Model Mis-Specification In Assessing The Impact of Financial Aid on Academic Outcomes

Author: Sigal Alon

Source: Research in Higher Education, Volume 46, Number 1, February 2005 , pp. 109-125(17)

Publisher: Springer

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Abstract:

The focus of the paper is the development of a novel conceptual framework that aims to remedy a critical mis-specification in prior research on the impact of financial aid on academic outcomes: the blending of the effect of aid eligibility with the influence of aid amounts on academic outcomes. To assess the impact of aid amounts received on college graduation while considering aid receipt status as an endogenous variable, I use the procedure of Instrumental Variable Probit. Empirical illustration of this model confirms that the interrelationships between aid eligibility and graduation mask the positive impact of financial aid on graduation.

Keywords: financial aid; college graduation; selection bias; endogenous variable; instrumental variable probit

Document Type: Research article

DOI: http://dx.doi.org/10.1007/s11162-004-6291-x

Affiliations: 1: Department of Sociology and Anthropology, Tel Aviv University, Ramat Aviv, Tel Aviv, 69978, Israel, Email: salon1@post.tau.ac.il

Publication date: 2005-02-01