Non-Take-Up of Student Financial Aid: A Microsimulation for Germany

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract is paper estimates the percentage of students who do not take up their federal need-based student nancial aid entitlements and sheds light on determinants of this behavior. Against the background that educational mobility in Germany is low although extensive student nancial aid for needy students is available, it is crucial to know whether students assert their claims for student aid at all. To investigate non-take-up, we set up a microsimulation model for the German Socio-Economic Panel Study 2002-2013 and estimate the respective aid amounts students would have received, had they led an application for need-based aid. e results indicate that about 40% of the eligible low-income students do not take up their entitlements. We employ instrumental variable techniques and a sample selection model to consider several potential explanatory factors for this behavior. Our results suggest that non-take-up is inversely related to the level of bene ts, though the elasticity is rather low. Apart from that, a shorter expected duration of bene t receipt is related to a higher non-take-up rate, whereas the possibility to draw upon older siblings' experience with completing the complex application for aid is associated with higher probabilities to claim. Moreover, we nd robust evidence that signi cantly more students socialized in the former socialist East Germany choose to take up student aid than similar West German students. Finally, in line with behavioral economic theory, debt aversion of highly impulsive and impatient students is associated with higher rates of non-take-up. Terms of use: Documents inJEL: I22; I23; I24; I38

What Works to Reduce Inequalities in Higher Education? A Systematic Review of the (Quasi-)Experimental Literature on Outreach and Financial Aid

“…Although the complexity of the aid application process has been mainly highlighted in the United States, the non-take-up of financial aid may be a problem relevant to other national contexts. In Germany, for example, a recent simulation estimates that around 40% of the eligible low-income students do not take up their entitlements (Herber & Kalinowski, 2016).…”