Does Broad-Based Merit Aid Improve College Completion? Evidence from New Mexico's Lottery Scholarship

Christopher Erwin () and Melissa Binder ()
Additional contact information
Christopher Erwin: Department of Economics University of New Mexico Albuquerque, NM 87131
Melissa Binder: Department of Economics University of New Mexico Albuquerque, NM 87131

Education Finance and Policy, 2020, vol. 15, issue 1, 164-190

Abstract: We use the natural experiment of a state lottery scholarship to measure the effect of generous financial aid on graduation rates at New Mexico's flagship public university. During the study period, the scholarship program paid full tuition for eight semesters for any state resident earning a 2.5 grade point average in their first semester at any public two-year or four-year college. We find a significant positive completion effect of 10 percentage points (17.9 percent) for academically well-prepared students that is offset by a large negative effect of 11.6 percentage points (38.8 percent) for less-prepared students. We posit that the scholarship program, which effectively erased the difference in tuition at two- and four-year colleges, may have induced weaker students to take their chances on a more prestigious, yet riskier, academic path.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.mitpressjournals.org/doi/pdf/10.1162/edfp_a_00270 (application/pdf)
Access to PDF is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tpr:edfpol:v:15:y:2020:i:1:p:164-190

Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=1557-3060

Access Statistics for this article

Education Finance and Policy is currently edited by Stephanie Riegg Cellini and Randall Reback

More articles in Education Finance and Policy from MIT Press
Bibliographic data for series maintained by The MIT Press ().