Enlist or enroll: Credit constraints, college aid, and the military enlistment margin

• Individuals may enlist to overcome financial constraints that delay college enrollment.
• Some financial aid programs allow individuals to delay receipt until after military enlistment.
• Availability of aid reduces the likelihood of military enlistment for those likely to be eligible.
• The reductions in enlistment are largest in low-income areas, where constraints are most likely.

Money for education is a primary motivation for military enlistment. One explanation is that individuals use these benefits to overcome borrowing constraints. I explore this by examining the enlistment response of individuals to additional financial aid that can be used immediately upon high-school graduation or delayed until after military enlistment. I find that the introduction of a merit-aid program decreases the probability that a male enlists in the military by 0.6 percentage points (a 6% reduction), and that these effects are concentrated among applicants who are more likely to qualify for merit scholarships. The reductions are largest in low-income areas, supporting the argument that the effects on enlistment are a result of easing financial constraints.