Scholarships and student effort - The transition from Ser Pilo Paga to Excelencia

Shortly after the new president of Colombia took office in 2018, the Minister of Education announced the ending of the Ser Pilo Paga scholarship program. The scholarship, awarded on both the basis of need and merit, provided awardees with funding covering both tuition costs and a living stipend at any high-quality university in the country. It was replaced by a new scholarship, Generacion E – Excelencia, which was formally identical in terms of benefits and requirements. Exploiting the need-based eligibility threshold using a regression discontinuity design, we find that this policy transition reduced test scores for eligible students. An analysis of how this transition affected the socioeconomic composition of the highest performers shows that the representation of eligible students decreased. These findings underscore the importance of program visibility and trust in sustaining the behavioral effects of financial aid.