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Merit Aid, College Quality and College Completion: Massachusetts' Adams Scholarship as an In-Kind Subsidy

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  • Cohodes, Sarah

    (Harvard University)

  • Goodman, Joshua

    (Harvard University)

Abstract

We analyze a Massachusetts merit aid program in which high-scoring students received tuition waivers at in-state public colleges with lower graduation rates than available alternative colleges. A regression discontinuity design comparing students just above and below the eligibility threshold finds that students are remarkably willing to forgo college quality for relatively little money and that marginal students lowered their college completion rates by using the scholarship. These results imply that college quality has a substantial impact on college completion rates and that students likely do not understand this fact well. The theoretical prediction that in-kind subsidies of public institutions can reduce consumption of the subsidized good is shown to be empirically important.

Suggested Citation

  • Cohodes, Sarah & Goodman, Joshua, 2013. "Merit Aid, College Quality and College Completion: Massachusetts' Adams Scholarship as an In-Kind Subsidy," Working Paper Series rwp13-005, Harvard University, John F. Kennedy School of Government.
  • Handle: RePEc:ecl:harjfk:rwp13-005
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    More about this item

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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