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Can student loans improve accessibility to higher education and student performance? An impact study of the case of SOFES, Mexico

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  • Canton, Erik
  • Blom, Andreas

Abstract

Financial aid to students in tertiary education can contribute to human capital accumulation through two channels: increased enrollment and improved student performance. We analyze the quantitative importance of both channels in the context of a student loan program (SOFES) implemented at private universities in Mexico. With regard to the first channel, enrollment, results from the Mexican household survey indicate that financial support has a strong positive effect on university enrollment. Given completion of upper secondary education, the probability of entering higher education rises 24 percent. Two data sourcesare used to investigate the second channel, student performance. Administrative data provided by SOFES are analyzed using a regression-discontinuity design, and survey data enable us to perform a similar analysis using a different control group. Empirical results suggest that SOFES recipients show better academic performance than students without a credit from SOFES. However, the results cannot be interpreted as a purely causal impact of the student loan program, since the impacts also could reflect (self-) selection of students.

Suggested Citation

  • Canton, Erik & Blom, Andreas, 2004. "Can student loans improve accessibility to higher education and student performance? An impact study of the case of SOFES, Mexico," Policy Research Working Paper Series 3425, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3425
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    1. David S. Lee & Thomas Lemieux, 2009. "Regression Discontinuity Designs In Economics," Working Papers 1118, Princeton University, Department of Economics, Industrial Relations Section..
    2. Elena Del Rey & Bertrand Verheyden, 2008. "Loans, Insurance and Failures in the Credit Market for Students," Working Papers 359, Barcelona School of Economics.
    3. Mourifié, Ismael, 2015. "Sharp bounds on treatment effects in a binary triangular system," Journal of Econometrics, Elsevier, vol. 187(1), pages 74-81.
    4. Murakami, Yuki & Blom, Andreas, 2008. "Accessibility and affordability of tertiary education in Brazil, Colombia, Mexico and Peru within a global context," Policy Research Working Paper Series 4517, The World Bank.
    5. 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.
    6. Erik Canton & Bert Minne & Ate Nieuwenhuis & Bert Smid & Marc van der Steeg, 2005. "Human capital, R&D, and competition in macroeconomic analysis," CPB Document 91.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    7. Mauricio Villamizar‐Villegas & Freddy A. Pinzon‐Puerto & Maria Alejandra Ruiz‐Sanchez, 2022. "A comprehensive history of regression discontinuity designs: An empirical survey of the last 60 years," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 1130-1178, September.
    8. Remberto De la Hoz Reyes & José L. Ramos Ruiz, 2013. "La política de educación superior en el fortalecimiento de las instituciones técnicas y tecnológicas en Colombia," Revista de Economía del Caribe 14756, Universidad del Norte.
    9. David S. Lee & Thomas Lemieux, 2010. "Regression Discontinuity Designs in Economics," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 281-355, June.
    10. Marc Gurgand & Adrien Lorenceau & Thomas Mélonio, 2011. "Student loans: Liquidity constraint and higher education in South Africa," Working Papers halshs-00590898, HAL.
    11. World Bank, 2010. "Reform and Regional Integration of Professional Services in East Africa : Time for Action," World Bank Publications - Reports 2957, The World Bank Group.
    12. Guilherme Strifezzi Leal & Ã lvaro Choi, 2022. "Income-based scholarships and access to higher education," UB School of Economics Working Papers 2022/420, University of Barcelona School of Economics.
    13. Rodrigo Azuero & David Zarruk Valencia, 2016. "The Effects of Student Loans on the Provision and Demand for Higher Education," PIER Working Paper Archive 17-020, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 22 Oct 2017.
    14. Han, Sung min, 2016. "Student Academic Performance, Dropout Decisions and Loan Defaults: Evidence from the Government College Loan Program," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 38(1), pages 71-91.
    15. Pilar Beneito & Inés Rosell, 2018. "Gender responses to competitive pressure in college: a regression discontinuity design," Discussion Papers in Economic Behaviour 0518, University of Valencia, ERI-CES.
    16. A.R.S. Ibn Ali, 2021. "Financial behavior for status seeking purposes of consumers in emerging markets. A case study of suburban Jakarta, Indonesia," Discussion Papers in Economics and Business 21-21, Osaka University, Graduate School of Economics.
    17. Marc van der Steeg, 2005. "Why should governments intervene in education, and how effective is education policy," CPB Memorandum 122, CPB Netherlands Bureau for Economic Policy Analysis.

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