Who loses HOPE? Attrition from Georgia's college scholarship program.

• Author: Dee, Thomas S.
• Position: Helping Outstanding Pupils Educationally

1. Introduction

   In November 1992, voters in the state of Georgia approved a constitutional amendment that allowed the initiation of a state lottery. A large share of the funds from these lotteries has been dedicated to several education initiatives: structural investments in elementary and secondary schools, prekindergarten programs for at-risk children, and the Helping Outstanding Pupils Educationally (HOPE) Scholarship program.(1) The HOPE Scholarship program provides Georgia high school graduates who have a B average free tuition and a modest book allowance at the state's public colleges and universities.(2) In the 1996-1997 school year, this popular scholarship program supported roughly 124,000 students with $159 million in lottery revenues. There is evidence that this new spending was sufficiently popular to generate a migratory response in the metropolitan areas that straddle Georgia's borders with other states (Carey 1997; Dee 1998). Georgia's college scholarships have also inspired similar proposals in other states, as well as a 1997 proposal by the Clinton administration for a nationwide "HOPE Scholarship."(3)

   The limited criticisms of these scholarship programs have emphasized that because these programs largely benefit middle- and upper-class families, they are regressive relative to the more traditional approach of providing directed financial aid (Cronin 1997; Jaffe 1997; McPherson and Schapiro 1997).(4) However, there has been less scrutiny of other intended and unintended consequences of the incentives created by such scholarships. For example, Georgia's HOPE Scholarship program only guarantees support for one year. Support for a subsequent year is conditional on the student maintaining a sufficiently high grade point average. More specifically, Georgia's HOPE Scholars are initially guaranteed support only through the academic quarter (semester) in which they have scheduled their 45th (30th) credit hour (typically one academic year). Support for every additional year is continued only for those who have earned at least a B average (a 3.0 grade point average on a 4.0 scale). The B-average standard clearly creates incentives that may promote academic achievement. However, this standard may also create important patterns of scholarship attrition that constitute another dimension along which these scholarships are inequitable. For example, disadvantaged or minority students may be more likely to lose this support soon after entering college. Furthermore, a standard based on grade point averages may also create funding inequities among similarly qualified HOPE Scholars who happen to choose courses of study with historically different grading standards. Notably, the existence of such differentials across disciplines could have further unintended consequences by creating new incentives that influence course and major selection as well as the length of time spent in college.(5) At first glance, Georgia's early experience with HOPE Scholarships suggests the determinants of scholarship attrition deserve closer scrutiny: roughly half of HOPE Scholars lose their support after only their freshman year (Vickers 1994).(6)

   This empirical study provides novel and policy-relevant evidence on some of these questions by exploiting unique individual-level administrative data on a single cohort of undergraduate students at Georgia Tech. More specifically, this study presents evidence on how important observed student characteristics systematically relate to the probability of losing a HOPE Scholarship. The evidence is particularly intended to address whether there,inequities in who retains their HOPE Scholarship and the extent to which the benefits of the HOPE Scholarships are distributed evenly across students in academic disciplines with various grading standards.(7) The results of these estimations indicate that, conditional on measures of student ability, there are not dramatic differentials with respect to race or ethnicity. For example, in models that include measures of student ability as regressors (e.g., verbal and math SAT scores, high school grade point average), black and Hispanic students appear less likely than white students to lose their HOPE Scholarships.(8) However, these results also demonstrate that there is a strong relationship between scholarship attrition and the measures of student ability. These links are likely to reflect, in part, the influence of unobserved socioeconomic priors. In particular, the empirical relevance of unobserved student attributes is underscored by the joint significance of fixed effects for each student's county of origin and how the introduction of these fixed effects influences the estimated marginal effects associated with the ability measures.

   The results presented here also indicate that there are dramatic differentials in retention of the HOPE Scholarship by the student's chosen course of study. For example, these models demonstrate that students whose major course of study is in engineering, computing, or the natural sciences are 21 to 51% more likely to lose their HOPE Scholarships than students in other disciplines. These results suggest that the eligibility standards used in Georgia's HOPE Scholarship program may have some important and unintended consequences. In particular, such standards appear horizontally inequitable in that they financially punish those HOPE Scholars whose chosen course of study provides fewer opportunities to earn high grades. This differential may also be noteworthy since it could constitute a strong incentive that influences the course and major selection of subsequent college students. Such a change in the incentives facing college students could be particularly relevant to policy given the recent evidence on the growing importance of science and math skills for the distribution of wages (Murnane, Willett, and Levy 1995).

2. Data

   The data for this study were drawn from confidential administrative records on students at Georgia Tech. More specifically, this study is based on data from freshmen who first matriculated in the summer or fall of 1996.(9) This 1996 freshman cohort is appropriate, in part because, by this time, participation in the HOPE Scholarship program was no longer means-tested. In the 1996 academic year, more than 2,500 undergraduates had freshman status at Georgia Tech. However, only 2,069 individuals of this group had actually matriculated over this period. Furthermore, only 1,350 of these students had the Georgia residency that would allow them to be considered for the HOPE Scholarship program. For these students, participation and retention in the HOPE Scholarship program was determined directly from their high school and college academic records and the HOPE eligibility requirements. In order to be as inclusive as possible, the academic progress of these students was followed for nearly two academic years (i.e., through the winter quarter of 1998). The final sample employed in this study is based on the 1,189 HOPE Scholars who had scheduled their 45th credit hour at Georgia Tech within the period of observation.(10)

   Within only their putative freshman year, a surprisingly high number of these students lost their HOPE Scholarship. The means in Table 1 indicate that among this cohort, nearly 57% failed to achieve the 3.0 grade point average cutoff after scheduling their 45th credit hour. Table 1 also presents...