Tertiary Education Completion and Financial Aid Assistance: Evidence from an Information Experiment

TL;DR

This study investigates how targeted information provision influences disadvantaged students' academic performance and dropout rates, revealing that information about meeting academic requirements boosts motivation and completion.

Contribution

It provides experimental evidence that informing students about academic requirements, rather than labor market returns, improves educational outcomes among financially aided students.

Findings

Providing information on academic requirements increases credits obtained.

Such information reduces dropout probability by about 4 percentage points.

The positive effects are mediated by increased student aspirations.

Abstract

Understanding the role of information among disadvantaged students is crucial in explaining their investment decisions in higher education. Indeed, information barriers on the returns and the gains from completing college may explain a substantial share of variation in students' degree completion. We conduct a field experiment with 7,806 university students in Italy who benefit from financial aid assistance, by providing information, either on the labor market returns of completing college or on the education returns of meeting the academic requirements attached to the financial aid. Our results suggest that only the latter information treatment has a positive effect on academic performance, increasing the number of credits obtained by around 3, and by decreasing the probability of dropout by around 4 percentage points. We also find that the results are mediated by an aspiration lift generated by our treatment.