Grant Recipients and Race

Doug Lederman | Inside Higher Education
September 6, 2011

Every so often, the issue of financial aid awarded on the basis of students' race flares. Lawsuits crop up challenging a state's or institution's ability to consider students' race in handing out grants, or a white student (or a group of such students) announces the creation of a fund for scholarships reserved for white students, on the grounds that grant money flows disproportionately to members of minority groups.

A new report challenges the assumptions underlying such developments. The study, by the financial aid analyst Mark Kantrowitz, is plain about its goal: to debunk what the author calls "the race myth, which claims that minority students receive more than their fair share of scholarships."

Kantrowitz is no minority activist; as the publisher of Finaid.org, and an ABD in computer science from Carnegie Mellon University, he is first and foremost a financial aid data enthusiast, known for crunching numbers to help students and families, policy makers and others understand the complex world of financial aid.

Numbers present a compelling and clear argument in this case, Kantrowitz asserts in his paper. Mining data from the U.S. Education Department's National Postsecondary Student Aid Study, Kantrowitz examines the flow of federal, state, institutional and privately funded financial aid to students of different races.

Looking at all of those forms of financial aid together (excepting only federal tax benefits), Kantrowitz finds that the money flows to students of different races roughly in proportion to their representation in the overall postsecondary population: white students make up roughly three-fifths (61.8 percent) of all students, and they receive about that amount of all total grant funding (59.3 percent). Various minority groups also receive proportions of grant funding that track their representation among all students (Hispanic students make up 14.1 percent of students and receive that proportion of grant aid, etc.). That's more or less as it should be, Kantrowitz says.

The big differences come when examining breakdowns of different kinds of financial aid -- funds awarded to students based purely on their financial need vs. those awarded without regard to such need, scholarships awarded by institutions and by private organizations, etc.

Among all sources of grant funding (federal, state, institutional, private, etc.), white students (who make up 61.8 percent of all students) receive 51.3 percent of grant aid awarded based on financial need alone, while minority students receive 48.5 percent. That breakdown occurs, Kantrowitz says, for an obvious reason related to the relative financial stations of minority and white Americans in U.S. society: "Minority students receive a higher share of need-based grants, representing 48.5 percent of grant recipients and only 38.0 percent of the student population, [because] they are more likely to be low-income."

White students, in turn, receive 75.6 percent of grants awarded based on academic and other kinds of merit, compared to 24.3 percent allocated to minority students. These grants, Kantrowitz notes, are often awarded by semi-selective colleges as a "form of financial aid leveraging," to woo middle- and upper-income students who can pay meaningful portions of their tuition costs. "A full-pay student -- even with a significant discount in the form of a merit-based grant -- still yields more net revenue to the college than low or moderate-income students," he writes.

Focusing on institutional grants alone -- the funds that individual colleges and universities choose how to distribute -- white students receive 69.1 percent of all funds, but 75.9 percent of merit-based grants, and 60.7 percent of need-based grants. "Caucasian students are almost twice as likely to receive institutional merit-based grants as minority students" are, Kantrowitz writes. The figures hold for minority students of all kinds, as seen in the table below:

Allocation of Institutional Merit-Based Grants, 2008-9

Race	Average Grant Received	Number of Grant Recipients	Percentage of Grant Recipients	Percentage of Total Grant Funding	Percentage of Student Population
White	$5,375	1,383,900	75.5%	75.9%	61.8%
All Minority Students	$5,259	447,300	24.4%	24.0%	38.0%
Black/African-American	$5,238	171,100	9.3%	9.1%	14.0%
Hispanic/Latino	$4,839	141,800	7.7%	7.0%	14.1%
Asian	$6,543	72,100	3.9%	4.8%	5.9%
American Indian/Alaska Native	$3,909	12,300	0.7%	0.5%	0.8%
Native Hawaiian/Pacific Islander	$4,587	6,800	0.4%	0.3%	0.7%
More Than One Race	$5,066	43,200	2.4%	2.2%	2.4%
Total	$5,347	1,833,100	100.0%	100.0%	100.0%

Source: Mark Kantrowitz

At public colleges, white students made up 62.7 percent of the student population but were 73.1 percent of the recipients of merit-based grants and received 68.2 percent of the merit-based funds; at private nonprofit colleges, white students made up 66.8 percent of the collective student bodies but received nearly 80 percent of the merit-based grants. Over all, white students were nearly twice as likely as minority students with SAT scores of at least 1400 (on a 1600 scale) to receive institutional merit-based scholarships, Kantrowitz says.

Figures like those explain why state and institutional merit-based financial aid has increasingly come under attack from groups that advocate for low-income and minority students (like Education Trust) and why some campus leaders have argued that institutions should move to once again allocate their precious aid dollars based on students' financial need rather than other factors. Minority students receive 34.7 percent of all privately funded scholarship money, and make up 30.5 percent of recipients of privately funded scholarships, Kantrowitz reports.

