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Home Publications Money for nothing: Estimating the impact of student aid on participation in higher education

Money for nothing: Estimating the impact of student aid on participation in higher education

Journal article | Economics of Education Review

Understanding how higher education (HE) finance policy can affect HE decisions 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 in encouraging 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 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 the effect of the reform on HE undergraduate participation. We find a positive impact of maintenance grants, with a £1000 increase in grants leading to a 3.95 percentage point increase in participation