Colleges aren’t the only institutions that are joining the merit-aid movement. Hoping to keep their brightest students near home and slow their “brain drain” problems, more than a dozen states have begun providing scholarships based solely on merit — as measured by academic performance in high school and/or on standardized test scores.
Georgia was a leader in state merit aid. Under its HOPE program, any student with a high school grade point average of B or better has tuition and fees waived at any public college or university in Georgia to which the student is accepted. Many other states have followed Georgia’s lead, shifting a significant portion of states’ limited resources away from need-based financial aid programs. In 1990, says Penn State researcher Donald Heller, only 10 percent of state aid was awarded without regard to financial need; today, fully one-fourth of state aid is available to all students — even those from the wealthiest families.
Critics say that merit programs don’t increase college attendance because they generally provide money for students who would go to college in any case. The Kennedy School’s Susan Dynarski, who has studied state merit programs, has observed that some of the programs tend to favor upper-income students. Says Dynarski: “Any program based on merit rather than need funnels fewer dollars to low-income people.”
Although the federal government does not provide merit scholarships, analysts say that the HOPE and Lifelong Learning federal tax credits that were enacted during the Clinton administration are comparable to merit aid in their impact.
To help offset tuition costs, taxpayers can take a credit of up to $1,500 under the HOPE program and, starting with the 2002 tax year, up to $2,000 under Lifelong Learning. (These credits are subject to income ceilings, however. For taxpayers filing jointly, a gradual phase-out of the credit begins at $80,000 in adjusted gross income [AGI], and those with AGI above $100,000 qualify for no benefit.) In the 2000 tax year, says Harvard’s Bridget Long, taxpayers took almost $5 billion in credits, and that figure is eventually expected to double. She and other critics say that, like merit awards, the main beneficiaries of tax credits are families whose children would go to college anyway. A recent study by the U.S. General Accounting Office seems to support that claim. That study shows that about two-thirds of financially dependent undergraduates who received HOPE credits and 70 percent of those who received Lifelong Learning credits came from families earning at least $60,000. “Rather than improve programs for low-income students, the government has shifted its priority,” Long says. Analysts view state merit programs and federal tax credits as efforts by politicians to woo middle-class voters.
“Politically, paying for college shows up on the list of what Americans think of as important issues," says Michael McPherson. “So there has been tremendous interest in helping the middle class pay for college. It is a way of getting money to people who vote.” Susan Dynarski describes tax credits and state merit aid as “entitlement programs” because funding for them is guaranteed. Georgia’s HOPE program, for example, is funded by dedicated revenue from the state lottery. This isn’t true of the Pell Grant program — which receives specific appropriations and therefore must compete with other legislative priorities. At the state, federal and institutional levels, student financial aid policies “have focused increasingly on making college more affordable for middle-income students, rather than on the fundamental goal of making postsecondary education accessible to all qualified students,” says financial aid researcher Sandy Baum, professor of economics at Skidmore College in Saratoga Springs, N.Y.
In a November 2002 report published by the College Board, Baum says these policies, while defensible from the perspective of any of the three entities involved in setting and implementing them, are clearly at odds with any national agenda aimed at increasing college access. “Policies designed to increase access are efficient if — and only if — they target those students whose behaviors they can significantly alter: students with very limited financial resources,” she says.
