Financial support (post-entry)

What is it? Financial support includes grants, bursaries, scholarships and fee-waivers. When offered after entry to HE, it is designed to help students succeed on-course by alleviating the financial costs of studying.

Evidence? There is a high-quality body of evidence that finds financial support can have a positive impact on retention/completion in HE. However, most of the existing research comes from the USA and more evidence is needed on the impact of financial support in the current UK context.

Should HEPs use financial support to improve student success? There is a reasonable evidence base to support the use of needs-based grants to promote retention/completion. There is less strong evidence that this approach can improve attainment/degree classification. This support should be needs-based (i.e. based on financial background) rather than merit-based (i.e. based on prior attainment).

What is this intervention?

Financial support offered to HE students aims to reduce the financial burden of studying (e.g., tuition fees, accommodation, travel). The information on this page relates to:

• Grants/bursaries/scholarships – non-repayable monetary support.
• Fee-waivers – a reduction in HE course costs.

By alleviating the pressure on students to supplement their income via part-time work, this kind of support is intended to facilitate better engagement in HE, improved attainment and course completion.

This page focuses on support offered to students after they enter HE. Financial support can also be promoted to students before they enter HE – for more information, see our page on financial support (pre-entry).

Financial support also sometimes forms part of broader programmes of engagement with students – for more information, see our page on programmes of student support.

What is the target group?

The interventions presented on this page are targeted specifically toward HE students from low income background (so called ‘needs-based support’). This group of students has been found to experience considerable and increasing financial stress related to their studies (Halliday-Wynes & Nguyen, 2014).

Some other forms of financial support are only available to students who meet particular milestones in their academic development such as passing a certain number of courses (‘performance-based’ support). In the case of scholarships, this form of financial support is sometimes provided for high-achieving students who meet certain academic eligibility criteria (so called ‘merit-based’ support).

How effective is it?

The literature on the impact of financial support, post-entry to HE, is relatively recent, as the topic has received growing attention.

Most of the evidence comes from outside the UK, with several studies from the USA showing that needs-based grants can boost retention and completion for disadvantaged students in HE (Bettinger, 2015; Castleman & Long, 2016; Denning et al., 2019; Goldrick-Rab et al., 2016). A study conducted in France supports the same finding, suggesting that annual grants of $800-$1,500 can increase rates of degree completion by between two and six percentage points (Fack & Grenet, 2015). However, a recent systematic review of the relevant quasi-experimental literature highlights that estimating the value of grants is context specific, as the impact on outcomes depends on the extent to which the sum of the grant provided offset other costs (Herbaut and Geven, 2020).

In some cases, financial support has also been shown to improve on-course attainment (Bettinger, 2015; Castleman & Long, 2016) and to allow students to work fewer hours in off-campus employment (Broton et al., 2016), a practice negatively associated with academic performance (Zhang and Yang, 2020).

It is important to note that some studies suggest certain forms of financial support have no effect on retention/completion for disadvantaged students. These studies are focused on merit-based grants (Shudde & Scott-Clayton, 2016; Carruthers & Ozek, 2016), fee-waivers (Denning, 2017) or relate to students who have already entered the later stages of their study and arguably are less prone to dropout (Denning, 2019). Furthermore, using a regression discontinuity design to evaluate a need-based aid programme, Clotfelter et al., (2018) found that grant aid alone did not impact student outcomes (post-secondary progress, achievement, completion). However, when students were supplied with a grant-heavy aid package as well as a range of nonfinancial support, the likelihood of students staying on track to graduate in four years increased.

Most of the UK-based evidence comes from HE providers who have analysed outcomes (e.g., retention, attainment, employability) for recipients of their financial support packages versus a comparator group, using matching (Byrne & Cushing, 2015; Harrison & Hatt, 2012; Hoare & Lightfoot, 2015; O’Brien, 2015; Ilie et al., 2019). This type of analysis tends to show a positive correlation between receiving financial support and retention/completion, but it is not causal – that is, it cannot tell us for sure that the financial support is responsible for any impact on student outcomes.

