Dormitories or grants? Need-based aid and university students’ mobility in Italy

We study how Italy’s need-based student-aid system ( Diritto allo Studio Universitario , DSU) shapes first-time entrants’ choices of where and what to study by linking administrative records on first-time enrolments to university characteristics and DSU service provision. Using a Latent Class Logit model that accounts for heterogeneity in preferences, we find that dormitory capacity for eligible students substantially increases enrolment: adding 100 places raises enrolment at an average-sized institution by 5.3–9.6% ( equivalent to about 19 to 34 additional students ). By contrast, grants show no statistically significant effect. Dormitory availability matters most for students who lack a nearby university and those in STEM fields. Simulations focused on alternative expansions of dormitory supply suggest that a nationwide increase reallocates enrolment toward central/northern hubs and higher-quality institutions, whereas regionally targeted support in the South only marginally curbs South-to-North flows. • Dormitory availability significantly increases enrolment rates. • STEM students and those without local options are more responsive to dormitory supply. • Expansion of student aid boosts enrolment in higher-quality institutions and major university hubs. • Financial grants show negligible and inconclusive effects.