EconStor >
Forschungsinstitut zur Zukunft der Arbeit (IZA), Bonn >
IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA) >

Please use this identifier to cite or link to this item:
Title:The Effects of Merit-Based Financial Aid on Course Enrollment, Withdrawal and Completion in College PDF Logo
Authors:Lee, Kyung Hee
Cornwell, Christopher Mark
Mustard, David B.
Issue Date:2003
Series/Report no.:IZA Discussion paper series 820
Abstract:Since Georgia unveiled its HOPE Scholarship in 1993, at least 15 other states have implemented or proposed merit-aid programs based on the HOPE model. A common justification for these actions is to promote and reward academic achievement, thereby inducing greater investments in human capital. However, grade-based eligibility and retention rules encourage other behavioral responses. Using data extracted from the longitudinal records of all undergraduates who enrolled at the University of Georgia (UGA) between 1989 and 1997, we estimate the effects of HOPE on course enrollment, withdrawal and completion, and the diversion of course taking from the academic year to the summer, treating non-residents as a control group. First, we find that HOPE decreases full-load enrollments and increases course withdrawals among resident freshmen. The combination of these responses results in a 12% lower probability of full-load completion and an annual average reduction in credits completed of about 0.8 or 2%. The latter implies that between 1993 and 1997 Georgia resident freshmen completed almost 12,600 fewer credit hours than non-residents, or about 2,520 individual course enrollments. Second, the scholarship?s influence on course-taking behavior is concentrated on students whose GPAs place them on or below the scholarship-retention margin. Third, program effect increased with the lifting of the income cap. Fourth, these freshmen credit-hour reductions represent a general slowdown in academic progress and not just intertemporal substitution. Finally, residents diverted an average of .5 credits from the regular academic year to the summer in each of their first two summers after matriculation, which amounts to a 22% rise in summer course taking.
Subjects:human capital
merit-based aid
higher education
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

Files in This Item:
File Description SizeFormat
dp820.pdf549.3 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.