Does More Generous Student Aid Increase Enrolment Rates into Higher Education? Evaluating the German Student Aid Reform of 2001

Abstract

Students from low-income families are eligible to student aid under the federal students' financial assistance scheme (BAfoeG) in Germany. We evaluate the effectiveness of a recent reform of student aid that substantially increased the amount received by eligible students to raise enrolment rates into tertiary education. We view this reform as a "natural experiment" and apply the difference-in-difference methodology using a discrete-time hazard rate model to estimate the causal effect on enrolment rates into higher education. We find that the reform had a small positive but statistically insignificant effect on enrolment rates.

Keywords: educational transitions, educational finance, natural experiment

JEL Classification: H31, I28, I22, J24