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Read the Wall Street Journal article entitled “Shift to Merit Scholarships Stirs Debate,” conduct additional research on the topic by examining relevant articles, websites, and other sources, and compose a letter to Dr. James L. Applegate, executive director of the Illinois Board of Higher Education, making your recommendation on whether Illinois should adopt a merit-based approach for awarding college scholarships. is expected to be three to five pages in
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December 19, 2012, 10:57 p.m. ET
ATLANTA—In most parts of the country, states offer financial aid to incoming college students
based on need. But Georgia has led a movement for two decades that turned that idea on its
head—by offering scholarships entirely on merit.
Now that movement may be picking up steam, with sweeping effects on students. Last year, with
the scholarship program facing financial distress, Georgia lawmakers decided to increase the
academic requirements for scholarships. Administrators say the change will help keep the
program solvent. But it also wound up funneling a greater portion of the remaining aid to higherincome students.
A Shift From Need to Merit
More than 25 states now award some financial
aid for college students based on academic
achievement, as opposed to need. Thirteen
states, primarily in the South, award more than
half of their financial aid based on merit.
More photos and interactive graphics
Georgia—whose HOPE scholarship program is among
the largest merit-based programs in the country—is at
the forefront of a growing national debate over statebacked financial aid for college students. Should states
direct aid to the highest-achieving students, regardless
of income? Or should the money go to poorer students?
Proponents of merit, or some combination of merit and
need, say focusing on achievement helps reduce a
so-called “brain drain” of talented residents leaving
home states, and rewards those who study hard and
apply themselves. “Our society is built on meritocracy,”
said Richard Vedder, an economics professor at Ohio
University and director of the Center for College
Affordability and Productivity, an independent,
Washington-based research institute. “What is true in
real life in the job market should be true in education.”
Though the trend rarely gets much attention and is obscured by increases in federal grants to poor
students, 27 states have created some sort of merit-aid program since Georgia launched its own in
1993. Of those, 13 states based over half of their grant money on merit in 2010-2011, the latest
year available. In Arkansas, Louisiana, Mississippi, South Dakota and Georgia, more than 85% of
grants were merit-based.
Now, with funding for the scholarships falling behind steady hikes in college tuition and in the
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number of kids receiving them, lawmakers in Tennessee, South Carolina, New Mexico and other
states are weighing some tough calls on how to distribute their grants. For its part, Georgia
rejected proposals by some lawmakers for an income cap and decided instead to require better
grades and, for the first time, strong SAT or ACT test scores for full-tuition scholarships.
Collegiate Images/Getty Images
A view of the chapel on the campus of the
University of Georgia in Athens, Ga.
The move was applauded by lawmakers who said
middle-income families with high-achieving kids
deserve or need help paying tuition, which has more
than doubled nationally over the past 10 years at
four-year public colleges. But need-based backers say
disadvantaged kids need aid to help break the cycle of
poverty, by attending college and ultimately finding
better employment. According to a Wall Street Journal
analysis, the percentage of scholarship money to kids
from affluent areas did pick up, in some cases sharply.
The debate taps into several hot-button topics. Many of
the merit programs, for example, receive their funds
from state lotteries, which are disproportionately funded by lower-income players. Critics also say
the plans—which are largely, though not entirely, in southern states—can disproportionately hurt
“The money is being slowly taken away from the students who need it most,” says Shannon
McGhee, the associate director of financial planning at Mercer University, in Macon, Ga. She says
African-American and Hispanic students are most likely to benefit from need-based plans because
“they have not necessarily had the same educational opportunities as their white peers.”
Financially stressed students, of course, can get help
from federal, need-based aid sources, but they too are
Where Else to Look for College Aid
being squeezed by rising college costs and demand. The
Readers Weigh In: Merit vs. Need
federal Pell Grant program, which provided $36 billion
in aid in the past fiscal year to low-income students, has
expanded significantly in recent years, but the maximum grants covered on average only 64% of
tuition and fees at a public four-year-college this year, the lowest since the College Board began
keeping track in 1981.
Price of Admission
A series looking at the rising costs of higher
education in the U.S.
Who Can Still Afford State U?
Federal Lending Push Swells Student Debt
Dropping Out: Millions Struggle WIth High
College Debt and No Degree
New Peril for Parents: Their Kids’ Student
College Debt Hits Well-Off
Full Coverage: Price of Admission
In all, U.S. states provided about $11 billion in
postsecondary student financial aid in the 2010-2011
academic year. States such as California, New York and
Michigan allocate virtually 100% of their scholarships
to students where need is the primary component. But
nationally, merit-based state funding—which was rare a
few decades ago—now makes up 29% of the scholarship
dollars, highest on record, according to the nonpartisan
National Association of State Student Grant & Aid
Leading the merit case has been Georgia, whose HOPE
program—which stands for Helping Outstanding Pupils Educationally—started in 1993 after the
state amended its constitution to create a lottery and directed the revenue toward education. To be
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eligible, students had to graduate with a 3.0 average. In a speech announcing the plan, the
then-governor Zell Miller said HOPE was designed to help middle-income families and “bright
students who would otherwise find it difficult to go to college.”
