New Report: Merit Aid May Be Training Other States’ Workforce

A national study could undermine one of the central arguments behind financial aid policies based on academic merit.

Despite data showing that merit aid largely benefits students from less needy, higher-income families, advocates for awarding aid based on students’ academic credentials  argue that these programs keep promising college students in-state during – and many times, following – their academic careers.

But a National Bureau of Economic Research report written by Maria Fitzpatrick and Damon Jones, public policy professors at Cornell University and the University of Chicago, respectively, argue that these programs may be paying to train the future workforces of other states. 

Awarding scholarships based on academic performance does not have a considerable effect on graduates’ migration patterns, according to the NBER research. 

Fitzpatrick and Jones write that “nearly all of the spending on these programs is transferred to individuals who do not alter educational or migration behavior,” and after an extensive examination of state merit-based programs across the country, the policy experts concluded that these scholarships “altered the behavior of at most” 2 percent of participating students. 

There were 28 states with some form of merit-based student aid system in 2011, such as the Georgia’s $3.9 billion HOPE scholarship program. Many states base the merit scholarships on minimum grade point averages, while other states use standardized test scores to determine which students will receive aid. 

Georgia’s HOPE program, a model for many merit-based scholarship initiatives after its launch in 1993, began with a household income cap of $66,000, meaning students from families that exceeded that number would not qualify for HOPE funds. That cap jumped to $100,000 in 1994, and was altogether eliminated a year later, making any student from any family – not matter the income level – eligible for state scholarship money. 

The number of HOPE scholarships doubled when the income cap was removed, and the program has been dogged by funding woes as scholarships skyrocketed beyond 250,000 in 2010. 

Jones and Fitzpatrick contend that many skills acquired in college could be used anywhere in the country, not just a student’s native state. 

“If college provides location-specific human or social capital, students who are induced to remain in their home state for college may remain in the state after graduation,” the researchers write. “On the other hand, if the skills acquired during college are relatively portable geographically, states with merit aid policies may find themselves paying to train the future workforces of other states.”

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