ORCID
Abstract
In this paper, we use a natural experiment to measure the impact of a transitory positive income shock on college education. On March 11, 2021, the American Rescue Plan Act was signed into law. This act made provisions for the third round of Economic Impact Payment for eligible US residents. Each person in an eligible family received up to $1,400. This stimulus payment was an exogenous positive income shock on US college students if they received the payment. Using primary data collected through a survey, we first investigate how US college students were affected by and responded to this income shock. More specifically, we investigate how much stimulus money ultimately reached the hands of college students and the effect of this income shock on their investments in education, credit hours enrolled, and time to graduate. Only 38% of students received stimulus payments at their disposal and 59% of the stimulus money they received was spent on their education. Among those who received stimulus money, 20.4% reported that it helped them to enroll in more credit hours while 19.8% thought that it helped them to graduate early. The ex-ante perceptions of those who did not receive stimulus money about the expected benefits on their education were stronger than the ex-post perceptions of those who received money.
Recommended Citation
Angadi, Rohan and Tennekoon, Vidhura SBW
(2024)
"The Effect of Stimulus Payments on College Students: Ex-ante Perceptions and Reality,"
Midwest Social Sciences Journal: Vol. 27:
Iss.
1, Article 7.
DOI: https://doi.org/10.22543/2766-0796.1131
Available at:
https://scholar.valpo.edu/mssj/vol27/iss1/7
Included in
Adult and Continuing Education Commons, Behavioral Economics Commons, Cognition and Perception Commons, Economic Policy Commons, Education Economics Commons, Education Policy Commons, Public Economics Commons, Social Welfare Commons
