College Merit-Aid and Academic Renewal Thresholds: Evidence from Interactions of Discontinuous Rules
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Department of Economics
West Virgina University
To increase college completion, wages, and human capital, financial aid is offered to college students. Prior treatment estimates of myriad effects of merit-aid could be biased by selection into sample or known minimum eligibility cutoffs. This paper formally models, then tests viability and validity of an extension to measuring effects of merit-aid that improves upon assessing merit-aid's impacts. Under a grade progression assumption, students finish 1 grade per year on average, the Kindergarten cohort birthdate cutoff for beginning school can be used as discontinuous variation in college scholarship receipt. The effect of aid on credits and GPA are not as different as previously estimated. Different effects by gender are found for 3 year renewal for GPA, but not credits. The rules for this design to work are widespread, making this design relevant for identification challenges in education policy.