Abstract
In this paper I study the long-term effect of giving low-income, low-performing students access to state grants and loans for vocational schools. I combine 12 years of administrative records on higher education enrollment and graduation in Chile and exploit the fact that access to state grants for 2-year vocational programs and state loans for 2-year and 4-year vocational programs are both a discontinuous function of a student’s GPA. Both grants and loans increase a student’s probability of ever enrolling in higher education, as well as the number of years that students spend enrolled. Although imprecise, results show a positive effect on graduation. Findings indicate that financial aid can increase degree completion, even when targeted to low-performing students attending vocational education.