Impact of merit-based financial aid on student achievement

Some Russian universities provide tuition fee discount to their students conditioned on their academic achievement. The paper examines the impact of this type of financial aid on student performance. The amount of this discounts for the first academic year depends on the admission test results, and its extension for the second year depends on the student’s academic achievement in the first year. Using regression discontinuity design and quantile regression, we show that financial aid stimulates the performance of those fee-paying students, who are in the upper part of the grade-point-average distribution.