Also in the UK, Murphy and Wyness (2016) conducted a large-scale quasi-experimental study to evaluate the causal effect of needs-based bursaries on undergraduate completion rates, annual course scores and degree quality (capacity to graduate from a course with at least an upper second-class degree). They found that increasing financial aid by £1,000 increased the likelihood of obtaining at least an upper second-class degree by 3.7 percentage points.

Moores and Burgess (2022) conducted a natural experiment in the UK context to study the impact of financial support on student retention. Controlling for relevant demographic and attainment factors, the data indicates that scholarships improved retention principally for students from households with low and intermediate incomes. Interestingly, the value of the scholarships did not have a measurable effect on withdrawal.

Mountford-Zimdars et al., (2015) have reviewed a number of studies exploring other benefits of post-entry financial support in the UK context. They provided evidence of a  correlation between financial support and a reduction in anxiety about HE studies, better integration into university life, less need to combine work and study, and the ability to buy high-cost study items such as books. However, causation was not established in these cases.

Overall, there remains a lack of empirical evidence regarding the effectiveness of financial support on students’ access and outcomes, particularly in relation to the post-2018 student finance arrangements and in the context of further increased tuition fees.

In order to close the evidence gap on this topic, universities are required to evaluate whether their financial support is effective in improving outcomes for students from under-represented groups as part of the OfS Financial Support Evaluation Toolkit. According to OfS, most providers who reported statistical analysis results found strong evidence of their bursary effectiveness on student outcomes (i.e., retention, completion, achievement of a ‘good degree’, positive graduate outcome within six months). However, a small number of providers reported a negative impact of financial support provision, suggesting the importance of bursary design, allocation and institutional context to positive impact. Providers were encouraged to use a control group for their analysis. Nonetheless, these results are not considered causal evidence due to the limitations of the methodology used.

What features seem to be important?

The available evidence further suggests that needs‐based (income contingent) grants can be effective in supporting retention/completion among students from low-income households. There is limited evidence on whether merit-based support is effective but existing studies are not promising. We don’t have enough evidence to tell us whether or not performance-based support is effective.

Using data from 22 English universities, Murphy and Wyness (2016) have found that the decentralised nature of the bursary systems creates inequalities in bursary receipt. Indeed, universities with a higher proportion of disadvantaged students have to spread their resources amongst more students, limiting the amount that each student can get.  On the other side, disadvantaged students with high A-level grades generally obtain larger bursaries since they are more likely to attend universities with more ressources and a lower proportion of disadvantaged students.

What don’t we know

Currently we do not have enough evidence to make claims about which forms of financial support (bursaries/grants/fee-waivers/scholarships) are most effective.

In addition, much of the existing research has taken place in the USA. As student finance arrangements differ from country to country, we cannot make conclusive statements about how some forms of financial support might apply in a UK context. We are lacking causal studies about the impact of financial support offered by HE providers in the UK. Even UK studies published in the 2000s might not be relevant anymore, given that the system of student finance has considerably evolved over the last 20 years. More recently, the context of rising inflation may also have decreased the net value of the financial support provided to low-income students.

There is one study which seeks to compare the quantitative impact of financial support with other approaches and finds that financial support appears to have a smaller impact on retention and graduation than mentoring. However, this is focused on programmes in which faculty members serve as mentors rather than peer-mentoring (Sneyers & Dewitt, 2018). More evidence on the relative scale of the impact of financial support versus other approaches would help HE providers understand how best to structure their overall student support offering.

Where does the evidence come from?

TASO’s advice on the efficacy of financial support for HE students is based on evidence from fourteen causal research studies and three literature reviews. All the studies used experimental or quasi-experimental techniques to assess the impact of various forms of financial support and most of this research took place in the USA and none took place in the UK.

We’ve also drawn on findings from several other studies that explore the impact of such support but do not provide causal evidence. Many of these studies took place in the UK.

