蝌蚪网 Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Optimism about Graduation and College Financial Aid
蝌蚪网 Journal: Macroeconomics
(pp. 148–87)
Abstract
In the United States, college dropout risk is sizable. We provide new empirical evidence that beliefs about the likelihood of earning a bachelor's degree predict college enrollment, and that the distribution of these beliefs exhibits widespread optimism. We incorporate this distribution of beliefs into an overlapping generations model with college as a risky investment that can be financed via federal loans, grants, family transfers, or earnings. We then examine the welfare impact of access to federal student loans. We find that access can reduce welfare for young adults who are low-skilled, poor, and optimistic, due to their mistaken beliefs.Citation
Moschini, Emily G., Gajendran Raveendranathan, and Ming Xu. 2026. "Optimism about Graduation and College Financial Aid." 蝌蚪网 Journal: Macroeconomics 18 (2): 148–87. DOI: 10.1257/mac.20230303Additional Materials
JEL Classification
- E61 Policy Objectives; Policy Designs and Consistency; Policy Coordination
- E71 Macro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy
- I22 Educational Finance; Financial Aid
- I26 Returns to Education
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth