Evaluation of Aimhigher:Excellence Challenge: economic evaluation of opportunity bursaries

<p>This paper looks at the impact of Opportunity Bursaries on young adults who received payments in 2001-02 and 2002-03. Both linear regression and propensity score matching techniques are used to compare to outcomes of individuals in receipt </p><p>of an Opportunity Bursary with those who were eligible for the policy but not able to </p><p>receive it since only a limited number were available.</p> </p><p><p>We find some evidence that the policy has lead to increased retention in the </p><p>first year of university study - using a linear regression technique we find a </p><p>statistically significant increase of 2.6 percentage points while using propensity score </p><p>matching we find an increase of 1.6 percentage points, although this latter result was </p><p>not statistically significant at conventional levels. We also find some evidence that </p><p>receipt of an Opportunity Bursary led to lower levels of debt - in particular 'liquid </p><p>debt' defined as bank overdrafts or credit card debt.</p> </p><p><p>The evidence suggests that the majority of the £1,500 that will have been paid </p><p>to recipients by the time of our survey has been spent which is consistent with students </p><p>facing credit constraints. The fact that they will receive a further £500 in the following </p><p>year, and that their lower levels of debt may enable them to borrow more if needed, </p><p>suggests that those in receipt of an Opportunity Bursary should be better placed to </p><p>complete their course. Opportunity Bursaries are also found to be associated with </p><p>lower average parental financial support.</p> </p><p><p>An assessment of whether the benefits of the policy in terms of increased </p><p>lifetime wages are sufficient to justify the total £2,000 Opportunity Bursary payments </p><p>and the loss of wages while additional individuals choose to attend Higher Education </p><p>is not possible without an estimate of the increase in numbers completing Higher </p><p>Education as a result of receiving an Opportunity Bursary. However a simple cost </p><p>benefit calculation suggests that to justify Opportunity Bursaries on the sole basis of </p><p>the increased (gross) wages of those who complete Higher Education as a direct result </p><p>of the policy would require the policy to increase Higher Education completion among </p><p>those eligible for the policy by at least 2.7% if the required rate of return was 2½% a </p><p>year. The required impact of the policy on those eligible for it is estimated to rise to </p><p>3.5% if the required rate of return was 3½% and 5.1% if the required real rate of return </p><p>was 5% a year.</p>