Keeping HOPE Alive: An Economic Analysis of Georgia's Lottery-funded Scholarship Program

University Of Georgia Research Foundation Inc, Athens GA

Investigators

Abstract

9986469 Cornwell In September 1993, Georgia instituted its then unique lottery-funded college scholarship program called HOPE ("Helping Outstanding Pupils Educationally"). The scholarship pays the entire tuition, fees and book expenses of Georgia citizens who attend state universities and a comparably-valued fixed payment to Georgians attending in-state private institutions. Since its inception, over $750 million of HOPE scholarship aid has been distributed to over 420,000 students. The program's popularity has led other states to adopt similar proposals, and President Clinton designated Georgia's HOPE Scholarship as the model for the federal HOPE tuition tax credit. The defining issue of the 1998 Alabama and South Carolina gubernatorial elections was whether to institute a Georgia style scholarship. Students qualify for HOPE entirely on the basis of merit and there are no income restrictions. To become eligible, a high-school student must graduate with a "B" average. Once in college, the student must maintain a "B" average with a minimum number of credits to retain the award. These features, along with its overall size and scope, make Georgia's HOPE Scholarship one of the most important educational reforms in recent decades. HOPE fits into the national trend of offering increasing shares of merit-based aid and therefore affords a unique opportunity to learn how merit-based financial aid programs impact higher education. The project provides a rigorous empirical analysis of three questions about HOPE that focus on behavioral responses to the scholarship: How does HOPE affect decisions to enroll in college? How does losing HOPE change postsecondary outcomes? How has HOPE changed students' behaviors during their college careers? Each issue introduces many important policy implications.