Hope for the Pell? The Impact of Merit-Aid on Needy Students

Prior empirical evidence finds that merit-aid programs such as the Georgia Hope Scholarship yield large and significant enrollment effects, whereas need-based aid programs such as the Pell Grant yield modest and often insignificant enrollment effects. This paper uses unpublished panel data on the number and level of Pell awards at Southern universities along with detailed institutional data from the National Center of Educational Statistics to examine whether the Georgia Hope Scholarship improved the college access of needy students relative to other Southern states. Fixed-effect analyses show that large increases in merit aid improve college access of needy students and leverage Hope Scholarship funds with greater federal Pell assistance. Whereas most institution-specific increases in both Pell enrollment and funding are found for two-year and less selective, four-year institutions, the results also suggest that Pell students are not crowded out of more selective schools by Hope’s intent to retain the best Georgia high-school students.