Marginal Effects of Merit Aid for Low-Income Students (original) (raw)
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Objectives. This study assesses whether need-based grants are equally conducive to the college persistence of students from various economic strata and the extent to which a redistribution of funds can narrow economic-based inequality in college persistence. Methods. To estimate the causal effect of need-based grants on several persistence outcomes the discontinuity created in the dollar amounts of Pell grants when the students have siblings attending college is exploited. The analyses use a nationally representative sample of students enrolled at four-year institutions in 1995. Results. While the allocation of Pell Grants responds to students' pecuniary constraints, institutional and state grants expand the circle of recipients to more well-off students. Yet, it is only the persistence of students from the bottom half of the income distribution that is sensitive to aid amounts. If the need-based funds granted to affluent students had been diverted to these students, the gap in first-year persistence would have been closed. Conclusions. For a redistribution of funds to boost degree attainment and achieve equality of educational opportunity it must be based on stricter means-tested allocations of nonfederal funds as they are the main source of need-based aid.
Is merit-aid for all? The effects of aid-eligibility changes on college access in the United States
Studies in Higher Education, 2023
The United States has widely experimented with merit-based financial aid to make college more accessible and affordable for its youth. Varying in design and benefits, these state-run programs subsidize college costs for academically meritorious high-school graduates. While broadly linked to higher college attendance the distribution of aid benefits depends critically on the eligibility criteria. States often make post-adoption changes to merit requirements to lower program costs, but little is known about their impact on youth’s college decisions. This paper evaluates the effects of such eligibility revisions using West Virginia’s PROMISE scholarship, which, unlike its peers, frequently hardened merit rules post-inception. We leverage the discontinuities in the timing of the scholarship’s adoption and its successive modifications to estimate the policy-induced changes in students’ college choice. We use two robust inference models – difference-in-difference and synthetic control, on institution-level enrollment data from the Integrated Postsecondary Education Data Systems (IPEDS). We estimate a 6.5% growth in college enrollments immediately following PROMISE that fades rapidly once aid eligibility narrows. We find that this initial enrollment jump is attributable to an aid-induced improvement in the average youth’s college readiness which is confined to the high achievers after the program scope narrows. Additionally, enrollments shift from 4-year to 2-year colleges post eligibility revisions. Our results show that the stiffer criteria redirect the aid benefits toward youth with already better access to college.
American Journal of Sociology, 2016
Income inequality in educational attainment is a long-standing concern, and disparities in college completion have grown over time. Need-based financial aid is commonly used to promote equality in college outcomes, but its effectiveness has not been established, and some are calling it into question. A randomized experiment is used to estimate the impact of a private need-based grant program on college persistence and degree completion among students from low-income families attending 13 public universities across Wisconsin. Results indicate that offering students additional grant aid increases the odds of bachelor's degree attainment over four years, helping to diminish income inequality in higher education. The polarization of American society according to family income is sharper and more apparent today than at any point since the 1920s. The share of
2019
In this pre-registered study, we analyze the effects of need-based financial aid grant offers on the educational outcomes of low-income college students based on a large-scale randomized experiment (n=48,804). We find evidence that the grant offers increase two-year persistence by 1.7 percentage points among four-year college students. The estimated effect on six-year bachelor's degree completion is of similar size-1.5 percentage points-but is not statistically significant. Among two-year students, we find positive-but not statistically significant-effects on persistence and bachelor's degree completion (1.2 and 0.5 percentage points, respectively). We find little evidence that effects vary by cohort, race, gender or the prior receipt of food stamps. However, further exploratory results do suggest that the offers reduce associate's degree completion rates for two-year community college students by around 3 percentage points, with no statistically significant evidence of effects on technical college students. We also estimate that the effects of actually receiving grant money are very similar, though slightly greater than the effects of merely receiving a grant offer. Overall, our results show only very small effects of the needbased grant offers on college students' trajectories towards degree completion.
This paper assesses the effectiveness of financial aid in promoting the persistence of black and Hispanic students admitted to the most selective colleges and universities in the United States to complete their college education. To explore whether more dollars of aid enhance graduation, the analysis separates two constructs-aid eligibility and aid amountwhen assessing their influence on graduation likelihood of these students. Using the College & Beyond (C&B) database and implementing an IV/LATE analytical strategy, I find that although need-based aid eligibility is negatively related to graduation likelihood, aid amounts exert a positive influence on graduation, conditional on eligibility for aid. Among types of aid, grants and scholarships have the most positive effect on graduation. The results also indicate that financial aid amounts help equalize initial racial and ethnic differences in graduation likelihood. Minority students' graduation likelihood is found to be more sensitive to the amount of financial resources they secure, especially in the form of grants and scholarships, than that of their white counterparts. r
The Good, the Poor and the Wealthy: who Responds Most to College Financial Aid?
Bulletin of Economic Research, 2002
Financial aid programmes for students in the United States focus increasingly on academic merit, rather than financial need. There is little empirical evidence, however, on the distributional effects of merit-based aid -who benefits or responds most. We develop a bivariate probit model of the enrolment process estimated using data for a large public university over several years. Results show that merit-based aid increases enrolment for all students, but that financially-able students respond disproportionately, even with academic merit held constant. Thus, increased emphasis on merit in financial aid may exacerbate the trend toward greater income inequality in the US, even among students of equal academic merit.
Crafting A Class: The Trade Off Between Merit Scholarships and Enrolling Lower-Income Students
2005
Our paper uses institutional-level panel data to test whether an increase in the number of institutionally funded National Merit Scholarship (NMS) winners at an institution is associated with a reduction in the number of Pell Grant recipients at the institution. We find that, other factors held constant, an increase in the share of institutionally funded NMS winners in an institution's first-year class is associated with a reduction in the share of Pell Grant recipients among the institution's undergraduate student body and that the magnitude of this relationship is larges at the institutions that enroll the greatest number of NMS students.
The Enrollment Effects of Merit-Based Financial Aid: Evidence from Georgia's HOPE Scholarship
Social Science Research Network, 2001
This paper examines the effects of Georgia's merit-based HOPE Scholarship on college enrollment. Introduced in 1993, the HOPE Scholarship covers tuition, fees, and book expenses for students attending Georgia public colleges, and provides a subsidy of comparable value to students attending in-state private colleges, without any income restrictions. Treating HOPE as a natural experiment, we contrast college enrollment in Georgia with those in the other member states of the Southern Regional Educational Board using IPEDS data for the period 1988-97. We estimate that the HOPE increased total freshmen enrollment by 5.9 percent, with the gains concentrated in 4-year schools. For freshmen recently graduated from high school attending 4-year colleges, two-thirds of the program effect is explained by a decrease in students leaving the state. Both white and black enrollments increased because of HOPE, with the state's historically-black institutions playing an important role. Finally, the total HOPE-induced enrollment increase represents only 15 percent freshmen scholarship recipients.
Financial aid packages and college enrollment decisions: An econometric case study
2002
We study the effects of a change in financial aid policy introduced by a Northeastern university in 1998. Prior to that time, the university's financial aid packages for low-income students consisted of grants, loans, and campus jobs. After the change, the entire loan portion of the package for low-income students was replaced with grants. We find the program increased the likelihood of matriculation by low-income students by about 3 percentage points, although the effect is not statistically significant. The effect among low-income minority students was between 8 and 10 percentage points and statistically significant at the 10 percent level.