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Who merits financial aid?: Massachusetts' Adams Scholarship

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Author Info
Goodman, Joshua

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Abstract

Most states now fund merit-based financial aid programs, the effects of which depend on how strongly students react to changes in college costs. I estimate such reactions using quasi-experimental aspects of a recent Massachusetts merit scholarship program intended to attract talented students to the state's public colleges. Despite its small monetary value, the Adams Scholarship induced 6% of winners to choose four-year public colleges instead of four-year private colleges, suggesting an elasticity of demand for public college enrollment above unity. Nonetheless, most funds flowed to students who would have enrolled in public colleges absent the scholarship and the aid had no effect on winners' overall college enrollment rate, which already exceeded 90%. Regression discontinuity estimates are larger than those from difference-in-difference specifications because winners with relatively low academic skill, and thus nearest the treatment threshold, reacted much more strongly to the price change than did highly skilled winners. Conditional on academic skill, low-income winners reacted similarly to their higher income peers, suggesting that previous research may have mistaken income heterogeneity for skill heterogeneity.

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File URL: http://www.sciencedirect.com/science/article/B6V76-4S6P1XK-1/2/99263dd8c506f17166de570ba7693774
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Publisher Info
Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 92 (2008)
Issue (Month): 10-11 (October)
Pages: 2121-2131
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Handle: RePEc:eee:pubeco:v:92:y:2008:i:10-11:p:2121-2131

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Web page: http://www.elsevier.com/locate/inca/505578

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Related research
Keywords: Financial aid Merit scholarships College costs Difference-in-difference Regression discontinuity;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Flavio Cunha & James J. Heckman & Lance Lochner & Dimitriy V. Masterov, 2005. "Interpreting the Evidence on Life Cycle Skill Formation," NBER Working Papers 11331, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Christopher Cornwell & David B. Mustard & Deepa J. Sridhar, 2006. "The Enrollment Effects of Merit-Based Financial Aid: Evidence from Georgia's HOPE Program," Journal of Labor Economics, University of Chicago Press, vol. 24(4), pages 761-786, October. [Downloadable!]
  3. Groen, J.A.Jeffrey A., 2004. "The effect of college location on migration of college-educated labor," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 125-142. [Downloadable!] (restricted)
  4. Pietro Garibaldi & Francesco Giavazzi & Andrea Ichino & Enrico Rettore, 2007. "College Cost and Time to Complete a Degree: Evidence from Tuition Discontinuities," NBER Working Papers 12863, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Dynarski, Susan, 2004. "The New Merit Aid," Working Paper Series rwp04-009, Harvard University, John F. Kennedy School of Government. [Downloadable!]
  6. Wilbert van der Klaauw, 2002. "Estimating the Effect of Financial Aid Offers on College Enrollment: A Regression-Discontinuity Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1249-1287, November. [Downloadable!] (restricted)
  7. Thomas J. Kane, 2003. "A Quasi-Experimental Estimate of the Impact of Financial Aid on College-Going," NBER Working Papers 9703, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Susan Dynarski, 2002. "The Behavioral and Distributional Implications of Aid for College," American Economic Review, American Economic Association, vol. 92(2), pages 279-285, May. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Joshua Goodman, 2008. "Skills, Schools, and Credit Constraints: Evidence from Massachusetts," Discussion Papers 0809-03, Columbia University, Department of Economics. [Downloadable!]
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