We have focused on evidence produced in the last 10 years and, in the case of UK-based evidence, since the student finance reforms were introduced in 2012. Older evidence has been included if it is exceptionally relevant.

The key references are given below.

Key references

Causal studies

Anderson, D. M., & Goldrick-Rab, S. (2018). Aid after enrollment: Impacts of a statewide grant programme at public two-year colleges. Economics of education review, 67, 148-157. doi: 10.1016/j.econedurev.2018.10.008

Bettinger, E. (2015). Need-Based Aid and College Persistence: The Effects of the Ohio College Opportunity Grant. Educational Evaluation and Policy Analysis, 37(1_suppl), 102S-119S. doi: 10.3102/0162373715576072

Binder, M., Krause, K., Miller, C., & Cerna, O. (2015). Providing incentives for timely progress toward earning a college degree: Results from a performance-based scholarship experiment. New York, NY: MDRC. Linked here. 

Broton, K. M., Goldrick-Rab, S., & Benson, J. (2016). Working for college: The causal impacts of financial grants on undergraduate employment. Educational Evaluation and Policy Analysis, 38(3), 477-494. doi:10.3102%2F0162373716638440

Castleman, B. L., & Long, B. T. (2016). Looking Beyond Enrollment: The Causal Effect of Need-Based grants on College Access, Persistence, and Graduation. Journal of Labor Economics, 34(4), 1023-1073. doi: 10.1086/686643

Clotfelter, C. T., Hemelt, S. W., & Ladd, H. F. (2018). Multifaceted Aid for Low‐Income Students and College Outcomes: Evidence from North Carolina. Economic Inquiry, 56(1), 278-303. doi: 10.1111/ecin.12486

Denning, J. T. (2017). College on the cheap: Consequences of community college tuition reductions. American Economic Journal: Economic Policy, 9(2), 155-88. doi: 10.1257/pol.20150374

Denning, J. T. (2018). Born Under a Lucky Star Financial Aid, College Completion, Labor Supply, and Credit Constraints. Journal of Human Resources, 54(3), 760-784. doi: 10.3368/jhr.54.3.1116.8359R1

Denning, J. T., Marx, B. M., & Turner, L. J. (2019). ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare. American Economic Journal: Applied Economics, 11(3), 193-224. doi: 10.1257/app.20180100

Fack, G., & Grenet, J. (2015). Improving College Access and Success for Low-Income Students: Evidence from a Large Need-Based Grant Program. American Economic Journal: Applied Economics, 7(2), 1-34. doi: 10.1257/app.20130423

Goldrick-Rab, S., Kelchen, R., Harris, D. N., & Benson, J. (2016). Reducing Income Inequality in Educational Attainment: Experimental Evidence on the Impact of Financial Aid on College completion. American Journal of Sociology, 121(6), 1762-1817. doi: 10.1086/685442

Mayer, A., Patel, R., & Gutierrez, M. (2015). Four-Year Effects on Degree Receipt and Employment Outcomes from a Performance-Based Scholarship Programme in Ohio. SSRN Electronic Journal. doi: 10.2139/ssrn.2594482

Moores, E., & Burgess, A. P. (2022). Financial support differentially aids retention of students from households with lower incomes: a UK case study. Studies in Higher Education, 1-12. Linked here. 

Schudde, L., & Scott-Clayton, J. (2016). Pell Grants as Performance-Based Scholarships? An Examination of Satisfactory Academic Progress Requirements in the Nation’s Largest Need-Based Aid Programme. Research in Higher Education, 57(8), 943-967. doi: 10.1007/s11162-016-9413-3

Literature reviews

Herbaut, E., & Geven, K. M. (2019). What Works to Reduce Inequalities in Higher Education? A Systematic Review of the (Quasi-) Experimental Literature on Outreach and Financial Aid (No. 8802).  Policy Research Working Papers. doi: 10.1596/1813-9450-8802

Kaye, N. (2021). Evaluating the role of bursaries in widening participation in higher education: a review of the literature and evidence. Educational Review, 73(6), 775-797. doi: 10.1080/00131911.2020.1787954

Mountford-Zimdars, A., Sabri, D., Moore, J., Sanders, J., Jones, S., & Higham, L. (2015). Causes of differences in student outcomes (HEFCE). Linked here.

