified by complexity and uncertainty in the admissions and aid process, may explain this gap. In a large-scale experiment we test an early commitment of free tuition at a flagship university. The intervention did not increase aid: rather, students were guaranteed before application the same grant aid that they would qualify for in expectation if admitted. The offer substantially increased application (68 percent versus 26 percent) and enrollment rates (27 percent versus 12 percent). The results suggest that uncertainty, present bias, and loss aversion loom large in students’ college decisions. [Read more]
The Power of Certainty: Experimental Evidence on the Effective Design of Free Tuition Programs
Elizabeth Burland, Susan Dynarski, Katherine Michelmore, Stephanie Owen, & Shwetha Raghuraman. Fort, AER: Insights
Proposed "free college" policies vary widely in design. The simplest approach sets tuition to zero for everyone. More targeted approaches limit free tuition to those who successfully demonstrate need through an application process. We experimentally test the effects of these two models on the schooling decisions of low-income students. An unconditional free tuition offer from a large public university substantially increases application and enrollment rates. A free tuition offer contingent on proof of need has a much smaller effect on application and none on enrollment. The results suggest students place a high value on financial certainty when making schooling decisions. [Read more]