We also include the dummy variable indicating whether a student has a job on the side or not in this regression model. The behavior of students in terms of jobs on the side is potentially important for the formation of human capital, as labor time competes with study time (cf. Section 2). Students with jobs on the side may therefore need more time-to-graduate, fail exams more often, obtain lower grade points, and drop out from university more frequently.<sup>16</sup> For example, Stinebrickner and Stinebrickner (2003) look at student performance at a liberal arts institution in the USA, providing education to those who “have great promise, but limited financial resources”. Students receive full-tuition scholarships, and part of the cost of schooling is defrayed through a mandatory work-study program. Their empirical results suggest that working on the side has a harmful effect on student performance. In our estimation we find a negative effect from work on a student’s GPA, but the estimation is imprecise (the coefficient does not differ significantly from zero).

Comparison of the results from the SOFES database and the survey data brings us to the conclusion that students with a SOFES loan show better performance than students without a loan. This is not necessarily a purely causal impact of the loan program, but could also capture (self-)selection of students.

The second column of the table presents the results for the student’s failure rate, i.e. the number of courses that a student had to redo as a fraction of the total number of courses the student has attended. For other factors than the treatment variable, we find that (i) the student’s age again improves performance, repetion drops 0.3%-points; (ii) students in Engineering and Natural Sciences repeat at a higher frequency, 1%-point; and (iii) the student’s employment situation again shows up with an insignificant coefficient. For the treatment effect of student loans, we find that SOFES recipients score better than students without a SOFES loan. The chance that the student has to redo an exam is for SOFES-recipients about 0.5%-point lower than for students without credit from SOFES (with an average failure rate of approximately 5% that would be an effect of something like 10%), although the effect is not statistically significant.

# _6.3 Impact on part-time employment_

Does the level of student support have an impact on the student’s decision to work on the side? Do students who receive less support have to work more in order to generate enough resources to be able to pay for their education? Evidence for such a relationship in the data would be consistent with capital market imperfections: students are credit constrained and may need to find alternative sources to finance their higher education investments.

> 16 On the other hand, it should be mentioned that jobs on the side could yield benefits in terms of labor market experience. Also, the relationship between labor time and student performance will depend on the student’s ability, and good students who have jobs on the side may still show better performance than marginal students without any labor market activity (cf. Dolton et al., 2003).

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