"To put minority students on an equal footing would require increasing annual private scholarship awards for African-American students by $83 million and Latino students by $197 million," he writes. "These figures are based on equalizing the mean grant, the ratio of total funding to total student enrollment, so that all racial groups have the same mean grant."

Kantrowitz concludes: "Over all, merit-based grants tend to disproportionately select for Caucasian students. This is compensated somewhat by the distribution of need-based grants according to race, since minority students tend to be less affluent than Caucasian students. Shifting funding from merit-based grants to need-based grants will yield more balance in the distribution of grants according to race, but it will not entirely compensate for private scholarships that collectively demonstrate implicit preferences for Caucasian students."

Mixed News on State Student Aid

Doug Lederman | Insider Higher Ed

July 11, 2011

State spending on financial assistance to students increased by 3.8 percent in 2009-10, even as many governments struggled with recession-driven cuts in many programs. But nearly half of all states cut back on their all-important spending on need-based financial aid, even as enrollments boomed and as many students and families struggled to keep pace with tuitions that public colleges (or their legislatures) raised sharply.

Those are among the key findings of the annual report on state financial aid spending by the National Association of State Student Grant and Aid Programs, released today.

In all, states raised their spending on student financial assistance of various types -- need-based and non-need-based grants, and nongrant aid -- to $10.8 billion in 2009-10, up about 3.8 percent from $10.4 billion in 2008-9.
In a break from recent trends, state spending on aid based purely on students' financial need grew at a faster pace than did other kinds of aid. States spent $6.444 billion on need-based aid in 2009-10, 4.6 percent more than the $6.16 billion they awarded in 2008-9. (Aid awarded at least in part on non-need-based factors grew by 1.2 percent in 2009-10, but over a five-year period, merit-based aid has grown at a 36.7 percent clip, compared to 31.3 percent for need-based aid. The gap widens even more examined over a decade, with states raising their spending on merit-based aid by 162 percent since 1999, compared to 99.8 percent for need-based grants.)
But the 2009-10 growth in need-based aid was uneven, revealing significant differences in how states weathered the first full year of the downturn and how much they prioritized student financial aid as they allocated their constrained funds. Slightly more than half the states bolstered their need-based-grant spending -- with states such as California, New York and Pennsylvania among the 10 that did so in double digit percentages. In some of those states, though, tuition rose much more sharply; California's two public college systems raised their tuitions by more than 30 percent in 2009.
Others, however, responded to the rush of students returning to college in the downturn by curtailing their financial aid awards. Ohio slashed its spending on need-based aid by two-thirds (from $225 million in 2008-9 to $76.3 million in 2009-10), and Michigan cut its in half (as did Alaska, but from very little -- $1.97 million -- to virtually nothing).

State Spending on Student Financial Aid, 2009-10 (in millions)
 [Click to view full table]
Source: National Association of State Student Grant and Aid Programs

Big Student Debt Could Limit Schools' Financial Aid Access

by Tali Arbel, AP Business Writer
June 3, 2011

NEW YORK - The government is moving forward with its crackdown on the country's for-profit schools, aiming to protect students from taking on too much debt to attend schools that do nothing for their job prospects.

But the final version of the Department of Education's rule, released Thursday, is much softer than its original incarnation. It gives schools more time to correct deficiencies and makes it likely that fewer will lose access to federal student aid dollars. The news sent education stocks soaring in morning trading, with companies that analysts had considered most at risk of having to shut down programs or change them significantly like Corinthian Colleges Inc. and Education Management Corp. gaining each more than 25 percent.

Shares of the nation's largest chain, Apollo Group Inc., which owns the University of Phoenix, rose 13 percent. DeVry was up 11 percent and the Washington Post Co., which owns the Kaplan school chain, rose 6 percent.

The “previously proposed onerous rules have been relaxed,” said UBS analyst Ariel Sokol.

Nearly 18 months after negotiations began on how to define “gainful employment,” the DOE has released conditions that for-profit schools must meet in order to access federal financial aid dollars. If graduates owe too much relative to their income or too few former students are paying back their tuition loans on time, schools stand to lose access to Pell grants and federal student aid. Such a loss would seriously crimp schools' ability to attract students.

“These new regulations will help ensure that students at these schools are getting what they pay for: Solid preparation for a good job,” Secretary of Education Arne Duncan said Thursday. “We're giving career colleges every opportunity to reform themselves, but we're not letting them off the hook, because too many vulnerable students are being hurt.”

Most students at career colleges and vocational schools pay tuition with federal financial aid dollars as much as 90 percent of a school's revenue can come from government aid. But that leaves taxpayers on the hook if students can't find good jobs and default on their loans.

And they are defaulting in large numbers.

Students at for-profit institutions such as technical programs and culinary schools represent just 12 percent of all higher education students but 46 percent of all student loan dollars in default. The average student earning an associate degree at a for-profit school carries $14,000 in federal loan debt.

Government scrutiny of the industry grew as the Great Recession exacerbated students' debt burdens. The DOE last fall created rules to rein in deceptive advertising and barred schools from paying enrollment counselors based on how many students they signed up, among other measures. The agency drew up the “gainful employment” rule in 2010 but delayed putting it into effect as it faced heavy lobbying from schools and politicians.

