The enrollment effects of merit-based financial aid: Evidence from Georgia's HOPE Program

Introduced in 1993, Georgia's HOPE Program sponsors a merit-based scholarship for students attending in-state colleges and a grant for those entering technical schools. There are no income restrictions. Comparing Georgia with other southeastern states over the 1988-97 period, HOPE increased freshmen enrollment by 5.9%, or 2,889 students per year, which amounts to only 15% of freshmen scholarship recipients. Four-year colleges account for most of the gain; a reduction in students leaving the state explains two-thirds of the 4-year-school effect attributable to freshmen who have recently graduated from high school. White and black enrollments increased because of HOPE.