Can I Afford College? How Students’ Perceived Ability to Pay Shapes Postsecondary Outcomes and the Role of Policy

Abstract

Low- to moderate-income children who are qualified for college are far less likely to attend college and graduate than high-income children due, in part, to concerns about the cost of college (Advisory Committee on Student Financial Assistance, 2010). While many financial aid resources can make college affordable to many low-income children, the complexity of aid programs and eligibility requirements makes it difficult to understand the cost of higher education, whether it's affordable, and which colleges are affordable (Goldrick-Rab & Kolbe, 2016). When students lack clarity on the affordability of college, they may think they cannot afford it and decide not to pursue higher education. While prior research on financial aid and college access acknowledges the importance of student’s perceived ability to pay for college in shaping educational outcomes, it has not empirically evaluated this construct as a distinct mechanism, separate from actual ability to pay, and has rarely considered how policy can influence it. This dissertation addresses this gap by exploring how high school students’ perceived ability to pay for college shapes their postsecondary outcomes and the role that policy can play in shaping high school students’ perceived ability to pay, thereby affecting their college-going expectations, and college enrollment. Chapter 1 of this dissertation models the relationship between a student’s socioeconomic status (SES) when in high school, perceived ability to pay for college, and their later post-secondary outcomes (i.e. enrollment and degree attainment) using a structural equation model and a large nationally representative longitudinal survey spanning 2009 to 2021. Findings indicate that perceived ability to pay mediates approximately 38% of SES’s effect on students’ college-going expectations and between 8% and 19% of its effect on postsecondary enrollment and degree attainment, depending on the outcome measured. The findings suggest that public policies aiming to improve postsecondary outcomes among low-SES students must address not only financial barriers but also students’ perceptions of their ability to pay. Chapter 2 of this dissertation examines the implementation of a new child development policy in California, which aims to support college-going among low-income students by providing universal, progressive education savings accounts. Using a mixed-methods approach—including administrative data analysis, surveys, and interviews with program participants and staff—I explore how CalKIDS is being implemented, how students perceive the program, and what barriers may be limiting account claiming and fund use. Findings reveal that while the process of claiming accounts is generally easy for students, limited program awareness remains a primary obstacle to broader reach, largely due to constrained marketing resources and limited staff. Additionally, program administrators raised concerns that fund utilization among the eligible population is significantly lower than expected. Investigating this, I find that young adults who are eligible to use their funds are not experiencing issues with withdrawing funds—instead, many students choose to save their funds for future use, perceiving CalKIDS as a form of emergency savings for later in their educational journey, particularly when transferring to four-year institutions. Last, I highlight several program design features which create implementation challenges and may reduce the value of the program—such as logistical delays in processing distribution requests and confusion about eligibility rules—and provide recommendations for improvement. Despite these limitations, I find that students overwhelmingly view CalKIDS as a helpful and motivating source of support. Chapter 3 of this dissertation examines the effect of a new FAFSA completion policy in California that aims for every high school senior to complete a FAFSA or the state financial aid form. This policy represents a major effort to increase college-going by ensuring that students learn their specific net cost of college, after accounting for financial aid. Using a panel of nearly all California high schools from 2017–18 through 2023–24, I estimate the policy's effects on FAFSA submissions, financial aid awards, and college enrollment using two quasi-experimental methods. Specifically, I use difference-in-differences and instrumental-variable designs to identify the causal impact of the policy. Results show that the policy significantly increased FAFSA and Cal Grant submissions, but had no effect on Cal Grant awards, and only modest positive effects on college enrollment. This research aims to provide critical insights for state, local, or national policymakers seeking to improve educational access for young adults from low-income backgrounds. By analyzing the role that perceived ability to pay for college plays in shaping college-going expectations and enrollment, Chapter 1 illuminates how policies and interventions can improve academic outcomes by targeting students’ perceived ability to pay. By conducting a process evaluation of a CDA policy, Chapter 2 improves our understanding of how students perceive the benefits of CDA programs, identifies areas for strengthening CDA program implementation in California, and informs the work of agencies nationwide that implement CDAs. Last, by examining the effect of a FAFSA completion policy in Chapter 3, this research illuminates how such policies can increase college enrollment by helping students understand the net cost of college after financial aid is applied. Ultimately, by understanding the complex interplay between socioeconomic status, perceived ability to pay for college, educational attainment, and policy interventions, it is possible to help promote a more equitable and inclusive society where every child has the opportunity to climb the economic ladder.