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Effects of the Florida Bright Futures Scholarship

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Effects of the Florida Bright Futures Scholarship
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Wilbanks, Emily
Denslow, David ( Mentor )
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Gainesville, Fla.
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University of Florida
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English

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University of Florida
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,, Oluiie 6., issue 2 - OctOl.er 21:11:14



Effects of the Florida Bright Futures Scholarship

Emily Wilbanks


DOES STUDENT QUALITY AFFECT THE QUALITY OF THE SCHOOL?


All colleges and universities strive to attract the highest quality students to their institutions. Why is it that

colleges value student quality so highly? It could be that the quality of a college's students directly increases

the overall quality of the school by virtue of a feedback effect where high quality students attract yet other

high quality students to attend.



In the case of higher education, the quality of the customer, the student, actually affects the quality of the firm,

the university. Some economists refer this to as "customer-input" production technology and it helps to explain

why colleges are so interested in the quality of their students. In order to gain higher overall quality ratings,

most colleges are willing to restrict their supply by limiting enrollment in the face of a large demand for

higher education because they can thus be selective and only admit the highest quality applicants (Goethals et

al. 1999). Colleges are willing to forego the potential profit gained from students it turns away in order to

maintain the higher overall quality of the student body by being selective.



Selective universities attract high quality students for various reasons. For some students, being among high

quality peers at a selective university gives them a sense of elevated status and accomplishment and thus raises

the utility of choosing that school over alternatives that are less selective. High quality students also strive to

be among high quality peers because they have the opportunity to network and make connections in college that

will be beneficial in their future careers. There is also the possibility of "peer effects." Peer effects are still

being investigated, however there seems to be evidence that students learn from other students (Goethals et

al. 1999).



Several experiments exploring peer effects can be found in the literature. In one case, students' ability to write

a written response to a New York Times article was compared among similar students who were allowed to

discuss the article first with either a group of "high quality" peers or a group of "lower quality" peers. The

tested students performed better when among high quality peers (Goethals 2000). In another study, freshmen

GPA was compared among similar students who were purposefully paired with a higher or lower quality roommate

in the dorm. Students with better roommates maintained higher GPAs (Zimmerman 1999).



The social comparison theory, described by Festinger in 1954, states that people learn from one another





by observation and imitation. It is reasonable to believe a student might learn better study or time-

management habits or might become more academically successful by observing a superior peer. Also,

through interaction with peers people tend to evaluate themselves. In studies, comparing oneself to those more

able tends to increase an individual's aspirations and comparing oneself to those less able tends to decrease

an individual's aspirations (Goethals 2000). College is an impressionable time, so being among high quality peers

is important.



Previous research has shown that high quality students, although still heavily influenced by the potential benefits

of peer effects and college prestige, may be influenced by the prospects of a "bargain" (Winston 2000).

Therefore, student financial aid influences college choice, and incentives such as the Florida Bright

Futures scholarship are important.



Some may argue that merit-based subsidies are not important, because high income students spend only a

small portion of annual income to fund education, and low income students are eligible for need-based aid.

However, middle-income families do not fall into either category because their annual incomes are too high to

qualify for need-based scholarships, but are too low to easily pay for education out-of-pocket. For the middle-

income family, the cost of a child's tuition may amount to a very large proportion of the family's annual income.

This phenomenon is known as "middle-income melt." Without merit-based scholarships, very bright students from

the middle-income families may not have the opportunity to attend college. In that case, both the student and

the university system will suffer (McPherson and Schapiro 1994). Merit-based scholarships like Florida Bright

Futures can help alleviate these problems.



HAS ITS MERIT-BASED SCHOLARSHIP ENCOURAGED FLORIDA'S BRIGHTEST HIGH SCHOOL STUDENTS

TO REMAIN IN STATE?


The Florida Bright Futures Scholarship (FBF) is a merit-based scholarship that rewards Florida high school

students for their academic achievements. One concern among educators in Florida's is its ability to keep top

high school students in state for their post-secondary education and thereby to maintain the quality of its universities.



If FBF has been a factor that students weigh when choosing their institution of higher education, it is expected that

in-state attendance should have increased in Florida following the creation of the scholarship in 1997. Residency

data obtained from the Florida Department of Education for first-time-in-college (FTIC) students admitted to

the regular fall terms of Florida universities show an upward trend in resident attendance (Figure 1). The rate

at which the in-state attendance was increasing nearly doubled after 1997. It is important to recognize that

the overall increase has been small, though the change in growth rate following 1997 is noteworthy.








