Supplemental Material for "Assessing the College Financial Aid Work Penalty"
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Date
2017-05-20
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Taylor & Francis
Abstract
Working has become commonplace among college students in the United States; however, this activity can have unexpected financial consequences. Federal formulas implicitly tax the amount of financial aid some students are eligible to receive by as much as 50 cents for each marginal dollar of income. In this paper I document this college financial aid “work penalty” and discuss the related incentives for some college students to reduce their income. Using data from a national sample of financially independent college students in the United States, I do not find evidence to suggest that students meaningfully reduce earnings because of implicit taxes. Lack of knowledge, abstruse formulas, and the timing of aid receipt likely limit responses. The reduction in aid has the potential to burden low-income students that need to both work and receive financial aid in order to afford college expenses.
Description
Keywords
college financial aid, educational finance, implicit taxes, working students
Citation
Darolia, Rajeev. (2017) Supplementary Material for "Assessing the College Financial Aid Work Penalty." The Journal of Higher Education, 88 (3), 350-375. https://doi.org/10.1080/00221546.2016.1271696