Merit-Based College Scholarships Reassessed

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From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

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And I'm Robert Siegel.

Tuition is on the minds of many parents this time of year as they shop for colleges and universities for their children. Tuition is increasing at an average rate of 8 percent a year. To cope, middle-class parents ask for help from politicians, and in many states, they got it in the form of merit-based scholarships. Georgia was the first; now 13 states have adopted them. But as NPR's Kathy Lohr reports, there are questions about whether the scholarship programs do what they were set up to do.

KATHY LOHR reporting:

Georgia set up what's called the HOPE Scholarship in 1993 to pay college tuition for all students who earn a B average in high school and maintain that average throughout college. The state has paid out about $2 billion since then to about 800,000 students. It's the largest state-financed merit-based program in the US. Nancy Elliott(ph) has two daughters at the University of Georgia on the HOPE Scholarship plan. She says as her girls grew up, getting and keeping the merit scholarship was a big deal in and out of class.

Ms. NANCY ELLIOTT (Parent): Especially by the time late middle school, very beginning of high school--one of mine was a cheerleader. So I mean, even at cheerleading meetings, it ends up, you know, as they get older in high school, turning to, `Well, have you applied for the HOPE yet?' I mean, you know, wherever you are, it comes up.

LOHR: Elliott's youngest daughter Rebecca(ph) is a freshman at UGA with a 4.0 average. Her oldest daughter Rachel(ph) is a senior with a 3.7 average in pharmacy school. She always thought they'd attend college, but during Rachel's first year, Elliott said her husband had a heart attack. That changed everything.

Ms. N. ELLIOTT: Had we not had that at the time, she would have probably had to come home.

LOHR: Nancy Elliott said both her daughters have worked hard to keep their grades up. Rachel says she knew plenty of kids who lost their scholarship the first year.

Ms. RACHEL ELLIOTT (HOPE Scholarship Recipient): I take it view seriously 'cause I knew I needed to keep my grades up so I could, you know, stay in college without having to pay any of my own money.

LOHR: Losing the scholarship would have meant getting a job, saving up and driving the 40 miles or so from the family's middle-class home in Loganville to the campus in Athens, Georgia.

Unidentified Man: Let me get you guys oriented with the campus. Just for right now, we are on the north side of campus. If you look at campus...

LOHR: This time of year, students are studying for finals. Prospective parents are touring the campus in hopes of seeing their own children attending soon. One reason for establishing the HOPE Scholarship was to attract and retain highly qualified students, to stop what politicians call the brain drain. Officials say the program has done that. But some question the high cost and the unintended consequences. Christopher Cornwell is an economics professor at the University of Georgia. He says new data show that families who received the merit scholarship also bought more cars.

Professor CHRISTOPHER CORNWELL (University of Georgia): Automobile registration data, which is what we use to find that result, are easy enough to collect and analyze that. And also, the value of the scholarship is large enough to where you can imagine it being capitalized into the purchase of additional vehicles.

LOHR: The program has become so popular that for the past few years, there have been questions about whether dedicated lottery revenues could keep up with the cost. There have been debates on limiting it, but Cornwell says that's a tough thing to do now.

Prof. CORNWELL: HOPE, like so many middle-class government-provided benefits, is very popular. And as entitlements, people react very strongly to any hint of them being devalued or taken away. Once something like this is established, it is very difficult to change it.

LOHR: That's why Tennessee, the latest to begin a merit scholarship, looked long and hard at Georgia's program before starting its own last year. The head of the Tennessee Higher Education Committee, Richard Rhoda.

Mr. RICHARD RHODA (Tennessee Higher Education Committee): Ours is a flat dollar amount, $3,000 a year. It does not rise as tuition increases. So the only thing that'll change the fiscal demands of the scholarship programs will be the number of students, so we think there's a safeguard there. A bit concern, and we just don't know yet, is going to be the retention rate. We've seen in other state--again, Georgia primarily--approximately 50 percent of all scholarship-holders will lose it after the first year.

LOHR: But Tennessee also offers an extra thousand dollars to students who come from poor families. Donald Heller, with the Study for the Center of Higher Education at Penn State University, calls it a step in the right direction, but he says there's a big problem with merit-based aid.

Mr. DONALD HELLER (Center for the Study of Higher Education): It's poor students, it's minority students are the ones who historically have been underrepresented in college, and a lot of the reason they're underrepresented is they don't have as many financial resources. So if we're providing less and less financial aid to those students, it means ultimately fewer and fewer of them are going to be going to college.

LOHR: Heller says back when the HOPE Scholarship began, less than 10 percent of state aid was awarded without consideration of financial need; today, that has grown to nearly 30 percent. And Heller says studies show that the HOPE Scholarship doesn't change behavior. In other words, 90 percent of those who get the scholarship would have gone to college anyway.

Outside the student center, two sorority girls, both on HOPE Scholarships, say their families could afford to send them here to school without the aid. Katie Bernard(ph) is from Savannah.

Ms. KATIE BERNARD (HOPE Scholarship Recipient): I know there's a lot of controversy over it right now because there's not very much state money and there's a lot of money going into the HOPE Scholarship. And there are kids that are using it whose parents can afford to send them other places. Like, we're using it and we could afford to go somewhere else. And then there are those kids who can't afford to go anywhere else, and they really need the money more. But you know, we made the same grades as they did, so we deserve it just as much is how I look at it.

LOHR: Bernard says she really struggled with the decision to come to Georgia. She wanted to go out of state, to the University of Washington. The HOPE Scholarship was the deciding factor. But education officials say the real question is: Will she remain in the state after she graduates? Kathy Lohr, NPR News.

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