A large body of research focuses on two important rationales for government subsidies to college students: positive fiscal externalities from a larger tax base, and liquidity constraints among students. This paper provides a first attempt to gauge the relative importance of these mechanisms. I...

Altruistic parents, who differ in income, make financial transfers to their children, who differ in ability. The children invest in post-compulsory education, subject to an endogenous credit constraint, and taking policy as given. There are two policy tools: a subsidy to those who participate in...