Lottery Scholarships: Lessons Learned William R. Doyle Vanderbilt University

Lottery Scholarships: Lessons Learned Effect of lottery scholarships on: Attendance rates Student migration Adult migration Persistence and Completion Other Effects: Unintended Consequences

Lottery Scholarships: Characteristics Award CriteriaAward Amount Florida: Bright Futures GPA and SAT/ACTFull tuition at public plus $300 Georgia: HOPEGPAFull tuition at public plus $300 Kentucky: KEESGPA and SAT/ACT$1,000 per year New Mexico: Lottery Success College GPAFull tuition and fees, publics only South Carolina: HOPE and Lottery Tuition Assistance GPA, SAT/ACT and class rank $2,500 plus $150 books, or cost of tuition West Virginia: Promise GPA and SAT/ACTFull tuition at publics Source: Heller, 2004

States With Merit Aid Programs, 1994

States With Merit Aid Programs, 1998

States With Merit Aid Programs, 2002

States With Merit Aid Programs, 2005

Shift in State-Based Financial Aid

Effect of Merit Scholarships on Participation Dynarski, 2000 Looked at attendance rates of young people in Georgia and other nearby states before and after implementation of HOPE Found that HOPE increased the college participation rate of year olds by 7.0 to 7.9 percentage points

Dynarski, 2000: “Due to key differences between the federal and Georgia programs, these estimates should be treated as a generous upper bound...” Effect of Merit Scholarships on Participation

Dynarski, 2000: “Further, the evidence suggests that Georgia’s program has widened the gap in college attendance between blacks and whites and between those from low- and high-income families.” Effect of Merit Scholarships on Participation

Cornwell and Mustard 2003 “We estimate that the scholarship increased the overall freshmen enrollment rate by 6.9 percentage points with the gains concentrated in 4-year schools.”

Binder and Ganderton 2002 “Despite its generous terms, NM Success has not increased the overall college enrollment rate among high school graduates.” Effect of Merit Scholarships on Participation

Many studies find that students are likely to shift from two-year to four-year institutions Effect of lower prices, different incentives are posited to be possible causes Effect of Merit Scholarships on Participation

Effect of Merit Scholarships on Student Migration Dynarski 2000 HOPE decreases the number of Georgia students attending out of state, from 5,000 to 4,500 Effect is particularly strong at institutions in border states with typically large freshmen enrollments from Georgia

Effect of Merit Scholarships on Student Migration Cornwell and Mustard 2003 Utilize a slightly different methodology than Dynarski Results are very similar: HOPE has encouraged more students to attend higher education in-state.

Effect of Merit Aid Scholarships on Adult Migration No evidence from the literature yet exists on this question But: –More highly educated people are more mobile –Mobility among the educated is driven primarily by job market concerns

Effect of Merit Aid on Persistence and Completion Henry, Rubenstein and Bugler 2004 Looked at similar students above and below the “borderline” for HOPE Students with HOPE: –Had more credit hours –Had higher GPA’s –Were more likely to graduate

Binder and Ganderton 2002 Students with Success scholarships (NM) were more likely to drop out Students with Success scholarships were also more likely to reduce credit hours and withdraw from courses Effect of Merit Aid on Persistence and Completion

Merit Aid Programs: Unintended Consequences Grade Inflation: Bradbury and Campbell (2003) find that grade inflation did occur in Georgia high schools after HOPE was implemented Lexus effect: Substition of scholarship dollars for consumption does occur (Cornwell and Mustard, 2002) Tuition, Room and Board: Some evidence that college cost rise as a result of these scholarships (Long, 2003).

Who Adopts Merit Aid Programs? Factors associated with adoption –Low SAT/ACT Scores –Low outmigration –Low educational attainment –Higher levels of income No relationship found between adoption and: –Political characteristics –Diffusion Source: Doyle, 2006

A Decade of Merit Aid: The Summary Participation: scholarships increase enrollment, but effect is different by state. Participation: scholarships tend to shift student from two year to four year institutions Migration: scholarships reduce out-of-state migration to attend college Migration: no evidence on adult migration Persistence: Evidence is mixed, no clear findings

Georgia: HOPE Recipients, 1993: 2002 Source: Georgia Student Finance Commission 2004

Georgia: HOPE Awards, (In Millions) Source: Georgia Student Finance Commission 2004

Georgia: Lottery Proceeds,

Florida: Bright Futures Recipients Source: CEPRI, 2003

Florida: Bright Futures Awards Source: CEPRI, 2003

Florida: Lottery Proceeds,

West Virginia: Lottery Proceeds,

Issues for the Future Long term academic effects: –Retention/completion –Academic major –High school performance Effects on need based aid –Squeezing out of need-based programs –Need within merit/ Merit within need programs