Under final terms of the law, announced Thursday, schools will only be able to receive federal-paid tuition if at least 35 percent of its former students are repaying their loans. Or, the estimated annual loan payment of a typical graduate must not be bigger than 30 percent of his or her discretionary income, or 12 percent of his or her total earnings.

Many maintain that the rule will protect students from toxic programs.

“The Department of Education's gainful employment rule is a modest and important first step to protect students and taxpayers from subprime academic programs that have a demonstrated track record of failure,” said Sen. Tom Harkin, D-Iowa, who has headed a series of hearings critical of the for-profit sector.

“The only programs that would lose funding would be programs that are consistently failing to provide students with gainful employment and are providing them with insurmountable debt,” adds Pauline Abernathy of the Institute for College Access & Success, an education advocacy group that favors more industry regulation.

Others, including the National Black Chamber of Commerce and the Hispanic Leadership Fund, have said the new federal rule could hurt minority and low-income students by eliminating important funding options and therefore reducing the number of schools they can afford to attend. Congressman John Kline, R-Minn., filed an amendment in February to try to cut DOE funding in order to stop the rule from being enacted. Harris Miller, the president of Association of Private Sector Colleges and Universities, an industry group, has said the rule has “fundamental legal flaws” because the DOE is “engaging in a form of price fixing,” which it doesn't have the authority to do.

The lobbying seems to have worked.

Analysts say the rule is more lenient than they and most investors had expected “meaningfully watered down,” according to R.W. Baird's Amy Junker. Under the rule's original terms, programs that failed to meet the criteria would have lost federal loan eligibility immediately and enrollment would have been frozen at any school in danger of failing. The finalized rule gives schools multiple chances over a four-year period to improve their stats. After “three strikes,” a school would lose eligibility for three years.

“We're focusing on improving (for-profit programs) rather than closing them. Students would be better off if their programs were stronger rather than closed down,” said James Kvaal, a DOE official, during a conference call with reporters.

The DOE said it expects 18 percent of for-profit schools' programs to fail its tests at some point, and 5 percent of programs to lose eligibility under the new law.

There's a lot at stake for the schools and their investors, who have benefited from the surge in for-profit programs hitting the market in the last decade. The country's largest chain, Apollo Group, has seen revenue and net income grow about eightfold since 2000. And despite the hit that the sector has taken from increased regulatory scrutiny, Apollo's stock has more than quadrupled in that time.

But BMO Capital Markets analyst Jeff Silber sees profits declining or stagnating at most for-profit schools over the next few years. New enrollments are dropping sharply after years of double-digit growth as the schools adjust their businesses to accommodate the government's stricter oversight.

Some schools have been trying to get out in front of the new laws and adapt their business models to the new reality. Apollo's University of Phoenix, for example, now offers a free, three-week orientation that helps weed out unprepared students without charging them. The Washington Post Co.'s Kaplan education division also has put in place a free trial period so students can see if they really want to commit to school. Career Education Corp. is making new online undergraduate students pass a college prep course if they haven't attended college before; if they can't do the work, they can drop out without paying tuition.

University of Phoenix spokesperson Rick Castellano and Kaplan spokesperson Mark Harrad said they had no comment yet on the new regulations.

Birdwell Tries, Fails to Hike Tuition for Undocumented

by Becca Aaronson | Texas Tribune
May 9, 2011

An effort by Sen. Brian Birdwell, R-Granbury, to require undocumented Texas students to pay out-of-state tuition rates sparked emotional debate in the Senate today, and forced Birdwell to pull the measure down.

Birdwell tacked the amendment, which would have required undocumented students to pay much higher out-of-state tuition rates, onto an education finance bill. Those currently paying in-state tuition would have been grandfathered in under the measure, but the amendment could have affected some 16,000 students.

“You’re putting a dagger in the hearts and the hopes of these students,” said Sen. Leticia Van de Putte, D-San Antonio, the first senator to voice concern. “...We’re punishing the students, the children, because of a transgression of their parents.”

Sen. Eddie Lucio, D-Brownsville, argued: “They’re in college trying to make something of themselves, and if we in any way interfere, they won’t get their education.”

Birdwell said constituents have complained about paying tuition for illegal residents. He said his intention was “fairness for the Texas taxpayers.”

But Sen. Carlos Uresti, D-San Antonio, said that argument was “illogical” because undocumented residents are taxpayers. Uresti said he saw students sobbing after the federal government failed to pass the DREAM Act, and now "what’s happened at the federal level is filtering down here with your amendment.”

After senators took a moment to conference, Birdwell withdrew the amendment “for the continued survival” of the education finance reform bill.

B-On-Time Program Costing Some Universities Millions

Check out the chart of each institutions total gain or loss during that fiscal year 2007 to 2010.