The program briefly considered family income when it
began, but when the lottery did better than expected,
that was quickly abolished—a politically popular move
then, and now, in the state. “It’s based upon your hard
work and that is what we need to be encouraging,” said
Georgia state Senator Cecil Staton, a Republican and
chair of the Senate Appropriations Subcommittee on
Higher Education.
David Walter Banks
Amy Thornburg, Georgia Tech: ‘[My classmates]
are from good families that… had the means to
send their kids to college.’
David Walter Banks for The Wall Street Journal
Sarah Nesbit, Armstrong Atlantic State
University: ‘I saw my Mom crying over bills and I
knew that in order to avoid that cycle, school was
what I had to do.’
In its 19 years, the program has given out $4.9 billion in
merit-based aid to 710,000 in-state students. Sarah
Beck, a University of Georgia junior, is a typical
recipient. She says her mother, a teacher, and her
father, who worked as a nuclear engineer, didn’t have to
worry about saving for college because “we knew HOPE
would be waiting for me.” With a high school GPA of 3.7
and high ACT scores, she is on a full HOPE award, and
thinks Georgia would have a hard time backtracking
now. “It’s a solid social program that people have just
grown up with literally,” she said.
Still, she does say some students at her school arrive
with new cars, paid for by parents who didn’t have to
pay tuition. The cars are known as “Hope-mobiles.”
College administrators say that while merit aid is
helping the middle class, low-income students who miss
the academic cut are either dropping out, slowing progress or taking on more debt. That was
particularly noticeable this fall, they say, after lawmakers decided to save the financially strapped
program by requiring full-tuition scholars to have a 3.7 average and a combined math and reading
SAT score of at least 1,200, or a composite ACT score of 26. Those who graduated as a
valedictorian or salutatorian can also qualify.
The full scholarships were renamed “Zell Miller” scholars. Traditional HOPE recipients, with
GPAs between 3.0 and 3.7, or without the required test scores, are still eligible for aid, but smaller
amounts adjusted annually based on lottery revenue.
The change made a difference to colleges catering to low-income populations. At Georgia State
University, where four in 10 pupils come from families earning less than $30,000 a year,
administrators were forced to drop dozens of students this fall for not paying tuition when their
scholarship funds were cut. Many were able to come back, thanks to an appeal to donors, a school
official said.
The Journal analysis of the change’s impact looked at
the home ZIP Codes of HOPE scholars for the past four
years and the Miller scholars for the program’s two
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With total student-loan debt approaching the
trillion-dollar mark, WSJ’s Jason Bellini
deconstructs how we got here and what it all
means. Image: Getty…
years. Students from ZIP Codes with median incomes
greater than $50,000 were nearly twice as likely to win
HOPE scholarships as those from ZIP Codes with
median incomes less than $50,000. But students from
the better-off ZIP Codes were nearly three times as
likely to win Zell Miller scholarships. The likelihood of
winning a Zell Miller scholarship increased nearly
uniformly with the income of the student’s home ZIP
One-fourth of Georgia’s 27,626 Miller scholars to date live in just 15 of the state’s roughly 700 ZIP
Codes, all of which have median household incomes at least one-third higher than the state
median of $49,347. Students in seven ZIP Codes—all in metropolitan Atlanta—with median
incomes above $100,000 account for 10% of Miller scholars, but just 3% of Georgia’s 15-to19-year-olds, the Journal found.
Amy Thornburg and Sarah Nesbit fell on opposite sides of the Miller-scholarship criteria.
Ms. Thornburg, 18, grew up in Peachtree City, an
affluent Atlanta suburb where students received Zell
Miller awards at roughly five times the state’s average
rate, according to the Journal’s analysis. She won one
herself, as well as other academic awards, including a
National Merit scholarship.
She is attending Georgia Tech, like her father, an airline
executive. Her parents had set aside money for college,
but the scholarships now cover her tuition and room
and board. “We made the decision not based on
money,” says her mother, Laura.
Amy Thornburg says she’s typical of students from
McIntosh High School, her alma mater, a good
percentage of whom she says got the Zell Miller. “This
helps them stay in state rather than going to a private
school outside the state,” she said.
By contrast, Ms. Nesbit, 19, grew up with a single
mother in Walker County, where students received the
Zell Miller at one-third less than the state rate.
“I saw my mom crying over bills and I knew that in order to overcome that cycle, school was what
I had to do,” she says.
She worked her way up to assistant manager at Chick-fil-A to save for college while taking many
Advanced Placement classes. She fell just short of the Zell Miller criteria, with a 3.69 GPA, but her
former high-school guidance counselor says she was among her most talented and determined
students. “She is bright enough to realize that education is what is going to make a difference in
her life,” says Laura Fritz, at Ridgeland High School in Rossville, Ga.
