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Who Merits Financial Aid?: Massachusetts' Adams Scholarship

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  • Joshua Goodman

Abstract

Most states now fund merit-based ?nancial aid programs, the effects of which depend on how strongly students react to changes in college costs. I estimate such reactions using quasiexperimental aspects of a recent Massachusetts merit scholarship program intended to attract talented students to the state's public colleges. Despite its small monetary value, the Adams Scholarship induced 6% of winners to choose four-year public colleges instead of four-year private colleges, suggesting an elasticity of demand for public college enrollment above unity. Nonetheless, most funds ?owed to students who would have enrolled in public colleges absent the scholarship and the aid had no effect on winners' overall college enrollment rate, which already exceeded 90%. Regression discontinuity estimates are larger than those from difference-in-difference speci?cations because winners with relatively low academic skill, and thus nearest the treatment threshold, reacted much more strongly to the price change than did highly skilled winners. Conditional on academic skill, low-income winners reacted similarly to their higher income peers, suggesting that previous research may have mistaken income heterogeneity for skill heterogeneity.

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  • Joshua Goodman, "undated". "Who Merits Financial Aid?: Massachusetts' Adams Scholarship," Working Paper 95406, Harvard University OpenScholar.
    • Handle: RePEc:qsh:wpaper:95406
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    File URL: http://scholar.harvard.edu/joshuagoodman/node/95406
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