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One recent policy tend to improve teacher quality is providing conditional grants to trainees in teacher colleges and commit them to working in disadvantaged areas upon graduation. Yet little is known whether such policies attract better trainees. This paper evaluates a conditional grant program in Chinese teachers' colleges, which commits students to teaching in their home province. Using a triple difference method, we find that teaching majors obtain better students due to the conditional grants. Exploring the heterogeneous treatment effects across regions, the policy effects not only increase as the costs of living during college decrease, but are larger in provinces with larger shares of disadvantaged students – i.e. rural, female, rural female, and with more siblings. These results suggest that the Chinese free teacher education program successfully attracts high quality students into the teaching force, and these high quality teacher trainees are likely to be credit constrained.

Can Conditional Grants Attract Better Students: Evidence from Chinese Normal Universities