-Patricia

by Reeve Hamilton | Texas Tribune
March 8, 2011

Even if state Sens. Dan Patrick, R-Houston, and Jeff Wentworth, R-San Antonio, are successful in their effort to end the practice of setting aside a portion of tuition for financial aid, it would not cut off funding for the set-aside-funded B-On-Time Loan Program for students at public institutions. The program offers sweet savings if you are a student. But if you are an institution of higher education, the program might be costing you anywhere from a few thousand to millions of dollars.

Currently, at each public university, 5 percent of tuition that exceeds a certain level is turned over to the Texas Higher Education Coordinating Board to finance the B-On-Time program, which offers a no-interest loan that is forgiven if students graduate in four years with at least a 3.0 GPA. The loan program is meant to encourage students to accomplish the, apparently, rare feat of graduating in just four years (and with good grades to boot).

The incentive seems to work. According to the Coordinating Board’s financial aid report for fiscal year 2009, students at public institutions who had financial aid other than a B-On-Time Loan had a 19.1 percent four-year graduation rate. For students who had a B-On-Time Loan, the four-year graduation rate was more than double: 38.6 percent. A total of 19,364 awards were given out from 2007 to 2010. For the current academic year, the loan amount is $6,780 per year at a four-year institution and $1,780 per year at two-year institutions.

State Sen. Judith Zaffirini, D-Laredo, who authored the legislation that created the program, calls it one of her “all time favorites.” She said, “The best way to save money is to get a degree as soon as possible. There is just no equal savings to that.”

But despite its apparent effectiveness, the B-On-Time program is a losing proposition for many universities, which do not get back what they are required to invest in the program. According to Coordinating Board data, the biggest loser in terms of dollars is the University of Houston, which turned over $8,684,374 in tuition set aside for the program from fiscal year 2007 to fiscal year 2010. In that same period, $1,497,565 was disbursed to UH, for a total of 292 awards.

There are some universities — just 10 of 35 that put money into B-On-Time — that come out on the winning end. The biggest earner: Texas A&M University, which turned over $12,456,041 from fiscal year 2007 to fiscal year 2010 and got back $17,538,131 in the same period.

It’s difficult to draw a straight line from what a school collects for the program and what it eventually receives back — or from a school that loses money to one that’s raking it in. In addition to set asides, disbursements may also include dollars from general state revenue and other state savings, though most general revenue used for B-On-Time loans goes to students at private institutions, which are not funded by set-asides from public institutions. No set-aside money is collected from community colleges, though their students are eligible for awards.

One of the key determinants in which schools win out monetarily is how strongly the school’s financial aid office, which acts as go-between for the Coordinating Board and the student, promotes the loan. “Institutions typically have a difficult time getting students [to apply], because the perception of it is that it’s another loan program,” said Joe Pettibon, assistant provost for student financial aid at A&M. “We’ve been one of the more aggressive institutions about getting this information to our students and awarding it to them.” Because the program gives priority to renewals, Pettibon said, the more recipients on campus already, the easier it is be to get more loans as time goes on.

Every school in the Texas State University System receives less money in B-On-Time loans than it turns over. Mike Wintemute, a spokesman for the system, said that, especially with proposed cuts to the state’s primary need-based aid program, TEXAS Grants, “there may be a greater desire to keep that five percent at those institutions.”

Zaffirini said the issue of schools losing money through B-On-Time has recently been brought to her attention. “We’ll look into that immediately,” she said. “It seems to be a problem, and if so, we’ll try to resolve it as soon as possible.”

To see how schools fare in the shuffling of B-On-Time Loan dollars, here is a chart of Coordinating Board data showing collections, disbursements and total awards by institution for fiscal year 2007 to 2010. You can also follow this link for a chart of each institutions total gain or loss during that time period.

Click here to view each institution and the number of awards they gave out.

Budget shortfall may gut higher ed, financial aid Read more: http://www.mysanantonio.com/default/article/Budget-shortfall-may-gut-higher-ed-financial-aid-945062.php#ixzz1AZhc9OHx

Good summary of what's in store for higher education. A very important detail mentioned here is that higher education is not protected by constitutional mandates. So while some have the capacity to lobby it not enough to protect college access and opportunities. In fact, even a giant like UT is not free from the what's coming down.

Need is quickly being replaced by merit, and we know who this will impact.

As I noted in an earlier post, it's important for current college students to become versed on these issues.

-Patricia

By Melissa Ludwig
Wednesday, January 5, 2011

Two years ago, legislators were talking big about building more Tier One research universities and putting Texas on the map for higher education.

As the 82nd legislative session kicks off Tuesday, higher education has turned into a fat target for budget cuts as legislators seek to patch a projected $20 billion shortfall.

Universities and colleges already have been asked to give back 7.5 percent of state dollars in this two-year budget cycle, and could face another 10 percent cut over the next two years. Financial aid may get chopped as well, some lawmakers fear.

“I think all of us felt as though we were making real progress for higher education in Texas after the 2009 session. Now, it looks like a lot of those gains will be lost,” said state Rep. Joaquín Castro, a San Antonio Democrat and vice chairman of the House higher education committee.

