Examining How Income Influences the Effects of Losing Merit Aid Among Tennessee Community College Students

States provide merit-based financial aid to enhance access to and success at in-state colleges. Over time, however, many recipients fall short of scholarship renewal requirements—community college attendees and low-income students in particular. Using a regression discontinuity design, we examine how losing eligibility for the Tennessee HOPE scholarship differentially affects community college students’ academic outcomes across income levels. Losing HOPE eligibility increased stopout and reduced vertical transfer and associate degree completion among all community college students. The lowest-income students experienced the strongest negative effects on transfer and associate degree completion. Merit-aid renewal criteria ultimately preclude students from persisting and benefiting from degree completion. States with similar policies should consider interventions that help more students maintain scholarship eligibility or reforms to existing renewal criteria.