Jackpot? The impact of lottery scholarships on enrollment in Tennessee

Donald Bruce and Celeste Carruthers

Journal of Urban Economics, 2014, vol. 81, issue C, 30-44

Abstract: We identify how the cost of college shapes high school graduates’ choice of college state and sector by exploiting discontinuous eligibility criteria for broad-based merit scholarships in Tennessee. For students whose ACT is a decisive factor in their scholarship eligibility, reductions in college cost result in substitution away from two-year community colleges in favor of four-year institutions. This pattern is more prominent among lower income students, and treatment effects are limited to a very local window around the qualifying threshold. We find no evidence that the scholarship affects college-going at the eligibility margin, little to no evidence of substitution between in-state and out-of-state colleges, and no evidence of substitution between public and private universities. Even so, results demonstrate that merit aid encompassing the middle of the ability spectrum can improve the quality of colleges students choose to attend.

Keywords: Education policy; Higher education; Financial aid (search for similar items in EconPapers)
JEL-codes: H75 I22 I23 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (46)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:81:y:2014:i:c:p:30-44

DOI: 10.1016/j.jue.2014.01.006

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