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CEP discussion paper

Testing means-tested aid

Inequalities do not end once students enter higher education. Yet, the majority of papers on the effectiveness of higher education aid examine its impact on college enrolment. In this paper, we provide evidence on the causal impact of means-tested but otherwise unconditional financial aid on the outcomes of students who have already enrolled in college. To do so, we exploit a unique non-salient financial aid program which varies both across and within institutions, and for which eligibility is a highly non-linear function of parental income. Using student-level administrative data collected from 9 English universities, we study the effects of aid receipt on college completion rates, annual course scores, and degree quality. Our findings suggest that each £1,000 of financial aid awarded increases the chances of gaining a good degree by around 3.7 percentage points, driven by increases in annual rates of completion and course scores.

Richard Murphy and Gill Wyness

17 December 2015     Paper Number CEPDP1396

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This CEP discussion paper is published under the centre's Education and skills programme.

This publication comes under the following theme: Higher education