How do human capital investments respond to student finance induced changes in cost? In 1983, Germany moved from a system offering means-tested student finance as a mix of a grant and a loan to exclusively a loan. Exploiting this unique setting, we find human capital investments of low-income students to be highly cost-sensitive. Loans were interest-free and income-contingent repayment plans effectively insured individuals against adverse labour market outcomes. Our event study results reveal that despite these favourable conditions, the reform reduced enrolment rates amongst funding eligible students substantially, with pupils re-allocating into apprenticeship training instead. The contraction in enrolment was particularly pronounced in teacher training, which was geared for a career in the public sector, and much less so in subjects associated with higher labour market returns. Furthermore, we find that funding eligible students became increasingly concerned with being financially independent and exploring different career options before making a final commitment. These results suggest that reform impacts were mainly driven by increased costs, but reinforced by heightened debt concerns. Finally, we also document that individual level responses to the policy added up to unintended consequences at the aggregate level. As a product of the reform, access to university was narrowed for low-income students of all abilities and the overall supply of teachers contracted during a time when pupil numbers were expanding.