The Effects of Financial Aid Loss on Persistence and Graduation: A Multi-Dimensional Regression Discontinuity Approach

Abstract

For years Georgia's HOPE Scholarship program provided full tuition scholarships to high achieving students. State budgetary shortfalls reduced its generosity in 2011. Under the new rules, only students meeting more rigorous merit-based criteria would retain the original scholarship covering full tuition, now called Zell Miller, with other students seeing aid reductions of approximately 15 percent. We exploit the fact that two of the criteria were high school GPA and SAT/ACT score, which students could not manipulate when the change took place. We compare already-enrolled students just above and below these cutoffs, making use of advances in multi-dimensional regression discontinuity, to estimate effects of partial aid loss. We show that, after the changes, aid flowed disproportionately to wealthier students, and find no evidence that the financial aid reduction affected persistence or graduation for these students. The results suggest that high-achieving students, particularly those already in college, may be less price sensitive than their peers.

Becoming HOPEless in the 2-Year Sector

“…Established in 1993, HOPE is one of the first merit aid programs in the United States (Jones et al, 2022). As stated above, this program is separated into HOPE Scholarship and HOPE Grant, with the former focused on 4-year and the latter on 2-year students.…”

“…This strengthened work engagement led them to recover only 14 cents of each dollar lost by becoming HOPEless. Finally, the most recent study on the topic is by Jones et al (2022). In this study, the authors analyzed the same policy change studied in this study but focused on the HOPE Scholarship.…”

“…Notably, these group of students receiving this partial support correspond to the group of students who never lost the support studied by Henry et al (2004), who also performed the best across their comparison groups. 10 Two common characteristics of these studies (Carruthers & Özek, 2016;Henry et al, 2004;Jones et al, 2022) are (a) their focus on the HOPE Scholarship as opposed to the HOPE Grant (i.e., the public 2-year sector), and (b) their focus on not qualifying for or failing to maintain minimum scholarship requirements. This study instead focuses on the HOPE Grant (public 2-year sector) and on students whose academic qualifications remained the same (while making satisfactory academic progress) but the scholarship requirements changed.…”

“…Although this policy change is not new, so far no state-based research has been conducted to assess the magnitude of its effects. For example, as discussed in the literature review section, in a recent study Jones et al (2022) analyzed this change but these authors focused on the HOPE Scholarship with no known analyses of its impact on 2-year students at the population state level. Although our results consistently reflected negative effects of this change in the 2-year sector among HOPEless students, on a positive note, on July 1st, 2013 the State reversed the GPA cutoff changes and awarded this HOPE Grant support to students with an average undergraduate cumulative GPA of 2.0.…”

“…This study focuses on what is perhaps the most well-known state level merit-based scholarship in the United States: The Georgia’s Helping Outstanding Pupils Educationally (HOPE) program (Technical College System of Georgia, 2011). Since its establishment in 1993, most of previous literature concerning HOPE has been focused on analyses conducted in the 4-year sector version of this support, the HOPE Scholarship (see Jones et al, 2022, for a recent example). Unlike the HOPE Scholarship, which requires a high school grade point average (GPA) of 3.0 or higher, the HOPE Grant only funds students enrolled in the state’s public 2-year sector, the Technical College System of Georgia (TCSG) and does not require recipients to graduate from high school with a specific GPA but only to maintain a minimum postsecondary GPA once enrolled in college (Georgia Student Finance Commission, 2015).…”