Income-based scholarships and access to higher education

Abstract

Financial aid to college students has been widely implemented by governments in developed and emerging economies in an attempt to reduce the entry barriers to higher education (HE). Understanding the extent to which these policies enable access to HE is crucial in order to unravel the effectiveness of such investments on promoting human capital accumulation. In this paper, we address this issue by employing a difference-in-differences framework to investigate the impacts of the Prouni, a Brazilian federal program created in 2005 that grants full and partial college scholarships to students from low-income families. We provide causal evidence that, by 2007, the full Prouni scholarship had increased the odds of enrolling in HE by 37%, while the partial Prouni scholarship had increased these odds by 20%; and that every USD 100 million spent by the government with Prouni’s tax waivers, generated an approximate 0.5 percentage points increase in the HE enrolment rate of academic age individuals (or, equivalently, every USD 1,000 per student increased this rate in 1.3 percentage points). Also, our findings suggest that the impacts of the grants on access to HE were greater for women and for non-white individuals.