The Effects of State-Sponsored Merit Scholarships on Course Selection and Major Choice in College

39 Pages Posted: 3 Feb 2006

See all articles by Christopher Cornwell

Christopher Cornwell

University of Georgia, C. Herman and Mary Virginia Terry College of Business, Department of Economics

Kyung Hee Lee

Sogang University

David B. Mustard

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics; IZA Institute of Labor Economics; University of Georgia Law School

Date Written: January 2006

Abstract

A common justification for HOPE-style merit-aid programs is to promote and reward academic achievement, thereby inducing greater investments in human capital. However, grade-based eligibility and retention rules encourage other behavioral responses. Using data extracted from the longitudinal records of all undergraduates who enrolled at the University of Georgia (UGA) between 1989 and 1997, we estimate the effects of HOPE on college GPA, course selection, and major choice, treating non-residents as a control group. First, we find that HOPE increased resident freshman GPA by 0.13 point, while its effect on GPA after the first year is weak. Second, HOPE reduced the number of credit hours completed in math and science core curriculum courses during the first year, and this effect persisted into the second at roughly the same magnitude. Over both years, the estimated program effects imply that residents completed about 1.2 fewer math and sciences credit hours. Finally, the likelihood that the average resident freshman would choose to major in Education jumped 1.2 percentage points relative to their out-of-state counterparts after HOPE was introduced and the scholarship's influence on this decision was more pronounced for women and whites.

Keywords: merit aid, education finance

JEL Classification: I2

Suggested Citation

Cornwell, Christopher Mark and Lee, Kyung Hee and Mustard, David B., The Effects of State-Sponsored Merit Scholarships on Course Selection and Major Choice in College (January 2006). IZA Discussion Paper No. 1953. Available at SSRN: https://ssrn.com/abstract=880430

Christopher Mark Cornwell

University of Georgia, C. Herman and Mary Virginia Terry College of Business, Department of Economics ( email )

Terry College of Business
U of Georgia
Athens, GA 30602
United States
706-542-3670 (Phone)
706-542-3376 (Fax)

Kyung Hee Lee

Sogang University

Seoul 121-742
Korea, Republic of (South Korea)

David B. Mustard (Contact Author)

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics ( email )

Athens, GA 30602-6254
United States
706-542-3624 (Phone)
706-542-3376 (Fax)

HOME PAGE: http://www.terry.uga.edu/~dmustard/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

University of Georgia Law School

225 Herty Drive
Athens, GA 30602
United States

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