Association for Public Policy Analysis & Management

I examine whether student aid impacts achievement differently for low- and high-income students. To estimate the effect of aid, I exploit the eligibility requirements of a state program that awards merit-aid recipients with additional aid if they major in a STEM field. The program's introduction resulted in some students experiencing an exogenous shock to their aid, allowing the achievement effect to be isolated from compositional changes. Utilizing a triple-difference design, the results show that, among merit-aid recipients, student aid benefits low-income students only, increasing their GPAs and graduation prospects. These students may respond to the additional aid by working less.