Testing Means-Tested Aid

Richard Murphy and Gill Wyness

Journal of Labor Economics, 2023, vol. 41, issue 3, 687 - 727

Abstract: We estimate the effect of an unexpected institutional financial aid (IFA) award on student outcomes using administrative data collected from nine universities, exploiting variation in IFA schedules within and across university-entry cohorts. Each £1,000 of IFA during the first year of college increases the chances of completing that year by 1.4 percentage points, improves test scores by 0.059 standard deviations, and increases the chances of graduating with a good degree by 3.4 percentage points. We find that high-ability and low-income students benefit the most and calculate outcome-maximizing and cost-minimizing IFA schedules for each university.

Date: 2023
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Related works:
Working Paper: Testing Means-Tested Aid (2016)
Working Paper: Testing Means-Tested Aid (2015)
Working Paper: Testing means-tested aid (2015)
Working Paper: Testing Means-Tested Aid? (2015)
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