Public community colleges and universities already have begun grappling with budget cuts by increasing class sizes, shedding full-time employees and filling the teaching ranks with part-time professors.

Further cuts could force them to defer maintenance projects, reduce academic offerings and cut programs that aren't core to the teaching mission, according to college leaders.

It also could mean higher tuition for students and families, and in the case of community colleges, higher taxes for local property owners.

“It is going to be a tough session. (Lawmakers) are not going to raise taxes, we know that,” said Ricardo Romo, president of the University of Texas at San Antonio. “There will be cuts, but no one knows where the cuts will be.”

Some lawmakers are pushing proposals to squeeze more productivity out of limited dollars by tweaking the higher education funding formula and criteria for the state grant program, but it's unclear whether those ideas can gain traction in a session consumed by wrangling over the budget.

“What am I going to do, throw a lady out of a nursing home or cut CHIP (Children's Health Insurance Program)?” said state Sen. Leticia Van de Putte, D-San Antonio. “The choices are all awful.”

Like the 2003 budget crisis, higher education is again a popular target for cuts because it doesn't carry a federal or constitutional mandate like Medicaid, public schools or prisons, said state Sen. Judith Zaffirini, a Laredo Democrat who chairs the Senate higher education committee.

But unlike prisons, every dollar invested in higher education returns more than $5 to the Texas economy, according to the Texas comptroller.

The cuts come at a time when demographers project the state must double the percentage of adults with at least an associate's degree to 60 percent by 2030 to meet work force demand, said Bill Hammond, president of the Texas Association of Business.

The influential lobbying group is rooting for higher education, Hammond said, but reform is needed.

According to the Texas Higher Education Coordinating Board, students who entered Texas public higher education in 2003 and walked away without a degree cost $713 million in state and federal financial aid and $330 million in state appropriations.

“Completion is what counts,” Hammond said.

The group is backing a plan by the Coordinating Board to carve out 10 percent of state appropriations for universities and tie it to the number of bachelor's degrees awarded, with extra weight for at-risk students and high-demand fields such as science and math.

It would also stack up a university's actual six-year graduation rate to its “predicted” rate, given the university's student body makeup.

For community colleges, 10 percent of funding would be tied to “momentum points,” such as completing 15 or 30 credit hours, graduating or transferring to a university.

Local Democratic lawmakers are open to the proposal, but said it's unfair to crank up expectations while taking away money.

“Universities aren't going to be able to afford those programs to help (struggling) students succeed,” Van de Putte said.

Budgets already are on a tight wire.

In Bexar County, the Alamo Colleges are boosting average class sizes from 18 to 24, reducing full-time faculty and staff by 350 through attrition and early retirement, filling the teaching ranks with part-timers and canceling more classes because of low enrollment.

The colleges also have raised taxes and tuition, a trend that could continue if the cuts go deeper, said Bruce Leslie, the district's chancellor.

At public universities, average costs for students have jumped more than 70 percent since 2003. Texas A&M University and the University of Texas at Austin have offered buyouts to tenured professors.

UTSA and Texas State University have avoided that tactic, but have left many jobs unfilled.

“Everybody's workload goes up,” said Bill Nance, vice president for finances at Texas State. “There are larger classes, longer lines paying tuition and fees, delays in this and that.”

Romo and Nance said they would rather suffer delays than gut initiatives aimed at helping at-risk students. They're also concerned about potential cuts to TEXAS grants, the state's grant program for needy students.

Efforts to cultivate more Tier One research universities in Texas also will face a challenge.

Last session, lawmakers created the $570 million National Research University Fund and put up $50 million for a wildly popular gift-matching program.

The fund money will not be touched, but given the budget crisis, it's unclear whether the matching program will be renewed.

“Are we going to slow the pace to (Tier One)? Sure, but it doesn't mean we shut down the shop,” Romo said. “The horse is out of the barn, and we are galloping.”

Read more: http://www.mysanantonio.com/default/article/Budget-shortfall-may-gut-higher-ed-financial-aid-945062.php#ixzz1AZg3x7j0

Georgia Facing a Hard Choice on Free Tuition

This is an important conversation happening in Georgia regarding merit-based aid. Attempts to make eligibility for Texas' state financial aid, TEXAS Grant, an increasingly merit-based program is going to be on the table again this session.

The difficult factor that few are considering in Texas is that we've increased the challenges that students will have in simply meeting the current eligibility requirements. To support increasing the merit criteria will have disproportionate effects for low-income students that attend poorly resourced high schools.

I urge everyone, and college students especially, to please keep a close watch on this issue this session!

-Patricia

By KIM SEVERSON | NY Times
Published: January 6, 2011

ATHENS, Ga. — Students here at the University of Georgia have a name for some of the fancy cars parked in the lots around campus. They call them Hopemobiles. But there may soon be fewer of them.

The cars are gifts from parents who find themselves with extra cash because their children decided to take advantage of a cherished state perk — the Hope scholarship. The largest merit-based college scholarship program in the United States it offers any Georgia high school student with a B-average four years of free college tuition.

