When Grant Aid Is Lost: Racial and Contextual Disparities in the Consequences of Losing State Financial Aid

Purpose: Although many states offer financial aid through grant programs, these awards often carry merit-based requirements to retain the award. In this study, I examine whether the loss of state grant aid perpetuates disadvantages for racially minoritized students across public institutional contexts. Research Methods/Approach: Using administrative data on undergraduates who first enrolled with the HOPE Scholarship in Georgia, I leverage the grade point average (GPA) renewal threshold to employ a fuzzy regression discontinuity design, comparing students just above and just below the 3.0 GPA cutoff at the 30-credit checkpoint. I examine heterogeneity by race/ethnicity, income status, and institutional cost across three cohorts of first-time students who enrolled between 2013 and 2015. Findings: The results show no detectable effects of aid loss at the aggregate level, but low-income students of color attending the state’s most expensive institutions face a lower probability of completing a bachelor’s degree after losing aid. Implications: This study demonstrates how losing access to grant aid has differential consequences across groups and institutional contexts, perpetuating racial inequalities and exacerbating stratified trajectories in higher education. The findings underscore the need for state grant aid programs that more equitably distribute support to the students most vulnerable to the consequences of aid loss.