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Money for nothing: Estimating the impact of student aid on participation in higher education

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  • Dearden, Lorraine
  • Fitzsimons, Emla
  • Wyness, Gill

Abstract

Understanding how higher education (HE) finance policy can affect HE decisions is important for understanding how governments can promote human capital accumulation. Yet there is a severe lack of evidence on the effectiveness of student aid in encouraging HE participation outside of the US, and none at all for the UK. This paper exploits a reform that took place in the UK in 2004, when maintenance grants were introduced for students from low income families, having been abolished since 1999. This reform occurred in isolation of any other policy changes, and did not affect students from relatively better off families, making them a potential control group. We use a difference-in-difference framework to estimate the effect of the reform on HE undergraduate participation. We find a positive impact of maintenance grants, with a £1000 increase in grants leading to a 3.95 percentage point increase in participation.

Suggested Citation

  • Dearden, Lorraine & Fitzsimons, Emla & Wyness, Gill, 2014. "Money for nothing: Estimating the impact of student aid on participation in higher education," Economics of Education Review, Elsevier, vol. 43(C), pages 66-78.
  • Handle: RePEc:eee:ecoedu:v:43:y:2014:i:c:p:66-78
    DOI: 10.1016/j.econedurev.2014.09.005
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    References listed on IDEAS

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    1. Dynarski, Susan, 2000. "Hope for Whom? Financial Aid for the Middle Class and Its Impact on College Attendance," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(3), pages 629-662, September.
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    7. Jo Blanden & Stephen Machin, 2013. "Educational Inequality and The Expansion of UK Higher Education," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(5), pages 578-596, November.
    8. Susan M. Dynarski, 2003. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," American Economic Review, American Economic Association, vol. 93(1), pages 279-288, March.
    9. repec:mpr:mprres:3250 is not listed on IDEAS
    10. Lorraine Dearden & Emla Fitzsimons & Alissa Goodman & Greg Kaplan, 2008. "Higher Education Funding Reforms in England: The Distributional Effects and the Shifting Balance of Costs," Economic Journal, Royal Economic Society, vol. 118(526), pages 100-125, February.
    11. Barr, Nicholas & Crawford, Iain, 1998. "The Dearing Report and the government's response : a critique," LSE Research Online Documents on Economics 283, London School of Economics and Political Science, LSE Library.
    12. McPherson, Michael S & Schapiro, Morton Owen, 1991. "Does Student Aid Affect College Enrollment? New Evidence on a Persistent Controversy," American Economic Review, American Economic Association, vol. 81(1), pages 309-318, March.
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    Citations

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    Cited by:

    1. Stephen Machin & Richard Murphy, 2017. "Paying out and crowding out? The globalization of higher education," Journal of Economic Geography, Oxford University Press, vol. 17(5), pages 1075-1110.
    2. Richard Murphy & Gill Wyness, 2016. "Testing Means-Tested Aid," CESifo Working Paper Series 6105, CESifo Group Munich.
    3. Lucia Rizzica, 2018. "Raising aspirations and higher education: evidence from the UK’s Widening Participation policy," Temi di discussione (Economic working papers) 1188, Bank of Italy, Economic Research and International Relations Area.
    4. Richard Murphy & Gill Wyness, 2015. "Testing Means-Tested Aid?," DoQSS Working Papers 15-10, Department of Quantitative Social Science - UCL Institute of Education, University College London.
    5. Estelle Herbaut & Koen Geven, 2019. "What Works to Reduce Inequalities in Higher Education? A Systematic Review of the (Quasi-)Experimental Literature on Outreach and Financial Aid," Sciences Po publications info:hdl:2441/527ht1a96e8, Sciences Po.
    6. 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.
    7. Bradley, Steve & Migali, Giuseppe, 2019. "The effects of the 2006 tuition fee reform and the Great Recession on university student dropout behaviour in the UK," Journal of Economic Behavior & Organization, Elsevier, vol. 164(C), pages 331-356.
    8. A.P. Gorina, 2016. "Issues and Prospectives of the Educational Service Market Modernization," European Research Studies Journal, European Research Studies Journal, vol. 0(3B), pages 227-238.
    9. José García-Montalvo, 2018. "The Impact of Progressive Tuition Fees on Dropping Out of Higher Education: A Regression Discontinuity Design," Working Papers 1017, Barcelona Graduate School of Economics.
    10. Steve Bradley & Giuseppe Migali, 2015. "The Effect of a Tuition Fee Reform on the Risk of Drop Out from University in the UK," Working Papers 86010138, Lancaster University Management School, Economics Department.
    11. José Garcia Montalvo, 2018. "The impact of progressive tuition fees on dropping out of higher education: a regression discontinuity design," Economics Working Papers 1597, Department of Economics and Business, Universitat Pompeu Fabra.

    More about this item

    Keywords

    Higher education participation; Higher education funding policies; Maintenance grants; Difference in differences;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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