But the Hope scholarship program is about to be cut by a new governor and Legislature facing staggering financial troubles.

The lingering effects of the recession and the end of federal stimulus funds have sunk many states into a fiscal quagmire. The seriousness of the problem, and a growing concern over how much worse it might become, have many states struggling to find ways to trim services or raise revenues.

In Georgia, that means taking a slice out of the Hope scholarship.

When it was begun in 1993, the program was covered easily by Georgia’s state lottery. Politicians enjoyed how happy it made middle-class constituents. Educators praised the way it improved SAT scores and lifted Georgia from the backwaters of higher education.

It was considered so innovative that 15 states copied it. And while the lottery-based scholarship programs in states like Tennessee are dipping into reserves to cover the costs, none have fiscal woes as big as Georgia’s.

Part of it is the program’s popularity. A majority of freshmen in Georgia have grades good enough to qualify for Hope, which covers tuition, some books and fees — but not housing costs — at any Georgia university or technical school.

And even though as many as two-thirds of Hope students let their college grades slip so much that they no longer qualify — “I’ve lost Hope,” they joke when it happens — Georgia still gives away more financial aid per student than any other state. Since the program started, 1.3 million Georgia students have received a total of $5.6 billion in educational support. The program offers as much as $6,000 a year for some students.

But the program has become so popular it cannot sustain itself. Lottery sales, which by law can pay for only the Hope scholarship and a free prekindergarten program, will be short $243 million this fiscal year and as much as $317 million the next, according to state budget estimates.

Last year, lawmakers had to pull millions of dollars from the state’s reserve fund just to cover the cost. But this year, there is nowhere to turn.

Like the other states that are facing the worst fiscal crisis in recent memory, Georgia heads into its legislative session next week staring at a budget deficit of as much as $2 billion. And that is after billions of dollars in cuts over the past two years that have reduced the state’s spending power to $17.9 billion for fiscal year 2011.

But trim the program that for years has paid to educate the children of the most reliable voters in the state?

“Undoubtedly, this is, in every sense of the word, a very strongly ingrained entitlement for a certain segment of voters, and politicians are indeed reluctant to touch it,” said Christopher Cornwell, a professor of economics at the University of Georgia, who has studied the effect of the Hope scholarship on the state, including an analysis of the positive impact the scholarship has had on car sales.

Politicians are hoping for mercy as they begin this month to make decisions that will surely have the parents of college-bound students scrambling to find new ways to pay for tuition.

“We trust and we hope the people in the state of Georgia understand the position we’re in,” said State Representative Len Walker, a Republican who leads the House Higher Education Committee.

They do and they don’t.

Cathy Ottley, a part-time office manager, and her husband, a management consultant, are raising three children in Marietta, north of Atlanta. One is a sophomore at the University of Georgia, courtesy of the Hope scholarship. A daughter who is a high school senior had her heart set on the University of North Carolina but has come to see an in-state college as the practical way to go. And then there is the youngest, a high school freshman with a promising future in athletics. Without the scholarship, Ms. Ottley said, college for her children would be a stretch at best.

“This just gives you options,” she said. “I don’t have peace about kids just starting out at 22 with $200,000 in debt for their education.”

Mr. Walker said no one was talking about cutting the program completely.

“It appears at this point that it will not be a 100 percent scholarship. It might be 90 percent. It might 80 percent,” he said. But the cost of books and fees will most certainly be eliminated.

Other options include raising the required grade-point average, which would cut the number of students who qualify, or giving more to exceptional students and less to merely above-average performers.

“That would make it so much harder,” said Myisha Price, a junior at Clayton State University in Atlanta, who relies on the scholarship and also works. “I don’t go to clubs. I don’t drink. I don’t smoke and I don’t party and it’s already hard.”

Another idea is to work economic need into the equation, though that idea does not have much support, both lawmakers and educators said.

The most likely plan, and one that Governor-elect Nathan Deal, a Republican, has indicated he supports, would be to create a flat rate for each student, regardless of the tuition bill.

At a cafeteria table here this week, a group of Hope recipients defended the program and debated a range of ideas to keep Hope alive, including raising taxes.

Allie McCullen, who is majoring in English and women’s studies, is in her fourth year at Georgia. She is the only child of a single mother who in 2006 lost her job in the mortgage industry. Ms. McCullen pieces together her living expenses and extra book costs through a small grant and two jobs.

“If I didn’t have it, I might not be able to attend at all,” she said. “Or I would just be in such severe debt that I might not ever be able to get out of it.”

If the scholarship ends or gets cut drastically, it could send the most promising students out of state and even end the era of new cars for incoming freshman.

Lauren Rice drives a Hopemobile (though, she concedes, it is only a Honda Civic). Her parents told her she could go to college anywhere. She was considering Auburn in Alabama. But her parents offered her what she called “the car incentive.” That, plus the daunting out-of-state tuition helped her select the University of Georgia.

But without Hope, Ms. Rice’s decision might have been different.

“If you’re going to have a bill in-state anyway,” she said, “then what does it matter?”

