Merit Aid, Sorting, and Institutional Access: Evidence from Tennessee's HOPE Scholarship

Abstract

Merit-based scholarships are typically found to be regressive because academic eligibility correlates with family income. Using tax-linked data from Chetty et al. (2020), we document an exception. Following the 2004 introduction of Tennessee's HOPE Scholarship, the bottom-quintile share at Tennessee public colleges rose by 1.50 percentage points relative to non-merit control states, with a monotonic gradient across all five income quintiles. Total enrollment at Tennessee publics expanded by roughly seven percent, indicating that the compositional shift reflects system expansion rather than displacement of higher-income students. The effect concentrates at community colleges and is larger for female students, consistent with HOPE's permissive eligibility threshold (GPA 3.0 or ACT 21) binding most tightly at the marginal-eligibility margin. Cross-state evidence supports a design-based interpretation: Massachusetts (progressive) and South Dakota (regressive) produce compositional shifts in directions predicted by their threshold strictness and award structure. The Tennessee result is robust to unit-specific detrending, to Rambachan–Roth sensitivity at breakdown values above M* = 2, and to a triple-difference specification that differences out Tennessee-wide trends. Program design — threshold strictness, first-dollar status, and capacity response — predicts whether merit aid expands access or concentrates it.

Presentations

Cite

@unpublished{KiddSoltanianSotomayorUcedaSosa2026MeritAid,
  author = {Kidd, Balint and Soltanian, Tommy and Sotomayor, Tyler and Uceda-Sosa, Gabriel},
  title  = {Merit Aid, Sorting, and Institutional Access: Evidence from Tennessee's HOPE Scholarship},
  note   = {Working paper, Columbia University},
  year   = {2026}
}