87 5 /-

87.-





85.5 -
85-



1993 1994 1995 1996 1997 1998 1999 2000 2001
Year



Figure 1. The average percentage of first-time-in-college students in the regular Fall term at schools

in Florida's State University System (collectively for all 4-year state colleges) that were Florida

residents over time (Florida Department of Education, 1994-2000).



The data also show that attendance of Florida residents at Florida universities is correlated with state funding of

non-need based financial aid (r2= 0.93, p= 0.00041, _= 0.05) (Figure 3) (Almanacs 1995-2002, Facts and

Figures" 2003). It is obvious that a merit-based scholarship program, funded by the state lottery, like FBF

increases state spending on non-need based financial aid. Since spending is correlated with resident attendance, it

is expected that attendance rose when FBF was created (Figure2). The significant positive correlation shows that

FBF has influenced the ability of Florida's universities to attract the top high school students in the state.





250 88

200-- - 87
- - 88.5
150

- 85.5
_ 85
50, . 84.5
84
0 I I I I I I- 835
1994 1995 1996 1097 1998 1999 2000
Year

-a--Non-ned asod funding-e-Avg. % students Stle Reient



Figure 2. The level of state spending, in millions of dollars, on non-need based student financial aid

and the average percentage of first-time-in-college students at state universities who were

Florida residents over time (The Chronicle of Higher Education 2003 and Florida Department

of Education).



















Figure 3. The regression plot of average percentage of in-state students on level of non-need

based funding, in millions of dollars (The Chronicle of Higher Education 2003; Florida Department

of Education). Average percent of in-state students attending state universities is significantly

correlated with the level of spending by the state on non-need scholarships (r2= 0.93, p= 0.00041,

_= 0.05).



The question now is whether this has had any effect on university quality in Florida. Since the quality of students at

a university should directly influence the overall quality of the university, as discussed above, the retention of

high quality students in Florida should have increased the quality of Florida colleges since FBF was initiated in

1997. Two possible measures of improvement of university quality are heightened admission standards of

universities across the state and improved student performance at those universities.



A widely accepted determinant of admission standards is the average SAT score of the newly admitted

freshmen. Selective schools should higher quality students. Theoretically, a merit-based scholarship should

allow state universities to be more selective by both increasing the pool of applicants from which they choose and

by encouraging the state's top high school students to apply. If this is true, the average SAT scores for FTIC

students admitted to Florida universities should increase following the creation of FBF. The data from the

Florida Department of Education concerning average freshmen SAT scores do not show such a trend (Figure 4).

The average test scores of freshmen were also not correlated with state spending on non-need based scholarships

as might be expected (r2=0.098, p= 0.49, _= 0.05) (Figure 5).


88
87.5 *
87 * Avg, % Students
86.5 - - Slate Residents
86 - * *
85,5 - *
85 - * Predicted Avg, %
84.5 1 ..... .I Students State
0 100 200 300 Residents
Non-need based funding


100U i
1994 1995 1996 1997 1998 199 2000
Year






Figure 4. The average combined verbal and math SAT score for newly admitted first-time-in-

college students at Florida universities in the regular fall terms over time (Florida Department

of Education).


Figure 5. The regression plot of average SAT scores of first-time-in-college students admitted to

the regular fall term of Florida universities on the level of non-need based spending by the state

in millions of dollars (Florida Department of Education; The Chronicle of Higher Education 2003).

The correlation is not significant (r2=0.098, p= 0.49, _= 0.05).



The SAT scores may not be telling the whole story, however. It is surprising that SAT scores have remained

so constant since 1996 (Figure 4), but this could be due to the fact that the scores calculated are averages for

all state universities. It is possible that all schools do not profit equally from FBF. Since high quality education

is ultimately the product offered by universities, higher quality is commonly higher priced. For high quality

students that fall victim to the so-called middle-income melt discussed in part one (McPherson and Schapiro

1994), attending an expensive college may be out of the question. Attending a lower priced, possibly lower

quality school may be the only feasible option. The existence of a merit-based scholarship like FBF affords

middle-income students that find themselves in such a predicament the opportunity to attend higher priced,

and maybe higher quality, universities than was possible before.



Under such reasoning we expect to see the major public universities benefit more than the smaller public

universities from a merit-based scholarship. If this is the case, the average freshmen SAT scores for larger

state universities should increase due to increased selectivity (this is examined in a case study below). The

opposite may occur for smaller, less expensive schools because they will lose the applications of some students

who will now apply to the larger schools. Losing these students, who are now able to attend the state university

of their choice, should decrease the average SAT scores of the freshmen at those schools. If the increases

in freshmen SAT scores at large universities closely mirror the decreases in freshmen SAT scores at

smaller universities, the average freshmen SAT scores for all of the public universities in the state could remain

fairly constant. This may well be the case observed here, although the data would warrant further scrutiny.



