Low-performing student responses to state merit scholarships

Christopher Erwin ()
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Christopher Erwin: NZ Work Research Institute, Faculty of Business, Economics and Law at AUT University

No 2019-02, Working Papers from Auckland University of Technology, Department of Economics

Abstract: State merit scholarships may affect academic outcomes for low-performing college students, yet low-performers are generally overlooked in existing literature. New Mexico’s lottery scholarship provides tuition-free college to residents meeting a uniquely “low-bar” eligibility criteria. Using administrative data, a discontinuity in eligibility rules identifies local average treatment effects on degree completion and course taking behavior for students with below-average college grades. Results suggest a reduction in time-to-degree corresponding to the scholarship’s funding cap, with no overall change in degree completion. Despite modest eligibility requirements related to credit completion, the scholarship increased credit completion among low-achieving students. Some students appear to manipulate scholarship eligibility by taking fewer courses or strategically dropping courses during a qualifying semester in order to secure aid. A bounding exercise suggests partial manipulation of eligibility rules results in selection bias which underestimates the true effect of the scholarship on time to degree and credit completion.

Keywords: higher education; state merit scholarships; time to degree; college completion (search for similar items in EconPapers)
JEL-codes: C14 D04 H75 I22 I23 (search for similar items in EconPapers)
Date: 2019-02
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