Does access to credit explain the gap in schooling attainment between children from richer and poorer families? I present new evidence on this important question based on the causal effects of two college loan programs in Chile that are available to students scoring above a threshold on the national college admission test, enabling a regression discontinuity design. I find that credit access leads to a 100 percent increase in immediate college enrollment and a 50 percent increase in the probability of ever enrolling. Moreover, access to loans effectively eliminates the income gap in enrollment and number of years of college attainment.

This study examines the long-term effects of student loans and grants in Chile through a regression discontinuity design. It finds that university loans significantly boost degree completion, especially among women and low-income students, with marginal positive effects on employment and earnings for women. Vocational loans benefit only those ineligible for university loans. Conversely, grants, alongside loans, do not affect education or labor market outcomes. The limited impact of the tuition reductions induced by grants, combined with the substantial gains for low-income students, highlights the presence of credit constraints.