October 14, 2003
Authors Christopher Avery and Caroline Hoxby followed a sample of high achieving students through the college admissions process in 1999-2000. They found that students, for the large part, behaved rationally. They chose the most selective college with the best financial aid package, and avoided less selective schools with fewer aid opportunities.
Consistent with this finding, they found that on the whole, students were more likely to enroll in a college that is their father's alma mater or is a sibling's college.
- Furthermore, they found that students with parents who attended very selective colleges are less attracted to a sibling's college, less attracted to in-state colleges, and more attracted by a college with a median SAT score average above their own.
- Students who came from high income families will focus more on a college's selectivity and are relatively insensitive to college costs and less attracted by aid.
According to the authors, the biggest obstacle to making rational choices was the complication of college application. Students may not be tapping all of their financial aid opportunities because they are "bewildered" by the sheer amount of information needed for financial aid and the complexity of the forms.
Source: Linda Gorman, "Student Aid Packages and College Choices," NBER Digest, August 2003; based upon Christopher Avery and Caroline Hoxby, "Do and Should Financial Aid Packages Affect Students' College Choices," Working Paper No. 9482, February 2003, National Bureau of Economic Research.
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