Student Aid Reforms in Quebec: Is Changing the Clawback Rate Better than Changing the Base Grant?

Pier-André Bouchard St-Amant and Hugo Morin

Canadian Public Policy, 2021, vol. 47, issue 3, 373-398

Abstract: We examine two ways through which student financial aid can be reformed: a cut in the rate at which the aid is clawed back with earned income or an increase in the threshold at which this clawback applies. We present a theoretical and empirical analysis of these options. We show that both reduce incentives to work, although the clawback rate does so less. Cuts to clawbacks also deliver a bigger boost to financial aid for those most in need, although they may benefit students higher in the income distribution. We argue that governments might consider a policy that reduces clawback rates, but within a reasonable range of earned income.

Keywords: student financial aid; policy reforms; incentives; efficiency (search for similar items in EconPapers)
Date: 2021
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