THE ADOPTION OF LOAN REPLACEMENT GRANTS FOR LOW- AND MODERATE-INCOME STUDENTS AT AMERICAN COLLEGES AND UNIVERSITIES: A COMPARATIVE CASE STUDY

In recent years, a growing number of American colleges and universities have implemented financial aid policies targeted at lower-income students. These initiatives – referred to in this study as Loan Replacement Grant (LRG) programs – seek to reduce or eliminate loans as part of student financial aid awards and replace them with grants. Since the first LRG was instituted in 1998, the programs have proliferated; in the past five years over 40 institutions have adopted LRGs. This qualitative study investigates how and why LRGs are adopted at colleges and universities. Using a comparative case study design, the policy adoption process at three institutions is considered in relation to the diffusion of policy innovation theory – a widely accepted mechanism for investigating the spread of new policies across adopting units. The theoretical framework, which has been derived from policy innovation and diffusion literature, consists of eight dimensions and guides analysis of archival data and interviews with institutional policymakers. The core study finding offers support for a “unified theory” (Berry, 1994) of policy adoption, which simultaneously considers the influence of internal determinants and diffusion-related factors. Results suggest that in LRG adoption, an evaluation of internal determinants is most effective in describing an institutions ability or capacity to implement programs, while diffusion-related factors provide insight regarding the likelihood that institutions will adopt. Additional findings point to a centrality of institutional finances in the policymaking process, the prominent role of policy entrepreneurs, and the influence of institutional problems stemming from underrepresentation of lower-income students. Among diffusion explanations, competition between institutions and the borrowing of policy ideas out of convenience represent the most relevant factors in LRG adoption.