Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/172214 
Year of Publication: 
2016
Series/Report no.: 
Upjohn Institute Working Paper No. 16-252
Publisher: 
W.E. Upjohn Institute for Employment Research, Kalamazoo, MI
Abstract: 
As the costs of higher education rise, many communities have begun to adopt their own financial aid strategy: place-based scholarships for students graduating from the local school district. Some place-based scholarships impose merit- and/or need-based restrictions, while others require little more than residency and graduation. In this paper, we examine the reach and cost-effectiveness of the Kalamazoo Promise, one of the more universal and more generous place-based scholarships. Building upon estimates of the program's heterogeneous effects on degree attainment, individual-level scholarship cost data, and projections of future earning profiles by education, we examine the Promise's benefit-cost ratios for different types of students differentiated by income, race, and gender. Although the average break-even rate of return of the program is about 11 percent, rates of return vary greatly by group. The Promise has high returns for both low-income and non-low-income groups, for nonwhites, and for women, while benefit assumptions matter more for whites and men. Our results show that universal scholarships can reach many students and have a high rate of return, particularly for places with a high percentage of African American students.
Subjects: 
place-based scholarship
enrollment
college completion
natural experiment
difference-in-differences
financial aid policy
benefit-cost analysis
JEL: 
I21
I22
I24
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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