This paper studies the equilibrium effects of the Gainful Employment Rule (GER), the largest quality regulation policy in the U.S. higher education market. The rule required for-profit institutions to meet quality standards to retain access to their primary source of revenue: federal student aid. Using administrative data and an event-study design, I find that the GER increased for-profit exit rates by 5 percentage points, while surviving institutions reduced prices and enrollment by 4% and 20%, respectively. Untargeted competitors raised prices without enrollment losses, consistent with increased market power. Informed by these event-study estimates, I develop an equilibrium model of demand and supply with endogenous exit and a quality constraint to evaluate how counterfactual levels of regulatory stringency shape the distribution of value-added within an equity–efficiency framework. I show that tuning regulatory stringency can increase equity without reducing efficiency.

This paper examines the effects of a large need-based scholarship in Michigan, the Tuition Incentive Program (TIP). TIP covers in-district community college tuition and fees, can be stacked on top of most other financial aid sources (such as the Federal Pell Grant), bases eligibility on categorical participation in Medicaid, does not require annual certification of need, and communicates eligibility early in students’ academic career. Despite these advantageous features, participation in the program remains low. Using linked administrative data on 1.2 million Michigan high school graduates, we find null effects on enrollment with a regression discontinuity design but positive effects using a matching approach. These contrasting results suggest that students on different margins may vary in their awareness of the program. To reconcile these findings, we develop and estimate a structural model of college choice with endogenous aid take-up, in which students form beliefs about potential aid from noisy signals. Signal precision depends on individual- and school-level factors driving awareness, such as attachment to the safety net and presence of high school counselors. The model will permit us to simulate policies that improve awareness and reduce application barriers.