Financial aid and students’ academic performance in higher education: evidence from a Chinese university

Financial aid is central to higher education equity, yet its associations with academic outcomes may differ by aid type and students’ behavioural context. Drawing on expectancy-value theory, this study examines how merit-based and repayment-based aid are associated with academic performance, whether study effort mediates these associations, and whether campus consumption level moderates them. Using administrative data from 3,499 undergraduates at a Chinese ‘Double First-Class’ university, the findings show that merit-based aid is positively associated with academic performance, whereas repayment-based aid is negatively associated with it. Study effort partially mediates the merit-based aid–performance association. Higher campus consumption strengthens the negative associations of repayment-based aid with both performance and study effort, while weakening the positive association between merit-based aid and study effort but not its association with performance. These findings highlight heterogeneous relationships between financial aid and academic outcomes and provide implications for more targeted aid policies.