Today, she is a freshman at Armstrong Atlantic State University in Savannah, where her HOPE
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scholarship is currently covering 85% of tuition—or about two-thirds of her yearly $5,844 tuition
and fees. But she still has another $9,000 a year in housing, food, and other costs. To pay for that,
she has had to tap into a Pell Grant and loans and to sell her car, but she still has “panic attacks”
about how she will pay for college going forward. “The odds are against me, I’m not going to lie,”
says Ms. Nesbit.
Critics say such stories highlight problems with the revamped HOPE program, and that race can
be an issue too. State Senator Emanuel Jones, who is head of the Black Caucus, said lawmakers
“discounted poor kids and kids of color and it upsets me to no end.”
Precise figures on the racial impact of merit funding in Georgia aren’t available, since the state
doesn’t track that. Black enrollment at Georgia’s public colleges fell 3.2% this fall, more than the
overall 1.2% enrollment decline. But experts say in any one year, several factors, from the economy
to the job market, may explain that.
Outside of Georgia, at least one state—Tennessee—does report the racial makeup of merit-based
scholars. It found that only 10% of recipients were black, half the percentage of state residents
ages 18 to 24 who are black. Some 84% were white, compared with 72% of college age whites in
the state.
Some merit-backers have argued that these programs can reduce the so-called brain drain local
economies suffer when too many talented graduates leave their home state. But a recent study by
the National Bureau of Economic Research that looked at 15 states with such plans found those
eligible for the aid were only one to three percentage points more likely than peers who weren’t
eligible to remain in the state after college graduation.
The merit aid is “lowering the cost of college for students, but not changing what they would have
done,” said Damon Jones, an assistant professor at the University of Chicago and co-author of the
Still, officials at some colleges in Georgia say they have seen a noticeable uptick in the
student-body skills since merit programs started. Across Georgia’s 35 public colleges and
universities, HOPE recipients are much more likely to graduate than other students, according to
state statistics. At the University of Georgia, the average GPA for entering freshmen was 3.26 last
year, up from 2.7 in 1993, with a sizable increase in SAT scores as well.
“You can’t directly connect HOPE but there is a lot of evidence that there is some sort of
connection,” said university spokesman Tom Jackson, a spokesman for the university, where the
acceptance rate was 55% this year, compared to 68% when Georgia introduced HOPE.
The merit debate stirs other issues, including its source of funding. In April, the nonpartisan
Georgia Budget & Policy Institute said counties with low and moderate average incomes spent the
most on the state’s lottery games but received proportionally fewer HOPE scholarships. Charles
Clotfelter, a Duke University professor who has written a book on state lotteries, calls that a
“stunning” example of redistribution.
“I am not moved by that particular argument,” says Sen. Staton, a Senate leader on education
issues, referring to the points raised in the Georgia Budget & Policy report. “The government
frankly does a lot of other things for them, if you’re referring to low-income people.”
Ultimately, the future shape of state scholarships will be decided in one state legislative house
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after another, as more programs face financial stress. In New Mexico, a state report in September
said the merit-based lottery scholarship program will be broke by 2014. Similarly, Florida’s own
merit-based program, “Bright Futures,” is being squeezed, says incoming House Speaker Will
Weatherford, a Republican. He has floated the idea of considering need, but concedes the idea
might be “heresy” to his party and other merit backers.
In South Carolina, lawmakers have said it may be necessary to raise eligibility requirements or cap
award amounts. State Senator John Courson, a Republican who chairs the Senate Education
Committee and leans toward capping award amounts, said the idea of adding means testing isn’t
on the table and wouldn’t go over well in South Carolina. He points out the lottery was sold to
voters on the merit-based notion.
“It goes to the basic thought that everyone should not necessarily go to college,” he said, of the
support for merit aid. “And that if you do it on a merit-based structure, then your best and
brightest will stay in the state.”
Neal McCluskey, education analyst for the Cato Institute, a libertarian think tank, argues that
neither form of aid is ultimately beneficial, saying both types drive colleges to raise tuition to
capture the financial assistance. But states that do provide aid should most likely use a mix of
merit and need-based criteria, he said.
The downside to merit aid only, he said, is that “often the people who can get it, those who have
the high test scores, don’t need it.” But giving students need-based aid, without regard to whether
they have a demonstrated aptitude for college-level work, amounts to “setting them up for failure,”
he said. “It ends up wasting their time and money as well as taxpayers’ money.”
Write to Jennifer Levitz at and Scott Thurm at
A version of this article appeared December 20, 2012, on page A1 in the U.S. edition of The Wall
Street Journal, with the headline: Shift to Merit Scholarships Stirs Debate.
Copyright 2012 Dow Jones & Company, Inc. All Rights Reserved
This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by
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