In-state college merit scholarship programs have little impact

Fifteen U.S. states currently have broad-based college merit scholarship
programs. Based on either high school grade point averages or scores on college
entrance exams, these in-state tuition scholarships are awarded to at least 30
percent of each state's graduating high school class. In total, the 15 states
spend about $2,191 per recipient or $1.4 billion per year. The aid programs
appear to slightly increase the probability that residents born in the state
live there after college, but they may also decrease the probability that people
attain a four-year college degree.

In Higher Education, Merit-Based Scholarships, and Post-Baccalaureate Migration
(NBER Working Paper No. 18530), co-authors Maria Fitzpatrick and Damon Jones use
Census and American Community Survey data to track college attendance, college
completion, and residential decisions of 24-to-32 year olds between 1990 and
2010. After controlling for race, gender, and state unemployment rates, they
find that merit aid eligibility is associated with a 1 percentage point increase
in the proportion of people who are born in a state and remain residents of it
until they are between 24 and 32 years old.

However, merit aid does not affect the proportion of people in that age group
who remain resident and earn a BA degree. In fact, the data suggest that merit
scholarships may slightly decrease BA degree attainment. So, unless BA
completion rebounds after age 32, the authors conclude that by encouraging
additional students to stay in-state for college, these merit scholarship
programs may either be crowding out less able students or creating
student-college mismatches that reduce the likelihood of graduating. Overall,
their results suggest that at most 2 percent of the 30 percent of high school
graduates targeted by merit scholarship programs change their degree attainment
or ultimate migration patterns.