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Losing HOPE: Financial aid and the line between college and work

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  • Carruthers, Celeste K.
  • Özek, Umut

Abstract

Although a wealth of research has shown that financial aid reduces hurdles to college enrollment, much less is known about how students react to the common occurrence of losing aid midway through their college careers. Using longitudinal data on two cohorts of Tennessee public college students and regression discontinuity designs centered around merit-based HOPE scholarship renewal benchmarks, we find that losing one’s scholarship results in a small degree of detachment from college and a rise in earnings of about 14 cents per dollar of lost aid. We see no local impact, however, on timely degree completion, which implies that HOPE loss may have merely accelerated a small number of students’ migration out of college. It remains to be seen how students fare farther below the renewal threshold, or whether they are better off for having had the HOPE scholarship at all, albeit for a short time.

Suggested Citation

  • Carruthers, Celeste K. & Özek, Umut, 2016. "Losing HOPE: Financial aid and the line between college and work," Economics of Education Review, Elsevier, vol. 53(C), pages 1-15.
    • Handle: RePEc:eee:ecoedu:v:53:y:2016:i:c:p:1-15
    DOI: 10.1016/j.econedurev.2016.03.014
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    More about this item

    Keywords

    Financial aid; Merit aid; Higher education; Human capital; Labor force participation;
    All these keywords.

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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