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Economic Brief

March 4, 2020

Richmond Fed Research Suggests More-Targeted College Subsidies

Based on a model of college-enrollment decisions, the Richmond Fed’s latest Economic Brief calculates that the value students place on higher education varies greatly from person to person. The model suggests that this variation is large enough to allow improved overall outcomes while preserving enrollment choices – by redirecting benefits to those who don’t attend college even with current levels of public subsidies.

Although this finding is theoretical, rather than empirical, it suggests that more-targeted subsidies have the potential to improve outcomes in the real world.

The Richmond Fed’s Economic Brief series provides web-exclusive essays on economic issues and trends. Sign up to receive an email notification when a new essay is posted.


As part of our nation’s central bank, the Richmond Fed is one of 12 regional Reserve Banks working together with the Board of Governors to support a healthy economy and deliver on our mission to foster economic stability and strength. We connect with community and business leaders across the Fifth Federal Reserve District — including the Carolinas, District of Columbia, Maryland, Virginia, and most of West Virginia — to monitor economic conditions, address issues facing our communities, and share this information with monetary and financial policymakers. We also work with banks to ensure they are operating safely and soundly, supply financial institutions with currency that’s fit for distribution, and provide a safe and efficient way to transfer funds through our nation’s payments system.

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Jim Strader (804) 697-8956 (804) 332-0207 (mobile)