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Lottery Scholarships: Lessons Learned

William R. Doyle

Vanderbilt University


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Lottery Scholarships: Lessons Learned

Effect of lottery scholarships on:

  • Attendance rates

  • Student migration

  • Adult migration

  • Persistence and Completion

    Other Effects:

  • Unintended Consequences








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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 18-19 year olds by 7.0 to 7.9 percentage points


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Effect of Merit Scholarships on Participation

Dynarski, 2000:

“Due to key differences between the federal and Georgia programs, these estimates should be treated as a generous upper bound . . .”


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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.”


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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.”


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Effect of Merit Scholarships on Participation

Binder and Ganderton 2002

“Despite its generous terms, NM Success has not increased the overall college enrollment rate among high school graduates.”


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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


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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


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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.


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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


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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


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Effect of Merit Aid on Persistence and Completion

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


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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).


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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


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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


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Georgia: HOPE Recipients, 1993: 2002

Source: Georgia Student Finance Commission 2004


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Georgia: HOPE Awards, 1993-2002(In Millions)

Source: Georgia Student Finance Commission 2004




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Florida: Bright Futures Awards

Source: CEPRI, 2003




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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


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