At Texas A&M, Student Senate Votes to Cut Off Tuition Perk for Illegal Immigrants

By Alexandria Hein
November 16, 2010

Texas A&M University’s student Senate recently approved a bill that would no longer allow illegal immigrants attending the school to be eligible for in-state tuition rates.

Since 2001, illegal immigrants in Texas have qualified for in-state tuition, which offers them a generous discount compared to out-of-state students attending the university. Texas A&M has 49,000 students, and about 300 are illegal immigrants.

But while the student Senate voted 48-21 this month in favor of the bill, S.B. 63-11, the move isn’t sitting well with Student Body President Jacob Robinson.

Robinson, who vetoed the bill, says that it’s up to the state legislature – not the school – to address the problem of illegal immigration
.

“This is a state of residency issue and the state needs to address this first,” said Robinson.



The student senators voted because state legislators "mentioned the desire to receive feedback from students at Texas institutions -- specifically Texas A&M," said Clark Caperton, student Senate chair of external affairs.

That “desire” hit a nerve when the bill was introduced this month.

Demonstrators took to campus streets and held up signs that said, “Aggies don’t fight Aggies,” and “We don’t choose to be illegal." Many of the demonstrators support proposed federal legislation called the Dream Act -- which would allow immigrant children to remain in the United States to serve in the military or attend college.

Justin Pulliam, student Senator and chairman of Texas Aggie Conservatives, the co-author of the S.B. 63-11 bill, predicts that Dream Act
Activists will turn out Wednesday when the bill is brought back onto the floor. Students will have an option to override Robinson’s veto.

“Dream Act Activists are very effective and good at being heard,” Pulliam said. But he says there are others not so vocal -- students and faculty alike -- who support the bill.

The student Senate has the backing of state Representative Leo Berman, who has plans to introduce legislation on this matter in the spring.

“I’m very disappointed that one person would have the authority to say no to a bill that was passed by the entire student government,” said Berman, adding that Robinson's veto was “ridiculous.”

Texas A&M is not the only campus in Texas experiencing turmoil recently, as other campuses in the state have had similar splits in the student body. University of Texas San Antonio students took part in a hunger strike in order to enlist Sen. Kay Bailey Hutchison's support for the Dream Act. Undocumented students at the University of Texas Austin put themselves at risk for deportation while participating in a "coming out rally" on campus last Tuesday.

In 2001, Texas became the first of ten states to offer in-state tuition to illegal immigrants who meet certain criteria, which includes graduating from a local high school and pledging to legalize their immigration status as soon as possible. Illinois, Kansas, Nebraska, New Mexico, New York, Utah, Washington and Wisconsin all have a variation of the law.

On Monday, California’s Supreme Court upheld its state law, after out-of-state students and their families challenged it, arguing they shouldn’t have to pay higher tuition while undocumented immigrants get to pay the lower state rate.

Georgia and South Carolina -- which have a selective admissions process -- are the only two states that ban illegal immigrants from attending any college there.

The Texas A&M bill has received 330 Facebook “likes.” But the petition site Change.org called the bill “discriminatory” and filed an online petition against it, saying it will result in the “loss of opportunity and advancement and higher costs for Texans in the long term.”

Caperton says the bill was to test the water of public opinion.

“S.B. 63-11 is merely designed to represent the collective, although not universal, opinion of the students at Texas A&M,” said Caperton.

Caperton or Robinson wouldn’t speculate if the veto would be overturned Wednesday, but both said that it would be a close vote.

Proposals floated to 'reinvent public higher education'

Coordinating board wants to revise funding formula, financial aid.

By Ralph K.M. Haurwitz | AMERICAN-STATESMAN STAFF
Thursday, Oct. 28, 2010

The state's higher education agency called Thursday for sweeping changes in policy, including a revised method of funding community colleges and public universities, a greater emphasis on merit for certain financial aid and a series of cost-cutting measures.

The proposals, which would require legislative action, come at a difficult time for higher education: Enrollment is surging just as the state's finances are looking increasingly bleak.

The latest estimates put the overall shortfall at about $24 billion for the next two-year budget.

"We want to reinvent public higher education — reinvent it in a more cost-efficient way and reinvent it in a way that gives better academic results," said Higher Education Commissioner Raymund Paredes.

"And we think that we can do that. I'm sure we'll need more financial resources over time, but not nearly as much as we would need if we didn't change the way we deliver education."

Members of the Texas Higher Education Coordinating Board, Paredes' agency, approved the various recommendations unanimously at a meeting in Austin. The proposals now go to Gov. Rick Perry and the Legislature.

The coordinating board also announced that statewide enrollment this fall is up 7.2 percent from a year ago, to 1.5 million students, based on a preliminary head count. The final count is expected to be 2 to 6 percent lower. The figures include all postsecondary institutions except private, for-profit colleges.

The recommendations on cost-cutting were developed for the coordinating board by a 20-member advisory panel of higher education leaders and business executives led by Fred W. Heldenfels IV , the board's chairman. Perry issued an executive order last year directing the board to look for savings, and perhaps not surprisingly, some recommendations echo policies the governor has urged lawmakers to adopt in recent years.

