Is College Financial Aid Equitable and Efficient

Dados Bibliográficos

ID4029581
AutoresAaron S Edlin (Doctoral student in economics and a law student, Stanford University, Stanford, California; Assistant Professor of Economics, University of California, Berkeley, California., autor correspondente)
Ano1993
Volume7
Fascículo2
Páginas143-158
Data de publicação1993-05-01
Peer ReviewedSim
Open AccessSim
TipoARTICLE
PeriódicoThe Journal of Economic Perspectives (JOURNAL)
Identificadores do periódicoISSN: 0895-3309 • E-ISSN: 1944-7965
EditoraAmerican Economic Association (PUBLISHER • US)
DOI10.1257/jep.7.2.143
OpenAlexW2170266049
IdiomaEN
Citações recebidas4
Referências citadas3

Two families with identical earnings paths pay dramatically different amounts for college if one saves more than the other. Because saving leads to receiving less financial aid, a family's return to saving is substantially below the social return. This may lead to families making inefficient intertemporal choices and correspondingly to an inefficient loss of capital formation. This paper first explores the size of the implicit tax on savings, pointing out its potential effects, and its accompanying problems of inefficiency and unfairness. To cure these ills, I will argue that financial aid for dependent students should be based upon the best available measure of parents' permanent income from long streams of wage data. This would require Congress to change the Congressional Methodology, the federal formula for determining a family's financial need

Earnings · Economics · Inefficiency · Labour economics · Microeconomics · Wage · Financial Literacy, Pension, Retirement Analysis · Fiscal Policy and Economic Growth · Gender, Labor, and Family Dynamics · Finance