Financial Aid, and the Supply and Demand for Higher Education

Cauê Dobbin

Governments use student loans to promote access to higher education worldwide. However, the net increase in access can be substantially smaller than the number of beneficiaries, for at least two reasons. First, some of the beneficiaries would otherwise pay out-of-pocket. Second, institutions may raise tuition or reduce student aid. In my dissertation, I investigate the equilibrium effects of government-funded student loans and use my findings to propose an efficient allocation of these loans. I exploit a drastic contraction in the Brazilian student loan program. I show that institutions responded to the contraction by reducing tuition and offering additional scholarships. Our results suggest that 65% of loan beneficiaries would enroll in the same degree in the absence of federal loans. I then develop a model of the supply and demand for higher education, which I estimate by leveraging natural experiments created by discontinuities in the rule that allocates government loans. Using this framework, I show how governments can allocate loans to promote access at a lower fiscal cost.

About Cauê Dobbin

Cauê Dobbin is a Ph.D. student in economics at Stanford University, with a research focus on the economics of education and its relationship with inequality and development. His work combines economic theory and big data to shed light on some of the most pressing issues of our time, such as student loans, migration restrictions, and affirmative action. Dobbin has taught a wide range of courses in economics at Stanford, which recognized him with an award for outstanding teaching in 2019. He holds a B.A. from the University of Brasilia and an M.A. from the Pontifical Catholic University of Rio de Janeiro, both in economics.