How Will I Afford It? Financial Aid and Its Impact on Higher Education: Evidence from the State of Mississippi

Herasymova, Daria (2019) How Will I Afford It? Financial Aid and Its Impact on Higher Education: Evidence from the State of Mississippi. Undergraduate thesis, under the direction of Bonnie Van Ness from Finance, University of Mississippi.


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The cost of higher education, in real terms, doubled in the last twenty years, increasing faster than medical costs, the consumer price index and housing. In 1987, U.S. Secretary of Education, William J. Bennett, in the New York Times article, raised the concern that financial aid has unintended consequences of enabling higher education institution to increase tuition. In this paper, through collection of data and literature review, I examine the drivers behind the rising cost of higher education and test whether the postsecondary institutions in the state of Mississippi exhibit behavior, consistent with the Bennett Hypothesis. Using fixed-effects regression model, I analyzed data from the Integrated Postsecondary Education Data System (IPEDS), Title IV and Mississippi Office of Student Financial Aid annual reports from 2007 to 2016. I found a positive correlation between Pell Grants and tuition-in-state, subsidized loans and tuition out-of-state, consistent with existing research. In addition, I found a positive correlation between state program MESG and tuition-in-state. However, the results were found to vary based on model specification due to data limitations and omitted variable bias.

Item Type: Thesis (Undergraduate)
Creators: Herasymova, Daria
Student's Degree Program(s): B.B.A. in Managerial Finance and Economics
Thesis Advisor: Bonnie Van Ness
Thesis Advisor's Department: Finance
Institution: University of Mississippi
Subjects: H Social Sciences > HG Finance
L Education > L Education (General)
Depositing User: Daria Herasymova
Date Deposited: 16 May 2019 19:48
Last Modified: 16 May 2019 19:48

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