The coordinating board wants 10 percent of the base funding for universities to be indexed to so-called "student outcomes," such as graduation rates; total degrees awarded; degrees awarded to students from low-income families or those otherwise deemed at-risk; and degrees in science, technology, engineering, math and other fields considered high-priority.

Ten percent of community college funding would be on the basis of degrees awarded, certificates completed, college-level math course completions and other performance measures.

Currently, base funding is strictly a function of enrollment. Paredes said the recommendation was limited to 10 percent of base funding to avoid making draconian changes in the middle of a budget crisis. But that should be enough to prompt improvements, he said, and the percentage could be ramped up later.

These and other recommendations could save $4.2 billion over four years by raising graduation rates and achieving other cost efficiencies, Heldenfels said.

The coordinating board also wants to step up the merit component in allocation of financial aid awards called Texas Grants to students from low-income families.

Those with strong academic credentials would get priority. A similar proposal suggested by Paredes didn't get approved by lawmakers last year.

Lawmakers won't write the state's budget, including the higher education portion, until they meet in Austin next year. But Heldenfels acknowledged that it will be a challenging legislative session.

The first goal is to preserve base funding and financial aid, Heldenfels said. The coordinating board also hopes to get extra funding to accommodate enrollment growth. But if higher education takes a big hit, the sense among chancellors and presidents is that there's no way to avoid tuition increases, he said.

Results released today from a public opinion poll conducted for the American-Statesman and four other Texas newspapers might not help the coordinating board's cause.

Among registered voters who were surveyed, one quarter said that to close the budget deficit, they would cut universities and junior colleges more than public education, health services for poor people and public safety .

rhaurwitz@statesman.com; 445-3604

As College Fees Climb, Aid Does Too

TAMAR LEWIN | NY Times
October 28, 2010

As their state financing dwindled, four-year public universities increased their published tuition and fees almost 8 percent this year, to an average of $7,605, according to the College Board’s annual reports. When room and board are included, the average in-state student at a public university now pays $16,140 a year.

At private nonprofit colleges and universities, tuition rose 4.5 percent to an average of $27,293, or $36,993 with room and board.

The good news in the 2010 “Trends in College Pricing” and “Trends in Student Aid” reports is that fast-rising tuition costs have been accompanied by a huge increase in financial aid, which helped keep down the actual amount students and families pay.

“In 2009-2010, students got $28 billion in Pell grants, and that’s $10 billion more than the year before,” said Sandy Baum, the economist who is the lead author of the reports. “When you look at how much students are actually paying, on average, it is lower, after adjusting for inflation, than five years earlier.”

In the last five years, the report said, average published tuition and fees increased by about 24 percent at public four-year colleges and universities, 17 percent at private nonprofit four-year institutions, and 11 percent at public two-year colleges — but in each sector, the net inflation-adjusted price, taking into account both grants and federal tax benefits, decreased over the period.

Almost everybody has been helped by the federal government’s increased spending on education, Ms. Baum said, either through Pell grants, which provide an average of $3,600 for low-income students, or through tax credits, which go further up the income scale.

The increase in federal support this year was so large that unlike former years, government grants surpassed institutional grants.

“I think that’s an aberration,” Ms. Baum said. “Pell grants are unlikely to grow so rapidly in the coming years, and institutional grants are likely to grow, so I think the ratio will flip back.”

This year, the report found, full-time students receive an average of about $6,100 in grant aid and federal tax benefits at public four-year institutions, $16,000 at private nonprofit institutions, and $3,400 at public two-year colleges.

“The College Board figures are depressing and utterly predictable,” said Terry Hartle, senior vice president of the American Council on Education. “When states cut funding for higher education, tuitions go up to make up for the difference. The good new is that Pell grants will cushion the increases for low-income students, but if you’re not eligible for financial aid, it’s a problem, since very few families are seeing their income go up 8 percent this year.”

Despite the weak economy, and the number of families having trouble paying tuition, the nation’s public universities continue to award most of their institutional aid without regard to financial need. Over all, the report found, 42 percent of the public institutions’ aid is awarded on the basis of need.

That is up from 28 percent the previous year, Ms. Baum said, for reasons that are unclear.

“It might be that they said, look at all these kids who need money, we should be giving more to them,” she said. “Or it might be that because of the recession so many more people have financial need that more of them happen to be getting institutional aid.”

Out-of-state students at public universities this year are paying an average of $19,595 in tuition, with total charges of $28,130, according to the report.

At public community colleges, published tuition and fees rose 6 percent, to an average of $2,713.

And at for-profit institutions, the report found, tuition and fees rose 5.1 percent, to an average of $13,935.

Over the last decade, published tuition and fees at public four-year colleges and universities increased each year at an average of 5.6 percent beyond the rate of inflation.

“We have to figure out how to educate students in a more cost-efficient way,” Ms. Baum said. “We haven’t yet figured out how to use technology to make it cheaper. But we will.”