The Effect of the Government-Subsidized Student Loan Program on College Students in China

Abstract

Using an original dataset collected at a Chinese university and adopting a difference-in-differences research design, this study draws causal inferences regarding the effect of the Government-Subsidized Student Loan Program (GSSLP) on financially needy students at Chinese higher education institutions. Specifically, this study finds that the program may have enabled financially needy students to spend 527.80 Chinese yuan more on food and take 26 hours less paid work on average during one academic year. In other words, the GSSLP has been found to have had positive impact on financially needy students’ basic needs such as food and work. In order for the program to have greater impact on such students’ overall quality of life, policy-makers should make efforts to increase maximum loan amounts. This will enable students from low income families to spend more on educational resources and reduce their finance-related anxiety.

Keywords

higher education / financial aid / student loans / policy analysis