A second possible indicator of changing university quality is student performance while in college. This can

be extremely difficult to measure, although analyzing graduation rate and student GPA at the state universities


1180
1160- .
1140 * S * * * Avg. SAT Score of
1120 - Freshmen
1100 . Predicted Avg, SAT
1080 Score of Freshmen
1060 *
1040 I I
0 100 200 300
Non-need based funding





may help shed some light on the issue.


Graduation rate was correlated with the level of non-need based spending on student financial aid (r2= 0.65,

p= 0.028, _= 0.05)(Figure 6). The average graduation rate at Florida universities, therefore, increased as a result

of FBF ("Almanacs 1995-2002, Facts and Figurers" 2003). FBF requires students to maintain high quality

academic performance while at college in order to retain the scholarship. This should improve student effort and

raise the quality of student work, thus increasing the percentage of students making it to graduation. Also,

peer effects, discussed in part one, may increase total student performance (Goethals 2000; Goethals et al.

1999; Zimmerman 1999). An increasing graduation rate is indicative of increased student effort and, in

turn, increased school quality. The increase in graduation rate is, however, somewhat slight across all

public universities. This is due to the same effects plaguing the SAT data concerning differing effects based

on university size and tuition discussed previously.


Figure 6. The regression plot of average graduation rate for all colleges in Florida's State

University System on the level of non-need based spending by the state in millions of dollars

(The Chronicle of Higher Education 2003). The correlation is statistically significant (r2= 0.65, p=

0.028, _= 0.05).



A specific case study of one of Florida's largest public universities helps to clarify the positive effects of FBF

on university quality. The changes in the quality of students admitted, as measured by freshmen SAT scores, and

the performance of students at the university, as measured by college GPA, following the implementation of FBF

are more pronounced at larger universities. This is the case at the University of Florida, for example.



Admission standards at the University of Florida have increased over time, judging by the increase in FTIC SAT

scores for regular fall admits over time ("University of Florida Fact book" 2003) (Figure 7). More interestingly,

the average SAT scores of University of Florida freshmen prior to the state legislature's approval of the FBF in

1997 were significantly lower than the average SAT scores after 1997 (Mann Whitney U-test: U=1, R1= 29, N1=

7, R2=49, N2=5, p<0,05). The higher test scores may reflect the ability of the school to be more selective

in admitting only the highest quality students due to the increased application pool generated by the merit-

based scholarship.


59
58- - *
58"* Graduation Raoe
57 -
56-- p I . Predicted Graduation
55 Rate
54 I I
0 100 200 300
Non-need based funding









1300-
1280-
1260 *
1240-
1220
1200
1180-
1180
1140- *
1120- *
1100-
1988 1990 1992 1894 1995 1998 2000 2002 2004
Year



Figure 7. The increasing trend of the average freshmen combined SAT scores at the University of

Florida over time (University of Florida Fact book 2003). The difference between SAT scores after

1997 and prior to 1997 is significant (Mann Whitney U-test: U=1, R1= 29, N1= 7, R2=49, N2=5, p<0.05).



To rule out the possibility of a national increase in average SAT scores having caused the increases observed

in freshmen admitted to the University of Florida, the scores before and after 1997 were compared to the scores

for students across the nation. The University of Florida Fact book contains data on the percentage of UF

freshmen who scored a 600 or above in the verbal section or the math section of the SAT. The database also

contains information about the percent of all students in the nation that scored a 600 or above in either section.

The percentage of University of Florida students was greater than the percentage of all students who took the

test and scored above 600 for both the verbal and the math sections in every year from 1990 to 2002 (Figures 8

and 9). More interestingly, the difference between the percentage of University of Florida students who scored 600

or above and the national percentage was greater in the years after FBF began than it was before 1997.

The difference in UF students' superiority over the national average before and after 1997 was statistically

significant for both verbal and math scores (Mann Whitney U-test: U=0, RI = 28, NI = 7, R2=50, N2=5,

p<0.05). Since the SAT scores of UF students increased faster than the nation on average after 1997, it appears

that the University of Florida was able to be more selective and increase the quality of its admits.


























