Does replacing grants by income-contingent loans harm enrolment? New evidence from a reform in Dutch higher education

Abstract

This paper evaluates the impact of a reform which replaced universal basic grants by income-contingent loans on enrolment in Dutch higher education using administrative data of ten complete student cohorts. Estimates of differences between cohorts show no negative effect of the policy on enrolment. Moreover, difference-in-differences estimates exploiting variation in eligibility for supplementary grants show no negative effect on enrolment. These findings suggest that a system of income-contingent loans can facilitate an increase of private contributions without harming access to higher education.