Who Does Aid Help? Examining Heterogeneity in the Effect of Student Aid on Achievement
42 Pages Posted: 14 Aug 2018 Last revised: 10 Mar 2019
Date Written: March 7, 2019
Does financial aid impact achievement differently for low- and high-income students? I exploit the eligibility requirements of a state merit-aid program that awards additional aid to STEM majors. A triple-difference design, using administrative data from a large institution and exploiting differences over time, by merit-aid recipient status, and by major type (STEM or non-STEM), shows that student aid increases the GPAs and graduation prospects of low-income students but has little impact on high-income students. Additional analysis suggests that reduction in student part-time work may be a potential mechanism for this differential effect. These results suggest that merit aid programs could be targeted more effectively than most currently are.
Keywords: achievement, heterogeneity by income, student aid
JEL Classification: I22, I24
Suggested Citation: Suggested Citation