How Does Reducing Merit-Aid Generosity and Certainty Affect College Choices? Evidence from Georgia’s HOPE Scholarship

While considerable evidence has accumulated on state-funded merit-based scholarships, research on the effects of specific scholarship design choices has been thin, perhaps in part because cross-state comparisons are difficult. As one of the only states to enact major changes in the design of its merit-based scholarship program, Georgia provides a unique opportunity to explore the effects of these design choices. Using student-level observations for all high school graduates in Georgia over 9 years from 2008 to 2016, the paper uses difference-in-differences analysis and regression-discontinuity design to estimate the effects of a reduction in the level of HOPE scholarship funding, and the start of a new full-tuition scholarship, on student enrollment in Georgia colleges and universities. We find that the highest-achieving students were more likely to attend Georgia public higher-education institutions after the scholarship changes than before. Students who qualified for partial-tuition HOPE scholarships beginning in 2011 were less likely to attend Georgia public 4-year institutions than those who received full-tuition HOPE scholarships before 2011, though their enrollment increased relative to students ineligible for any merit aid. We conclude with discussion of implications for the design of merit-based scholarship programs.