In this study, I exploit exogenous differences in institutional policies regarding the treatment of home equity in grant aid allocation to estimate a causal impact of institutional grant aid on college choice. Because institutional grant aid is typically not awarded randomly, the college-estimated home equity value serves as an instrumental…

New evidence on how students' choice of postsecondary institution is sensitive to grant aid offers from the colleges and universities. Institutional aid sensitivity is largest for students from the least wealthy families but does not vary by race/ethnicity or measured academic ability. A technical appendix is included.