Away, but not too far from home. The effects of financial aid on university enrolment decisions

•We analyse how students react to monetary incentives aimed at fostering university enrolment.•We focus on an Italian province as a case study, employing a unique data set combining survey data and administrative information.•We analyse a range of outcomes including enrolment and choices of the university.•Using a sharp regression discontinuity design we find no effect on enrolment but a remarkable impact on the choice of university location.•Relying on the empirical evidence, we propose a modification in the policy's eligibility criteria.

This paper investigates the impact of an educational programme recently introduced in the Province of Trento (North-East of Italy) aimed at fostering university enrolment of students from low-income families and at reducing inequalities in access to higher education. The programme consists in generous incentives: it targets university students from low-income families and is awarded upon both merit and demonstrated financial need. We exploit data from a survey conducted on a sample of upper secondary graduates linked to administrative records and employ a regression discontinuity design to estimate the impact of the intervention on the university enrolment decisions. We find that the programme has no significant effect on enrolment rates, but it exerts a positive effect on redirecting students already bound for university to enrol outside the place of residence.