We know pretty well that increasing student aid increases the likelihood of attending college, little is know about its impact on study duration and success. Daniela Glocker uses German data and finds that the source of support matters. Institutional student aid leads to shorter study duration than, say, support by parents. The amount of aid has no impact on duration, but improves the probability of successful completion of studies.
I find these results surprising. One would think that parents would be able to put more pressure on finishing in time than a government may be able to. Also, having more funding reduces the opportunity cost of studying, thus giving more incentives to take it leisurely, especially in Germany where students have plenty of opportunities to delay graduation. So why are those results found? One would think that this has to do with students not getting aid having to work, but it appears working time has not impact on graduation time or success. Glocker thinks this has to do with the fact that how of the loan needs to be repaid is tied to graduation time. too bad this could not be controlled for, or the results would have been really interesting.