The Role of Merit-Based Aid in College Enrollment and Selection: Evidence from Georgia’s HOPE Scholarship

• In Event: College and Post-College Outcomes of Merit-Based Financial Aid

Abstract

This study examines the impact of Georgia’s merit-based HOPE Scholarship on high school students’ college decisions. As concerns about college affordability and the effectiveness of financial aid policies grow, recent research has increasingly focused on whether aid programs reach the students who need them most. In Georgia, the HOPE Scholarship covers up to 90% of tuition costs for in-state college students and, as of 2023, supports over 178,000 students (Georgia Student Finance Commission, 2024). However, its merit-based eligibility criteria—lacking an income requirement—may unintentionally exacerbate disparities between low- and high-income students (Dynarski, 2000).

HOPE increased overall college enrollment in Georgia compared to other Southern states (Dynarski, 2000; Long, 2004; Cornwell et al., 2006). To better understand its equity implications, it is crucial to examine students at the eligibility margins and assess heterogeneous effects across subgroups. This study addresses that need by investigating how scholarship eligibility influences two key dimensions: (1) whether students enroll in college and (2) where they enroll—specifically, whether they attend in-state institutions, four-year colleges, selective institutions, or pursue specific majors.

College choice is as important as overall enrollment when evaluating the impact of HOPE. Since the scholarship is only available to students attending in-state institutions, I examine whether HOPE effectively retainstudents within Georgia, strengthening Georgia’s higher education system and future workforce. HOPE has also been shown to improve educational equity and quality (Henry & Rubenstein, 2002), potentially driving enrollment in four-year or selective colleges. Additionally, I assess major choice as a key outcome, as financial aid may influence students to pursue high-demand or higher-earning fields.

My analysis uses rich student-level administrative data from large public school districts in metro Atlanta graduating cohorts from 2011 to 2023, collectively representing approximately 35% of Georgia's high school graduates each year. The dataset includes high school GPA, demographic characteristics, high school enrollment histories, and postsecondary enrollment records from the National Student ClearingHouse.

To identify causal impacts, I mainly use a regression discontinuity design with cohort and high school fixed effects, that exploits the sharp eligibility threshold at a weighted high school GPA of 3.0, as determined by the Georgia Student Finance Commission. Students are notified of their eligibility during the spring semester of 12th grade. Assuming no manipulation of GPA around the threshold and smooth distribution of unobservable characteristics, the RD approach isolates the effect of scholarship eligibility on postsecondary outcomes (Imbens & Lemieux, 2008). In addition to estimating academic and behavioral responses to the scholarship, I complement these findings with a cost-benefit analysis to assess the economic implications of increased college enrollment driven by HOPE. This evaluation provides a broader policy perspective on the long-term benefits of merit-based aids. Together, these findings will offer important insights into how merit-based scholarships influence educational trajectories, which students benefit most, and at what cost.

Author

• Bogyung Kim, Georgia State University
  Presenting Author