Zhang, X., & Yang, L. (2020, March). The effects of employment on undergraduate student academic performance. In 2020 ASEE North Central Section conference. Linked here. 

Other references

Agasisti, T., & Murtinu, S. (2016). Grants in Italian University: a Look at the Heterogeneity of Their Impact on Students’ Performances. Studies in Higher Education, 41(6), 1106-1132. doi: 10.1080/03075079.2014.966670

Bowes, L. (2014). Evaluation of the National Scholarship Programme, year 3: report to HEFCE by CFE Research and Edge Hill University, November 2014. Linked here. 

Byrne, L., & Cushing, S. (2015). The impact of structured financial support on student retention case study: Buckinghamshire New University. Widening Participation and Lifelong Learning, 17(3), 47-59. Linked here.

Carruthers, C. K., & Özek, U. (2016). Losing HOPE: Financial aid and the line between college and work. Economics of education review, 53, 1-15. Linked here.

Clark, T., & Hordósy, R. (2018). Social Identification, Widening Participation and Higher Education: Experiencing Similarity and Difference in an English Red Brick University. Sociological Research Online, 24(3), 353-369. doi: 10.1177/1360780418811971

Crockford, J., Hordósy, R., & Simms, K. S. (2015). ‘I really needed a job, like, for money and stuff’: Student finance, part-time work and the student experience at a northern red-brick university. Widening Participation and Lifelong Learning, 17(3), 89-109. doi: 10.5456/wpll.17.3.89

Department for Education. (2019). Independent panel report to the Review of Post-18 Education and Funding. Linked here.

Franke, R. (2016). Examining the Role of the State: Need-Based Grants and Their Effect on Student Persistence and Degree Completion. AERA Online Paper Repository. Linked here.

Halliday-Wynes, S., & Nguyen, N. (2014). Does financial stress impact on young people in tertiary study?. National Centre for Vocational Education Research. Linked here. 

Harrison, N., & Hatt, S. (2012). Expensive and failing? The role of student bursaries in widening participation and fair access in England. Studies in Higher Education, 37(6), 695-712. doi:10.1080/03075079.2010.539679

Hoare, T., & Lightfoot, J. (2015). Student Funding, Student Retention and Student Experiences: Perspectives from Bristol. Widening Participation and Lifelong Learning, 17(3), 110-125. doi: 10.5456/wpll.17.3.110

Hordósy, R., Clark, T., & Vickers, D. (2018). Lower Income Students and the ‘Double Deficit’ of Part-Time Work: Undergraduate Experiences of Finance, Studying and Employability. Journal of Education and Work, 31(4), 353-365. doi: 10.1080/13639080.2018.1498068

Ilie, S., Horner, A., Kaye, N., & Curran, S. (2019). Financial support and undergraduate outcomes in the University of Cambridge. Linked here.

Murphy, R., & Wyness, G. (2016). Testing means-tested aid. doi:10.2139/ssrn.2866923

O’Brien, M. (2015). Student Finance, Progression and ‘Inclusivity’: Indicative Data from the University of Liverpool. Widening Participation and Lifelong Learning, 17(3), 74-88. doi: 10.5456/wpll.17.3.74

Office for Students. (2020). Understanding the impact of the financial support evaluation toolkit. Linked here.

Olbrecht, A. M., Romano, C., & Teigen, J. (2016). How Money Helps Keep Students in College: The Relationship between Family Finances, Merit-Based Aid, and Retention in Higher Education. Journal of Student Financial Aid, 46(1), 2. Linked here.