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Upstream and Downstream Impacts of College Merit-Based Financial Aid for Low-Income Students: Ser Pilo Paga in Colombia
Juliana Londoño-Vélez, Catherine Rodríguez, and Fabio Sánchez
American Economic Journal: Economic Policy. May 2020, Vol. 12, No. 2: Pages 193-227

Upstream and Downstream Impacts of College Merit-Based Financial Aid for Low-Income Students: Ser Pilo Paga in Colombia†

Juliana Londoño-Vélez1, Catherine Rodríguez2 and Fabio Sánchez3

1University of California, Berkeley, 530 Evans Hall, Berkeley, CA 94720-3880 (email: )

2Universidad de Los Andes, Calle 19A # 1-37, Bogota, Colombia (email: )

3Universidad de Los Andes, Calle 19A # 1-37, Bogota, Colombia (email: )

Abstract

How does financial aid affect postsecondary enrollment, college choice, and student composition? We present new evidence based on a large-scale program available to high-achieving, low-income students for attending high-quality colleges in Colombia. RD estimates show financial aid eligibility raised immediate enrollment by 56.5 to 86.5 percent, depending on the complier population. This rise, driven by matriculation at private, high-quality colleges, closed the SES enrollment gap among high achievers. Moreover, a DID approach suggests enrollment of aid-ineligible students also improved because college supply expanded in response to heightened demand. With ability stratification largely replacing SES stratification, diversity increased 46 percent at private, high-quality colleges. (JEL I22, I23, I24, I26, J24, O15)