Are University scholarships effective tools to prevent dropout and to favor graduation?

The present paper investigates whether the Italian University grants are an effective tool to prevent student drop-out and to favor the degree attainment, both for merit and need-based financial aids. In order to estimate the causal effect of receiving a grant, we follow the counterfactual analysis and we match treated and control units using Genetic matching and Coarsened Exact Matching. Empirical results suggest that the income-based financial aids have a positive impact to prevent drop-out at 2nd year, but a non significant effect on graduation time, whereas the merit-based scholarships increase the probability to achieve the degree in the time alloted.