Association for Public Policy Analysis & Management

The Bennett Hypothesis contends that college prices increase in response to federal subsidies to higher education in the United States. We explore evidence regarding the Bennett Hypothesis at a local level. Specifically, we investigate whether institutions are responding to the Pittsburgh Promise—a place-based scholarship—by decreasing institutional aid to Promise recipients. We use student-level data from the Pittsburgh Promise on each student’s precise costs of attendance, grants, and scholarships, as well as demographic and academic characteristics from Pittsburgh Public Schools (PPS) administrative files. We take advantage of the doubling of the award amount students were eligible to receive beginning with the class of 2012. We use a first-difference analytic strategy to examine potential institutional responses within three university sectors in Pennsylvania: state-related, public, and private institutions.