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Higher Education, Merit-Based Scholarships and Post-Baccalaureate Migration

Issue/Topic: Economic/Workforce Development; Postsecondary Affordability--Financial Aid
Author(s): Jones, Damon; Fitzpatrick, Maria
Organization(s): Cornell University; University of Chicago
Publication: National Bureau of Economic Research
Published On: 11/1/2012

Background:
Though policymakers develop merit aid programs to affect students' lifetime education and migration decisions, much of the literature has focused on the effect of receiving a grant on college enrollment and degree completion. Given that many states have created these programs to increase the educational attainment of the workforce, the impact of grants on personal mobility is a crucial, underresearched variable in evaluating the effectiveness of merit aid.

Purpose:
To investigate whether merit aid eligibility makes it more likely for residents to remain in the state in which they were born; to examine whether merit aid makes it more likely that a person obtains at least a baccalaureate degree.

Findings/Results:
Merit Aid and Migration Effects
  • Merit aid eligibility increases the probability that 24 to 32 year olds will live in their states of birth by 0.9%--a positive but statistically insignificant relationship.
  • Interestingly, when looking at merit aid in southern states only, the relationship between aid eligibility and remaining in one's state of birth is statistically significant.
  • Merit aid generally does not have an effect on the probability of college graduates living in their birth state.

Merit Aid, Degree Completion, and College Enrollment

  • The relationship between merit aid and degree attainment appears to be negative. The data used, however, do not permit analysis of why merit-eligible students graduate at marginally lower rates than their non-merit counterparts.
  • Merit aid did little to change the probability of young adults enrolling college. The relationship is muddied by the fact that the number of merit-eligible students and the overall percent of young adults enrolling in college increased at the same time, potentially confounding results.



Policy Implications/Recommendations:
  • Enrollment at two-year institutions decreases when merit aid is made available to residents. Policymakers should consider whether merit aid might have a negative retention effect on underprepared students.
  • The results of this study suggest that only a small fraction of the eligible population responds to merit aid by changing educational or migration decisions.
  • The people that appear to take the most advantage of merit aid are students at the margin of aid eligibility. This might explain why merit aid receipt is associated with net negative retention and completion effects.

Research Design:
A model that uses administrative financial aid data, Census, and American Community Survey Data to estimate the merit aid programs’ effects on residential mobility and educational attainment. The key element of the model is a behavioral variable—the probability that a person aged 24 to 32 was induced to change behavior because of their merit aid eligibility.

Population/Participants/Subjects:
Sampling of 24 to 32 year olds living in the United States from 1990 to 2010.

Year data is from:
1990 to 2010

Setting:
National

Data Collection and Analysis:
Administrative data from broad-based financial aid programs in 15 states. Census and American Community Survey data on 24 to 32 year olds living in the United States from 1990 to 2010.

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