New Department Working Paper: Gajendran Raveendranathan

We have a new working paper from Gajendran Raveendranathan!

College Financial Aid Application Frictions

Gajendran Raveendranathan is an Assistant Professor for the Department of Economics. His research interests are Heterogeneous Agent Macroeconomics with a focus on consumer credit, post-secondary education, macro health care, and firm dynamics.

His working paper is titled, “College Financial Aid Application Frictions” with Emily G. Moschini.

Abstract

We show that 11 percent of recent US high school graduates did not apply for federal financial aid due to mistakenly believing themselves ineligible or finding applying too difficult. Not applying for aid due to these frictions negatively predicts bachelor’s degree enrollment, even after controlling for other attributes. We embed aid application frictions into a structural model of college enrollment where federal financial aid is determined by the Expected Family Contribution formula. We find that the welfare costs of aid application frictions for affected non-enrollees amounts to 0.5 percent of lifetime consumption and leisure. General equilibrium effects magnify these losses.

For the full set of working papers, visit RePEC/ideas.