Common use of Administrative data Clause in Contracts

Administrative data. Over the first two years of the program, 860 students submitted an application, were found to eligible, and received a disclosure. These students came from 125 different majors with a 6Participants are required to file US federal income taxes in each year of the income share agreement and are also required to file form 4506-T which gives Purdue access to the W-2 and 1099-MISC forms. wide range of grades. 442 students (51%) chose to participate while 418 chose an alternative way to pay their college expenses. In total, the university dispersed $5.7 million or about $13,000 per participant. Some students applied in both years and so are present in the data twice. In total there are 767 unique students. Table 1 provides summary statistics for the ISA applicants who were eligible for the ISA and received a disclosure. This includes both the ISA participants and non-participants. Summary statistics for the universe of sophomores, juniors, and seniors at Purdue during this time period are also provided for comparison. A greater fraction of the ISA applicants are under-represented minority students than for the student body at large. ISA applicants are also more likely to be first-generation students. Only domestic students are eligible for the program which explains why ISA applicants are less likely to be transfer students and less likely to be non-native English speakers than for the full student population. ISA applicants also tend to have a lower prior-year GPA and SAT scores than the average for Purdue students.7 Table 1 also compares the administrative variable means for the ISA participants and non-participants and reports the p-value for the t-test of equality of means. Overall, the ISA participants are very similar to the non-participants. They have similar SAT scores, are in majors that have similar average starting salaries and similar standard deviation of starting salary, have similar fractions of transfer students and students where English in not their first language. The ISA participants also seem to be in a very similar financial situation as the non-participants. Not only did they both qualify for the ISA, with a remaining financial need of at least $5,000, but they also were offered similar income share percentages (the rate per $10,000 of funding) and were found to be eligible for very similar funding amounts.8 Note also that all ISA applicants have federal student loans and have either hit the maximum 7There are large differences in grade distributions across majors. To account for this, I regress the GPA on indicators for the student’s major and year in school and save the residuals. The prior-year GPA (relative to major) is the sum of the average prior-year GPA and the student-specific residual from this regression. 8Citing federal privacy laws, Purdue University has not provided me with FAFSA details on the ISA applicants. I continue to make requests, but have not been able to obtain this information. amount that they can borrow for the year (which ranges from $5,500 to $12,500) or the maximum amount they can borrow as an undergraduate student (which ranges from $31,000 to $57,500). There are also indications of differences between ISA participants and non-participants. Participants are more likely to be Hispanic, are less likely to be an Indiana resident, are more likely to be a prior ISA participant, and surprisingly have a higher prior-year GPA. Adverse selection suggests that the applicants who choose to participate in the ISA would be of lower, not higher, ability on average. However, 1 shows that the SAT scores and prior-year GPA are higher for the ISA participants, not lower as expected.9 This apparent lack of selection on ability into the ISA program and lack of differences in most of the other characteristics calls for more careful analysis of student selection into the ISA.