We examine the long-term impacts of California’s state-based financial aid by tracking educational and labor force outcomes for up to 14 years after high school graduation. We identify program impacts by exploiting variation in eligibility rules using GPA and family income cutoffs that are ex ante unknown to applicants. Aid eligibility increases undergraduate and graduate degree completion, and for some subgroups, raises longer-run annual earnings and the likelihood that young adults reside in California. These findings suggest that the net cost of financial aid programs may frequently be overstated, though our results are too imprecise to provide exact cost-benefit estimates. (JEL H75, I21, I22, I23, I26, I28)

, and West Point. We also thank the College Board for sharing data and Melanie Rucinski for providing excellent research assistance. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

This paper examines the Oregon Promise, a state‐level program that exclusively subsidizes in‐state community college attendance. I estimate impacts using a difference‐in‐difference design that links students in states with essentially universal 10th‐grade PSAT coverage to national‐level postsecondary enrollment data. I find that the implementation of the Oregon Promise increased enrollment at two‐year colleges by roughly four to five percentage points for the first two eligible cohorts. In the first year of the program, the increase in community college enrollment comes primarily from students shifting out of four‐year colleges, whereas in the second year the program predominately increases overall postsecondary enrollment.

By examining the college attendance patterns of youth who came of age during the Great Recession, our study investigates the economic factors in emerging adulthood that may contribute to the limited upward educational mobility experienced by a contemporary cohort of young adults. Drawing on telephone survey and in-depth interview data gathered from 18-to 26-year-olds, we analyze patterns of stopping out-or leaving college with intentions to return. Our findings demonstrate that financial considerations in emerging adulthood-including receipt of government financial aid, attending to family financial obligations, paying for housing expenses, and rising tuition rates-play a key role in shaping pathways through community and 4-year colleges. We argue that in seeking to understand inequality in educational and labor outcomes, researchers should make conceptual distinctions between financial factors connected to an individual's family background, and related, but temporally distinct financial issues experienced during the transition to adulthood.