Student Responses to Merit Scholarship Retention Rules

Christopher Cornwell (), Kyung Hee Lee and David B. Mustard ()

Journal of Human Resources, 2005, vol. 40, issue 4

Abstract: A common justification for state-sponsored merit scholarships like Georgia’s HOPE program is to promote academic achievement. However, grade-based retention rules encourage other behavioral responses. Using longitudinal records of enrolled undergraduates at the University of Georgia between 1989 and 1997, we estimate the effects of HOPE on course-taking, treating nonresidents as a control group. First, we find that HOPE decreased fullload enrollments and increased course withdrawals among resident freshmen. Second, the scholarship’s influence on course-taking behavior is concentrated on students whose predicted freshmen GPAs place them on or below the scholarship-retention margin. Third, HOPE substantially increased summer school credits.

Date: 2005
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