Education is central to human capital accumulation, productivity growth, and social mobility. While global progress has been substantial in expanding access to primary education, participation in secondary and tertiary education remains uneven in many developing countries. The Philippines exemplifies this challenge: despite improvements in basic education, structural barriers—ncluding financial constraints, labor-market uncertainty, and skills mismatches—continue to limit access to higher education and weaken incentives for households to invest in university study. Scholarship programs are therefore a key policy instrument for easing financial constraints and expanding participation in higher education in the short run.

This report evaluates the impact of a local university scholarship program implemented by the Cagayan de Oro City government in the Philippines. Moving beyond enrollment alone, the study examines a range of student outcomes, including academic persistence, academic specialization and performance, intentions to pursue professional certification, civic engagement, and short-run psychological well-being. By doing so, the report attempts to provide new evidence on the mechanisms through which scholarships may influence human capital formation before long-term outcomes such as graduation and labor-market earnings materialize.

The analysis finds that the scholarship program leads to modest improvements in student persistence, but shows limited short-run effects on academic performance, field specialization, and most indicators of psychological well-being. Strong conclusions regarding mental health impacts are not warranted. The findings highlight the need for further research on how financial aid affects students’ educational outcomes and psychological well-being in a short run.

An important feature of the program is that, although it is formally income-targeted, the income threshold is relatively mild, and the program functions in practice more as a merit-oriented than a need-based intervention. The modest gains in persistence combined with limited broader effects suggest that merit-based scholarships alone may not be sufficient to generate sustained or multidimensional impacts, particularly in settings where financial stress, academic preparedness, and labor-market uncertainty interact.

From a policy perspective, the findings underscore the importance of careful scholarship design. Scholarships can be effective in improving persistence, but their impact may be strengthened by incorporating stronger need-sensitive components and complementary support, such as academic advising, mental-health services, or living-expense subsidies. Without such design features, merit-based programs risk producing narrow benefits or reinforcing existing inequalities.

The report also carries implications for Korea’s development cooperation strategy. While Korea’s ODA has supported Filipino students primarily through scholarships for study in Korea, this approach generates limited spillovers for the Philippine higher education system and domestic labor market. International experience—such as Australia’s in-country scholarships in Papua New Guinea and Germany’s in-region postgraduate programs—suggests that locally embedded scholarship programs, implemented in partnership with domestic universities and aligned with national skill needs, can foster more sustainable human capital development.

The report therefore recommends that Korea expand its support toward locally grounded, jointly designed scholarship and training programs in the Philippines, potentially linked with industry partnerships in strategic sectors such as digital technology, engineering, and green industries. Such an approach can simultaneously strengthen the Philippines’ domestic human capital base and support deeper economic and industrial cooperation with Korea.

Overall, the report concludes that scholarship programs are a valuable but incomplete policy tool. When carefully designed and embedded within broader education and labor-market strategies, they can contribute meaningfully to human capital development, equity, and long-term inclusive growth.