July 6, 2004

Do student loans improve accessibility to higher education and student performance? An impact study of the SOFES program in Mexico

Financial aid to students in tertiary education can contribute to human capital accumulation through two channels: increased enrolment and improved student performance.

We analyse the quantitative importance of both channels in the context of a student loan program (SOFES) implemented at private universities in Mexico. With regard to the first channel, results from the Mexican household survey indicate that financial support has a strongly positive effect on university enrolment.

Two data sources are used to investigate the second channel, student performance. Administrative data provided by SOFES are analysed using a Regression-Discontinuity design, and survey data enable us to perform a similar analysis using a different control group. The empirical results suggest that SOFES recipients (i) show better academic performance, and (ii) tend to have more part-time jobs than students without a credit from SOFES.