Shifting Low-Income Students to Higher Quality Colleges

 Earnings inequality among college graduates has grown, and returns to a bachelor's degree (BA) vary substantially across colleges. This study experimentally evaluates a program that shifted high-achieving, low-income students into higher-quality colleges. Students randomly offered a guarantee of four years of tuition and fees at the University of Michigan were 21 percentage points more likely to enroll at a UM campus. The offer shifted students across colleges rather than into college: most compliers would otherwise have attended less-selective four-year colleges. 

HAIL increased four-year BA completion by 4 percentage points, but had no effect on attainment after six years. It substantially increased degree quality: students offered the scholarship were 12 percentage points more likely to earn a bachelor's degree from a highly or most selective college. 

IV estimates indicate that students induced to attend a University of Michigan campus were 56 percentage points more likely to earn such a degree. The increase in college quality predicts earnings gains of 18 to 25 percent. Faster degree completion adds about another 1 percent to the present discounted value of lifetime earnings.