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Does Merit-Based Aid “Crowd Out” Need-Based Aid?

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Abstract

The advent of merit-based state financial aid programs has had several first order effects, such as changes in enrollment. However, these programs may also have second order effects, such as declining state support for need-based state financial aid programs. I hypothesize that the advent of merit-based state financial aid may be an example of Baumgartner and Jones’ punctuated equilibria. Results from estimation of models for dynamic panel data suggest instead that need-based aid has changed only incrementally in the states, without an observable effect of merit-based aid.

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Notes

  1. As a check on possible issues of multicollinearity, I calculated variance inflation factors (VIFs) for the set of covariates included in the regressions. This involved two sets of calculations, one for the variables in nominal terms and the other for the variables after first differencing. None of the VIFs exceeded 4. The variable with the highest VIF was public four year tuition, with a VIF of 3.94 when entered in nominal terms and 1.32 when entered as a first difference.

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  1. Peabody College of Vanderbilt University, 230 Appleton Pl., Peabdoy #514, Nashville, TN, 37203-5721, USA

    William R. Doyle

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Correspondence to William R. Doyle.

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Doyle, W.R. Does Merit-Based Aid “Crowd Out” Need-Based Aid?. Res High Educ 51, 397–415 (2010). https://doi.org/10.1007/s11162-010-9166-3

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