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More money, better performance? The effects of student loans and need-based grants in China's higher education

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  • Huang, Wei
  • Li, Fan
  • Liao, Xiaowei
  • Hu, Pingping

Abstract

The goal of this study is to examine the effect of student loans and need-based grants on financially disadvantaged student academic performance in China's higher education. We used a large sampled data from 101 universities to conduct our study. By employing different matching methods, we found that receiving a student loan did not improve student academic performance, but slightly increased students' likelihood of doing a part-time job. Likewise, receiving a need-based grant had no significant effect on student academic performance. We argue that current financial aid programs do not yield any measurable improvement on student performance. Reform and more rigorous evaluations are needed to design an effective financial aid program to promote the development of higher education in China.

Suggested Citation

  • Huang, Wei & Li, Fan & Liao, Xiaowei & Hu, Pingping, 2018. "More money, better performance? The effects of student loans and need-based grants in China's higher education," China Economic Review, Elsevier, vol. 51(C), pages 208-227.
    • Handle: RePEc:eee:chieco:v:51:y:2018:i:c:p:208-227
    DOI: 10.1016/j.chieco.2017.09.005
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