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The Consequences of Merit Aid

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  • Susan Dynarski

Abstract

Since the early Nineties, a dozen states have established broad-based merit aid programs. The typical program waives tuition and fees at public colleges and universities in one's home state. Unlike traditional merit programs, such as the National Merit Scholarship, this aid requires relatively modest academic performance and provide scholarships to hundreds of thousands of students. This paper examines how merit aid programs in seven states have affected an array of schooling decisions, paying particular attention to how the effects have varied by race and ethnicity. I find that the new programs typically increase the attendance probability of college-age youth by five to seven percentage points. The merit programs also shift students toward four-year schools and away from two-year schools. The Georgia HOPE Scholarship, which has been found to widen racial gaps in college attendance (Dynarski, 2000) is atypical in its distributional impact, with the other state's programs tending to have a more positive effect on the college attendance rate of Blacks and Hispanics. I attribute HOPE's unique distributional effect to its relatively stringent academic requirements and a recently-eliminated provision that channeled the most generous scholarships to higher-income students.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9400.

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Date of creation: Dec 2002
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Handle: RePEc:nbr:nberwo:9400

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  1. Kane, Thomas J, 1994. "College Entry by Blacks since 1970: The Role of College Costs, Family Background, and the Returns to Education," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 102(5), pages 878-911, October.
  2. Dynarski, Susan, 2001. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," Working Paper Series, Harvard University, John F. Kennedy School of Government rwp01-034, Harvard University, John F. Kennedy School of Government.
  3. 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.
  4. 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.
  5. Rubenstein, Ross & Scafidi, Benjamin, 2002. "Who Pays and Who Benefits? Examining the Distributional Consequences of the Georgia Lottery for Education," National Tax Journal, National Tax Association, vol. 55(N. 2), pages 223-238, June.
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Cited by:
  1. Joshua Angrist & Eric Bettinger & Michael Kremer, 2004. "Long-term consequences of secondary school vouchers: Evidence from administrative records in colombia," Natural Field Experiments, The Field Experiments Website 00204, The Field Experiments Website.
  2. Michael Kremer & Edward Miguel & Rebecca Thornton, 2004. "Incentives to Learn," NBER Working Papers 10971, National Bureau of Economic Research, Inc.
  3. Michael Rizzo & Ronald G. Ehrenberg, 2004. "Resident and Nonresident Tuition and Enrollment at Flagship State Universities," NBER Chapters, in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 303-354 National Bureau of Economic Research, Inc.
  4. Joshua Angrist & Daniel Lang & Philip Oreopoulos, 2006. "Lead Them to Water and Pay Them to Drink: An Experiment with Services and Incentives for College Achievement," NBER Working Papers 12790, National Bureau of Economic Research, Inc.
  5. Joshua Angrist & Eric Bettinger & Michael Kremer, 2006. "Long-Term Educational Consequences of Secondary School Vouchers: Evidence from Administrative Records in Colombia," American Economic Review, American Economic Association, American Economic Association, vol. 96(3), pages 847-862, June.
  6. Angrist, Joshua & Lang, Daniel W. & Oreopoulos, Philip, 2007. "Incentives and Services for College Achievement: Evidence from a Randomized Trial," IZA Discussion Papers 3134, Institute for the Study of Labor (IZA).
  7. Stephanie Riegg Cellini, 2010. "Financial aid and for-profit colleges: Does aid encourage entry?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(3), pages 526-552.

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