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Testing means-tested aid

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  • Murphy, Richard
  • Wyness, Gill

Abstract

Billions of pounds per year is spent on aid for poor students in HE systems around the world, yet there remains limited evidence on the causal effect of these payments, particularly on the intensive margin. This is an empirical challenge since student aid is correlated with characteristics which influence both college enrolment and achievement. We overcome these challenges by studying a unique form of non-linear means tested financial aid which is unadvertised, varies substantially across institutions, and is subject to shifts in generosity across cohorts. Using student-level administrative data collected from 10 English universities, we study the effects of aid receipt on college completion rates, annual course scores, and degree class, using fixed effects and instrumental variables methods. Our findings suggest that each £1,000 of financial aid awarded increases the chances of gaining a good degree by around 3 percentage points, driven by completion of the final year and course scores.

Suggested Citation

  • Murphy, Richard & Wyness, Gill, 2015. "Testing means-tested aid," LSE Research Online Documents on Economics 66060, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:66060
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    Cited by:

    1. José Montalbán, 2019. "Countering moral hazard in higher education: The role of performance incentives in need-based grants," Working Papers halshs-02160365, HAL.
    2. Judith M. Delaney & Paul J. Devereux, 2020. "How Gender and Prior Disadvantage Predict Performance in College," The Economic and Social Review, Economic and Social Studies, vol. 51(2), pages 189-239.
    3. Gustave Kenedi, 2024. "Beyond the enrolment gap: Financial barriers and high-achieving, low-income students' persistence in higher education," CEP Discussion Papers dp1987, Centre for Economic Performance, LSE.
    4. José Montalbán, 2019. "Countering moral hazard in higher education: The role of performance incentives in need-based grants," PSE Working Papers halshs-02160365, HAL.
    5. Solis, Alex, 2019. "Measuring the Effect of Student Loans on the College Dropout Rate," Working Paper Series 2019:8, Uppsala University, Department of Economics.
    6. Bietenbeck, Jan & Leibing, Andreas & Marcus, Jan & Weinhardt, Felix, 2023. "Tuition fees and educational attainment," European Economic Review, Elsevier, vol. 154(C).
    7. Murphy, Richard & Scott-Clayton, Judith & Wyness, Gill, 2019. "The end of free college in England: Implications for enrolments, equity, and quality," Economics of Education Review, Elsevier, vol. 71(C), pages 7-22.
    8. Richard Murphy & Pedro Luís Silva, 2024. "Keeping It in the Family: Student to Degree Match," CESifo Working Paper Series 11075, CESifo.
    9. Nicholas A. Wright & Akeem Carter, 2024. "Who Benefits Most? Examining the Heterogeneous Impact of a Need-Based Grant Program in Jamaica," Working Papers 2412, Florida International University, Department of Economics.
    10. Berens, Johannes & Henao, Leandro & Schneider, Kerstin, 2024. "Tuition fees and academic (in)activity in higher education: How did students adjust to the abolition of tuition fees in Germany?," Ruhr Economic Papers 1074, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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    More about this item

    Keywords

    higher education; financial aid; degree completion;
    All these keywords.

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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