In a paper released on June 25, 2015, the Kalamazoo Promise college scholarship program is estimated to increase college completion by one-third.  The college completion effects of the Promise would be expected to significantly increase future earnings. Based on predicted future earnings effects, the annual rate of return to the Promise’s tuition subsidies is over 11%.

This paper is the first to examine the effects of the Kalamazoo Promise on post-secondary outcomes. The paper was written by Brad Hershbein, Marta Lachowska, and me, all economists at the Upjohn Institute.

The Kalamazoo Promise is a simple, generous, and near-universal college scholarship program announced in November 2005. Under the program, graduates of Kalamazoo Public Schools are eligible for scholarships that pay up to 100% of college tuition and fees at any Michigan public university or community college.  (Starting with the graduating class of 2015, some Michigan private colleges are also included.)  The “Promise” has relatively few conditions: students must graduate from KPS, must have attended KPS since at least ninth grade, and must live in the district. There is no high school GPA requirement: students must simply graduate from high school and be admitted to a college or university. The program is a “first-dollar” scholarship program, and so is not reduced by other scholarships.  Scholarships are generous: scholarships are 65% of tuition and fees for students attending KPS since 9^th grade, and then go up to 70% for students attending since 8^th grade, and so on, with students attending since kindergarten eligible for a 100% scholarship.

The Kalamazoo Promise is funded by anonymous private donors. Its stated purpose is to promote Kalamazoo’s economic development, by attracting parents and businesses to the area in the short-run, and, in the long-run, by increasing the local supply of college-educated labor by increasing the educational attainment of KPS graduates, some of whom will stay in or return to the Kalamazoo area.

Although the Kalamazoo Promise has many unusual features, its effects are highly relevant to ongoing debates about how to increase educational attainment and promote greater economic opportunity and economic equity. The Kalamazoo Promise was the first of many “place-based” scholarship programs. Since 2005, over 30 communities around the U.S. have adopted similar programs, in some cases using public funding or imposing additional restrictions on scholarship eligibility. Can such programs work? The effects of the Kalamazoo Promise are obviously relevant to this growing place-based scholarship movement.

More broadly, there is the issue of how much college costs and college scholarship design matter to educational attainment. Can money make a big difference to college success, at least if money is handed out in a relatively simple and straightforward manner, with few requirements? The Promise’s effects are at least suggestive of whether reduced college costs and more college scholarships can make a difference, although obviously the devil may be in the details of any particular scholarship program.

How did we estimate the effects of the Kalamazoo Promise? Because the Kalamazoo Promise is a near-universal program, it was not possible to do any random assignment experiment. However, the details of the Promise’s design provided a good “natural experiment”. Students are eligible for the Kalamazoo Promise if they started in at least 9^th grade, and ineligible if they started after 9^th grade.  Changes over time for these two groups help reveal the effects of the Promise.  The paper compared the change in post-secondary success, before and after the Promise, of the “eligible student group” (including pre-Promise graduates who would have been eligible if the Promise existed) with the “ineligible student group”. What we found was an abrupt increase in post-secondary success for the eligible group that began in 2006, the first graduating class that could use the Promise, but no such increase for the ineligible group.  The most plausible explanation for the changing relative success for these two groups is that the Promise’s tuition subsidies helped increase post-secondary success.

Among the estimated effects of the Promise are the following:

• The Promise is estimated to increase enrollment in a 4-year college by about one-third, from 40% for the comparable group in the pre-Promise period to 53% for the eligible group in the post-Promise period.
• The Promise increase college credits attempted at 2 years, 3 years, or 4 years after high school graduation by close to 15%. As of 4 years or 8 semesters after high school graduation, these effects correspond to students attempting an additional 2 to 3 college classes.
• As of 6 years after high school graduation, the Promise is estimated to increase the receipt of any post-secondary credential (certificate, associate degree, bachelor’s degree) from 36% of comparable KPS graduates in the pre-Promise period, to 48% for Promise-eligible KPS graduates in the post-Promise period, an increase of about one-third (12%/36%).
• As of 6 years after high school graduation, the Promise is estimated to increase the percentage of KPS graduates getting a bachelor’s degree from 30 percent of comparable KPS graduates in the pre-Promise period, to almost 40% for Promise-eligible KPS graduates in the post-Promise period, an increase of about one-third in the number of BA/BS graduates.

The Promise effects are not restricted to more advantaged groups. Although estimates for different sub-groups of KPS graduates are more imprecise, Promise effects appear to be similar for KPS graduates from low-income families compared to KPS graduates from middle-income families. Because baseline college success for students from low-income families on average is smaller, the relative effects of the Promise on college success are higher for low-income students. For example, the Promise is estimated to boost the number of low-income students attending a 4-year college by over 50%, over twice the percentage effect observed for middle-income students.  The Promise had at least as great and sometimes greater effects for non-white students compared to white students. Across gender, the point estimates found statistically significant effects on bachelor’s degree attainment for female students, but bachelor’s attainment effects for males were not statistically significant.

More coverage of this study’s findings can be found at the Upjohn Institute website, by Julie Mack in the Kalamazoo Gazette, and by Ron French in Bridge Magazine.