Purpose This study examines diaspora engagement and return migration programs aimed at providing diaspora youth with an opportunity to obtain higher education in Estonia and Kazakhstan. In particular, the authors sought to identify the main motivations, benefits and challenges of the programs, as well as understand how the programs contribute to the ethnic identity formation of diaspora students.Design/methodology/approach The paper employed a qualitative multiple-case study research design. In both countries, data were collected by means of 26 semi-structured interviews with return migrant students and experts involved in implementing the programs.Findings The study findings suggest that the primary motivations for diaspora youth to return to their homelands are tuition-free higher education, financial support and repatriation prospects in both countries. In Estonia, the scholarship holders struggled with language requirements for university admissions, the cost of living insufficiently covered by the monthly stipend and limited integration opportunities. In Kazakhstan, the students had to face the Russian language barrier and socio-cultural marginalization in their everyday life. It was also found that the return migrant students in Estonia and Kazakhstan develop hybrid identities to integrate into their domestic society. They reinforce their ethnic identities and negotiate their diasporic identities to make sense of their own background and cultural heritage and acclimatize to life in the new context.Originality/value The study provides practical implications for policy implementers and policymakers in Estonia and Kazakhstan. It can also be useful for the worldwide research community interested in exploring education-oriented diaspora engagement and return migration programs and their influence on the ethnic identity of diaspora students.