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The Effects of State-Sponsored Merit Scholarships on Course Selection and Major Choice in College

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Author Info

  • Cornwell, Christopher

    ()
    (University of Georgia)

  • Lee, Kyung Hee

    ()
    (Sogang University)

  • Mustard, David B.

    ()
    (University of Georgia)

Abstract

A common justification for HOPE-style merit-aid programs is to promote and reward academic achievement, thereby inducing greater investments in human capital. However, grade-based eligibility and retention rules encourage other behavioral responses. Using data extracted from the longitudinal records of all undergraduates who enrolled at the University of Georgia (UGA) between 1989 and 1997, we estimate the effects of HOPE on college GPA, course selection, and major choice, treating non-residents as a control group. First, we find that HOPE increased resident freshman GPA by 0.13 point, while its effect on GPA after the first year is weak. Second, HOPE reduced the number of credit hours completed in math and science core curriculum courses during the first year, and this effect persisted into the second at roughly the same magnitude. Over both years, the estimated program effects imply that residents completed about 1.2 fewer math and sciences credit hours. Finally, the likelihood that the average resident freshman would choose to major in Education jumped 1.2 percentage points relative to their out-of-state counterparts after HOPE was introduced and the scholarship's influence on this decision was more pronounced for women and whites.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1953.

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Length: 39 pages
Date of creation: Jan 2006
Date of revision:
Handle: RePEc:iza:izadps:dp1953

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Keywords: merit aid; education finance;

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References

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  1. Julian R. Betts & Darlene Morell, 1999. "The Determinants of Undergraduate Grade Point Average: The Relative Importance of Family Background, High School Resources, and Peer Group Effects," Journal of Human Resources, University of Wisconsin Press, vol. 34(2), pages 268-293.
  2. Thomas S. Dee & Linda A. Jackson, 1999. "Who Loses HOPE? Attrition from Georgia’s College Scholarship Program," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 379-390, October.
  3. Christopher M. Cornwell & David B. Mustard & Deepa Sridhar, 2005. "The Enrollment Effects of Merit-Based Financial Aid: Evidence from Georgia's HOPE Scholarship," HEW 0501002, EconWPA.
  4. Christopher M. Cornwell & Kyung Hee Lee & David B. Mustard, 2005. "Student Responses to Merit Scholarship Retention Rules," Journal of Human Resources, University of Wisconsin Press, vol. 40(4), pages 895-917.
  5. Daniel S. Hamermesh & Stephen G. Donald, 2004. "The Effect of College Curriculum on Earnings: Accounting for Non-Ignorable Non-Response Bias," NBER Working Papers 10809, National Bureau of Economic Research, Inc.
  6. Gary T. Henry & Ross Rubenstein, 2002. "Paying for grades: Impact of merit-based financial aid on educational quality," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 21(1), pages 93-109.
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Cited by:
  1. Sjoquist, David L. & Winters, John V., 2013. "State Merit-Aid Programs and College Major: A Focus on STEM," IZA Discussion Papers 7381, Institute for the Study of Labor (IZA).
  2. Chris Cornwell & David B. Mustard, 2005. "Evaluating HOPE-style merit scholarships," Proceedings, Federal Reserve Bank of Cleveland, pages 33-37.

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