Meritorious and (Un)Equal: Examining the Effect of Merit Aid on Social Mobility

• In Event: Exploring the Intricacies of Financial Aid Policy: Aid Applications and Student Outcomes

Abstract

Merit-aid programs have grown in popularity over the years despite mixed findings on its (un)intended outcomes on student success. Grounded in multiple theoretical lenses (i.e., peer effect, signaling theory, meritocracy in higher education), this study leverages a national dataset to examine the effect of strong statewide merit-aid programs on institutions’ social mobility rates, and whether the effect varies by institutional selectivity. Using generalized difference-in-differences and two-way fixed-effects event-study regression, we find that strong merit-aid is largely not related to social mobility rate at treated institutions. However, strong merit-aid have a positive impact on selective institutions’ social mobility rate, while it is negatively associated with non-selective institutions’ social mobility rate.

Authors

• Xiaodan Hu, Northern Illinois University

• Frank Fernandez, University of Florida

• Kubra Say, University at Buffalo