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

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Abstract

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.

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Data Availability

The data for this project are confidential and are used by the authors under a signed Confidentiality and Data Use Agreement with the Governor's Office of Student Achievement (GOSA). Release of the data to a third party is prohibited unless permission is specifically granted by GOSA in writing.

Notes

  1. Private college scholarships were originally $1000 but increased to $3000 in 1995.

  2. For example, the Zell Miller scholarship amount for 15 credit hours in Georgia’s research universities (Georgia Institute of Technology, Georgia State University, University of Georgia) was $3641 in 2011–2012, and the HOPE amount was $3181.50. The difference is $459.50, which indicates about a 13 percent gap between tuition and HOPE awards. The 13 percent gap was constant across the University System of Georgia’s institution, according to the Georgia Student Finance Commission’s award information in the 2012 academic year (https://apps.gsfc.org/main/publishing/pdf/common/FY2012_HOPEandZellMillerCombined.pdf.).

  3. At the flagship institutions that most Zell Miller-eligible students attend, Georgia Tech’s fees were $1,185 and UGA’s fees were $1095 for the Fall semester of the academic year 2012 (https://www.usg.edu/fiscal_affairs/tuition_and_fees/v5-index/fiscal_year_2012).

  4. Our baseline models use actual HOPE GPA and students’ highest ACT/SAT scores. Then, we use predicted HOPE GPA rather than actual HOPE GPA, and first ACT/SAT scores rather than highest scores, to adjust for potential scholarship-induced grade inflation and increased test-taking behavior after the 2011 changes. Details are described further below.

  5. Scholarship eligibility is based on students’ highest test score at a single test administration.

  6. As shown in Appendix Table 7, approximately 99 percent and 95 percent of predicted Zell Miller and HOPE scholarship recipients, respectively, actually received scholarships when using actual HOPE GPA and highest test score to measure eligibility. Using predicted HOPE GPA and first ACT/SAT test score to predict eligibility, approximately 96 percent and 80 percent of predicted recipients actually received scholarships. The table uses only students who enrolled at Georgia institutions as we only observe actual scholarship receipt for these students.

  7. We use predicted GPA and first test scores to reduce potential bias from grade inflation or test re-taking.

  8. These estimates come from separate multivariate regression models for each group that exclude the interaction terms from Eq. (1) and include covariates, and school and cohort fixed effects. The standard errors are clustered at the school level.

  9. The scholarship changes were announced in March 2011 and became effective immediately, leaving 2011 high school graduates little time to adjust plans for fall enrollment.

  10. In the pre-change period, this threshold did not exist and students above and below received the same merit-based scholarship.

  11. In response to concerns that the retention criteria could reduce STEM majors, the university system began adding 0.5 points to students’ grades in approved STEM courses, beginning in fall 2017. Students in our sample enrolled in college before this change took effect.

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Acknowledgements

The contents of this report were developed using data provided by Georgia’s Academic and Workforce Analysis and Research Data System (GA·AWARDS). However, those contents do not necessarily represent the policy of GA·AWARDS or any of its participating organizations, and you should not assume endorsement by GA·AWARDS or any of its participating organizations.

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  1. IBO, New York City, USA

    Youngwan Song

  2. Department of Public Management and Policy, Andrew Young School of Policy Studies, Georgia State University, Atlanta, USA

    Ross Rubenstein

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Appendix

Appendix

See Table 7.

Table 7 Actual and predicted scholarship receipt, 2008–2010 cohorts
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Song, Y., Rubenstein, R. How Does Reducing Merit-Aid Generosity and Certainty Affect College Choices? Evidence from Georgia’s HOPE Scholarship. Res High Educ 65, 1–41 (2024). https://doi.org/10.1007/s11162-023-09747-6

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