Higher Education, Merit-Based Scholarships, and Post-Baccalaureate Migration
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.
... only a small fraction of the eligible population responds to merit aid by changing educational or migration decisions.
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.