The Effect of Merit Aid on Enrollment: A Regression Discontinuity Analysis of Iowa’s National Scholars Award
- 607 Downloads
The cost of attending college has risen steadily over the past 30 years, making financial aid an important determinant of college choice for many students and a subject of concern for colleges and state governments. In this paper, we estimate the effect of rule-based merit aid assignment on students’ enrollment decisions at the University of Iowa. Iowa evaluates many students using an admissions score comprised of high school grade point average and class rank, core high school courses, and one’s ACT test score. Students from out-of-state who meet a specific threshold score qualify for the National Scholars Award (NSA), presently worth nearly $20,000 over 4 years. We employ a regression discontinuity model to take advantage of award assignment criteria, finding that the award does increase the probability of enrollment at Iowa. This result is robust for several applicant subsamples and passes falsification checks using Iowa residents, who are ineligible for the award. Preliminary analysis of an earlier, tiered version of the currently single-valued award suggests that the NSA may have strong effects on very high-achieving candidates.
KeywordsRegression discontinuity Financial aid Merit aid College enrollment College choice
We would like to thank administrators at the University of Iowa, particularly Don Szeszycki, Beth Ingram, Carol Evans, Thomas Kruckeberg, and Beth Cole, for providing us with access to admissions and financial aid data and assistance in understanding institutional admissions and financial aid policies and processes. Jeff Smith, Brian McCall, Charlie Brown, and Kevin Stange also provided invaluable feedback and comments. Any errors are our own.
- Andrews, K., & Ziomek, R. (1998). Score gains on retesting with the ACT assessment. ACT Research Report Series, 98(7), 1–29.Google Scholar
- Aud, S., Wilkinson-Flicker, S., Kristapovich, P., Rathbun, A., Wang, X., & Zhang, J. (2013). The condition of education 2013 (NCES 2013-037). Washington, DC: U.S. Department of Education, National Center for Education Statistics. Retrieved March 25, 2014 from http://nces.ed.gov/pubsearch.
- Avery, C., & Hoxby, C. M. (2004). Do and should financial aid packages affect students’ college choices? In C. M. Hoxby (Ed.), College choices: The economics of where to go, when to go, and how to pay for it. Chicago: University of Chicago Press.Google Scholar
- Baum, S., & Ma, J. (2013). Trends in college pricing—2013. Washington, DC: The College Board.Google Scholar
- Carruthers, C., & Ozek, U. (2013). Losing HOPE: Financial aid and the line between college and work. Center for Analysis of Longitudinal Data in Education Research Working Paper 91.Google Scholar
- DesJardins, S. L. (2001b). Assessing the impact of a change in institutional aid policy: A simulation tool. Journal of Student Financial Aid, 30(3), 7–16.Google Scholar
- Hershbein, B. J. (2013). Worker signals among new college graduates: The role of selectivity and GPA. Upjohn Institute Working Paper 13-190.Google Scholar
- McFadden, D. (1976). Aggregate travel demand forecasting from disaggregated behavioral models. Transportation Research Record, 534, 24–37.Google Scholar
- Phillips, M. (2011). Cost of college on the rise (again). http://freakonomics.com/2011/10/27/cost-of-college-on-the-rise-again/. Accessed March 8, 2014.
- Savoka, E. (1991). The effect of changes in the composition of financial aid or college enrollment. Eastern Economic Journal, 17, 109–121.Google Scholar