| This thesis explores some of the ramifications of federal financial aid on higher education. I focus on the Pell Grant Program and its impact on three of the major actors in postsecondary education: colleges, students, and their families. I use a new, comprehensive data set to construct simulated instrumental variables, to better estimate the effect of legislative changes in the Pell Grant program on the behavior of these three groups.;The first chapter analyzes the effect of Pell Grants on college tuitions. I test whether institutions raise their tuitions in order to capture the federal subsidies to higher education. The results indicate that an increase in federal financial aid may lead to an increase in the price that private four-year and public four-year colleges charge.;The second chapter estimates the effect of Pell Grants on student persistence and completion. I estimate that a ;The third chapter explores the impact of Pell Grants on the earnings and savings of students and their families. I find that as Pell Grants increase, individuals respond by increasing their earnings and savings. |
