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CEP discussion paper
Testing means-tested aid
Richard Murphy and Gill Wyness
December 2015
Paper No' CEPDP1396:
Full Paper (pdf)

JEL Classification: I22; I23; I28

Tags: higher education; education; financial aid; degree completion

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.