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Money for nothing: estimating the impact of student aid on participation in Higher Education

Author

Listed:
  • Lorraine Dearden

    () (Department of Quantitative Social Science, Institute of Education, University of London)

  • Emla Fitzsimons

    () (Institute of Fiscal Studies)

  • Gill Wyness

    () (London School of Economics)

Abstract

Understanding how finance policy can affect higher education 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 on 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 re-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 its effects on degree participation. We find a positive impact of maintenance grants on degree participation, with a £1,000 increase in grants leading to a 3.95ppt increase in participation. This finding is in line with US studies.

Suggested Citation

  • Lorraine Dearden & Emla Fitzsimons & Gill Wyness, 2013. "Money for nothing: estimating the impact of student aid on participation in Higher Education," DoQSS Working Papers 13-04, Department of Quantitative Social Science - UCL Institute of Education, University College London.
  • Handle: RePEc:qss:dqsswp:1304
    as

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    References listed on IDEAS

    as
    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.
    2. Helena Skyt Nielsen & Torben Sørensen & Christopher Taber, 2010. "Estimating the Effect of Student Aid on College Enrollment: Evidence from a Government Grant Policy Reform," NBER Chapters,in: Income Taxation, Trans-Atlantic Public Economics Seminar (TAPES), pages 185-215 National Bureau of Economic Research, Inc.
    3. Neil S. Seftor & NSarah E. Turner, 2002. "Back to School: Federal Student Aid Policy and Adult College Enrollment," Journal of Human Resources, University of Wisconsin Press, vol. 37(2), pages 336-352.
    4. Pedro Carneiro & James J. Heckman, 2002. "The Evidence on Credit Constraints in Post--secondary Schooling," Economic Journal, Royal Economic Society, vol. 112(482), pages 705-734, October.
    5. Thomas J. Kane, 1995. "Rising Public College Tuition and College Entry: How Well Do Public Subsidies Promote Access to College?," NBER Working Papers 5164, National Bureau of Economic Research, Inc.
    6. Haroon Chowdry & Claire Crawford & Lorraine Dearden & Alissa Goodman & Anna Vignoles, 2013. "Widening participation in higher education: analysis using linked administrative data," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 176(2), pages 431-457, February.
    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.
    13. Hemelt, Steven W. & Marcotte, Dave E., 2008. "Rising Tuition and Enrollment in Public Higher Education," IZA Discussion Papers 3827, Institute for the Study of Labor (IZA).
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    Cited by:

    1. 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.
    2. repec:oup:jecgeo:v:17:y:2017:i:5:p:1075-1110. is not listed on IDEAS
    3. 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.
    4. 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.
    5. 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.
    6. Steven Bradley & Giuseppe Migali, 2017. "The Effects of the 2006 Tuition Fee Reform and the Great Recession on University Student Dropout Behaviour in the UK," Working Papers 149346773, Lancaster University Management School, Economics Department.
    7. 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.
    8. 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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