Figure 8. The percent of University of Florida first-time-in-college students who scored 600 or above

on the verbal portion of the SAT as compared to the percent of all students who took the SAT that

scored 600 or above (University of Florida Fact book 2003). The difference between the national

average and UF students was significantly greater after 1997 than before (Mann Whitney U-test:

U=0, RI= 28, NI= 7, R2=50, N2=5, p<0.05).



90 -
so
70 1

0 F Naion
40 I UFFreshmen
30






Year



Figure 9. The percent of University of Florida first-time-in-college students who scored 600 or above

on the math portion of the SAT as compared to the percent of all students who took the SAT that

scored 600 or above (University of Florida Fact book 2003). The difference between the national

average and UF students was significantly greater after 1997 than before (Mann Whitney U-test:

U=0, RI= 28, NI= 7, R2=50, N2=5, p<0.05).



By admitting high quality students, you expect to attain higher performance from the students, which in

turn increases the prestige and reputation for the quality of the college as a whole. This is true in the University

of Florida case as well. Freshmen SAT scores and student GPA are correlated (r2= 0.75, p= 0. 00014, _ =

0.05) ("University of Florida Fact Book 2003") (Figure 10). Since the admission standards at the University of

Florida increased significantly after the Florida Bright Futures Scholarship was introduced, it is expected that

student GPA should also be significantly higher post-1997. This was observed in the data ("University of Florida

Fact Book" 2003). The average student GPA was significantly higher after 1997 than before (Mann Whitney U-


1990 1991 1992 193 199 1995 1995 1997 1998 1999 2000 2001 20=
Year


I rUF jo1r'




test: U=O, R1= 28, N1= 7, R2=50, N2=5, p<0.05).


Figure 10. The regression plot of average student GPA on the average freshmen SAT scores at

the University of Florida (University of Florida Fact book 2003). The correlation is statistically

significant (r2= 0.75, p= 0.00014, _= 0.05).




CONCLUSION


By accepting the notion that high quality students truly do add quality to their university, we can begin to see

the benefits that the FBF scholarship has brought to the state of Florida and its students. Since its

implementation, the percentage of Florida residents at state universities has increased and, because those

students are the creme of the high school crop, the performance of students at those schools has increased.

Colleges have been afforded the opportunity to be more selective in the students they choose to admit due to

the larger application pool, and admission standards have increased on average across the state. More students

are making it through to graduation from state universities, and the average student GPA has increased at

schools like UF.



Despite the possible mal-effect on lesser schools, providing a merit-based scholarship has produced

predominantly positive effects for both universities and students. Students that choose to work hard in high

school deserve the chance to earn a college scholarship independent of their socioeconomic background. College is

a serious investment for most families, and effort and achievement should not go un-rewarded. There has been

much discussion about making the Florida Bright Futures Scholarship need-based instead of merit-based. Such

an action would not have created the increases in university quality and student performance seen here. A

merit-based scholarship such as Florida Bright Futures has the potential to benefit both the students and the

post-secondary education system on a whole.






REFERENCES


1. "Almanacs 1995-2002, Facts and Figurers." The Chronicle of Higher Education. 2003. .


3.30
3.20 - -
3.10 - *AVG GPA
3.00 - Predicted AVG GPA

2.80 i I I

1100 1150 1200 1250 1300
SAT





2. "Fact books." (My) Florida Department of Education. 2003. .


3. "Florida Bright Futures Scholarship Program." Florida Department of Education. 2002.
doe/brfutures/bffacts. htm>.

4. "Florida's Bright Future Scholarship Program Helps Students." 2001.
us/community involvement/index.cfrn?fuseaction=scholarship>.

5. Goethals, G.R. "Social Comparison and Peer Effects at an Elite College." Williams Project on the Economics of

Higher Education. 2000.

6. Goethals, G., G. Winston, and D. Zimmerman. 1999. "Students Educating Students: The Emerging Role of

Peer Effects in Higher Education." Williams Project on the Economics of Higher Education. 1999.

7. McPherson, M.S. and M.O. Schapiro. "College Choice and Family Income: Changes Over Time in the Higher

Education Destinations of Students From Different Income Backgrounds." Williams Project on the Economics of

Higher Education. 1994.

8. "University of Florida Fact Book." Office of Institutional Research, Data Administration. 2003.
edu/facts. htm>.

9. Winston, G. C. "The Positional Arms Race in Higher Education." Williams Project on the Economics of

Higher Education. 2000.

10. Zimmerman, D.J. "Peer Effects in Academic Outcomes: Evidence From a Natural Experiment." Williams Project on

the Economics of Higher Education. 1999.


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