Sibling Spillovers of Merit-Based Scholarships

• In Event: Navigating Higher Education Opportunity: From Affirmative Action Reform to Community College Pathways

Abstract

Do state-funded merit scholarships generate benefits beyond their direct recipients? As college affordability remains a central policy concern, understanding whether financial aid produces broader household-level returns is critical for accurate program evaluation and resource allocation. Conventional cost-benefit analyses of financial aid programs focus exclusively on recipient outcomes, potentially underestimating the total social value of such investments.

This paper examines the intra-household spillover effects of Georgia's HOPE and Zell Miller Scholarships, which provide free tuition at in-state public colleges, on the postsecondary enrollment of younger siblings. In particular, I estimate how marginal eligibility of older siblings for the scholarship affects their younger siblings’ college enrollment and institutional choice.

Using student-level administrative records from a large public school district in Metro Atlanta, linked to National Student Clearinghouse postsecondary data, I track high school graduating cohorts from 2012 through 2023 and observe college enrollment outcomes for over 34,000 sibling pairs. Identification relies on a fuzzy regression discontinuity design centered on the older sibling’s 3.0 GPA eligibility threshold for the HOPE Scholarship. I exploit the sharp discontinuity in scholarship receipt at this cutoff to instrument for older siblings’ actual award receipt, thereby isolating the spillover effect of financial aid on younger siblings’ college enrollment while avoiding the reflection problem inherent in estimating peer and sibling effects. Covariate balance tests, density checks, donut RD specifications, and placebo cutoff exercises collectively support the validity of the research design.

The first-stage estimates show that crossing the 3.0 GPA threshold increases the probability that older siblings receive the scholarship by 74 percentage points. Older sibling eligibility increases younger siblings’ on-time college enrollment by 4.7 percentage points (a 9 percent increase relative to the control complier mean), compared with younger siblings whose older siblings narrowly miss the scholarship. Spillover effects are larger for in-state and public college enrollment, consistent with the scholarship’s incentive structure, which is most generous for in-state public institutions.

Heterogeneity analyses reveal that spillover effects are concentrated among low-income families, as proxied by eligibility for free or reduced-price meals (FRPM). Among FRPM-eligible younger siblings, on-time enrollment rises by 13 percentage points and in-state enrollment by 17 percentage points, effectively closing enrollment gaps between low- and higher-income households at the eligibility margin. Full-time enrollment increases by 6.8 percentage points, suggesting that reductions in household financial constraints may enable younger siblings to pursue more intensive enrollment. Demographically, Black students and students with disabilities experience the largest spillover benefits. Effects are also more pronounced among siblings with age gaps of four years or less, consistent with information transmission as a contributing mechanism.

These findings have implications for financial aid policy design and program evaluation. By documenting positive externalities that extend to non-recipient household members, particularly those from economically disadvantaged backgrounds, this paper demonstrates that merit-based scholarships may be substantially more cost-effective than conventional estimates suggest. Policymakers evaluating the equity and efficiency of state aid programs should account for household-level spillovers when assessing program returns, especially in contexts where siblings’ college decisions are interdependent under binding budget constraints.

Author

• Bogyung Kim, Georgia State University
  Presenting Author