An Alternative View of MeritBased Financial Aid: The Tennessee Education Lottery Scholarship Program

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An Alternative View of Merit-Based Financial
Aid The Tennessee Education Lottery Scholarship
Program
NASSGAP / NCHELP 22nd Annual Student Financial
Aid Research Network Conference Chicago,
Illinois June 9, 2005 Erik Ness Vanderbilt
University Tennessee Higher Education
Commission Richard Tucker Tennessee Higher
Education Commission
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The Impetus for a Merit Aid Program

• Improve academic achievement in high school
• Promote access to higher education
• Stanch brain drain
• Enhance economic development

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Negative Social Consequences of Merit Aid

• Awards college bound students without financial
  need
• Cornwell Mustard, 2005
• Heller and Rasmussen, 2002
• Mumper, 2003
• Under-represented students eligible at lower
  rates
• Dynarski, 2002 2004
• Cornwell Mustard, 2002 2004
• Binder Ganderton, 2002 2004
• Farrell, 2004

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Tennessees Merit ProgramFour Innovative
Characteristics

• Flexible eligibility criteria
• HS GPA-based or Standardized Test-based
• Broad/liberal eligibility criteria
• 19 ACT (890 SAT) or 3.0 GPA
• HOPE (base) 3,000

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Tennessees Merit ProgramFour Innovative
Characteristics

• Need-based supplemental award
• Annual adjusted gross income of 36,000 or less
• Need Supplement 1
• HOPE (base) criteria (4,000)
• Need Supplement 2 (Access Award)
• 18 ACT and 2.75 GPA (2,000)
• Merit-based supplemental award
• General Assembly Merit Scholarship (GAMS)
• 3.75 HS GPA and 29 ACT (1280 SAT)

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Hypotheses With Regard To Negative Social
Consequences

• Greater proportion of African American students
  eligible
• Greater proportion of low-income students
  eligible

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Awards by RaceFirst-Time Freshmen (FTF) at
Public Institutions
WICHE (2003)
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Awards by RaceFirst-Time Freshmen (FTF) at
Public Institutions
WICHE (2003)
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Awards by Income LevelAll Award Recipients
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Awards by Income LevelMerit Supplement Recipients
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Initial Findings With Regard To Negative Social
Consequences

• Greater proportion of African American students
  eligible
• No, Tennessee trends similar to other merit aid
  programs
• Greater proportion of low-income students
• No, recipients are disproportionately
  middle/upper income

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Proportion of Merit Aid Awarded on the Basis of
Need
Award totals for Fall 2004 only
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Proportion of Merit Aid Awarded on the Basis of
Need
Projected award totals for a full program
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Merit Aid Recipients with Financial Need
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Merit Aid Recipients with Financial Need
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Merit Aid Recipients with Financial Need
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Proportion of Merit Aid Recipients with Financial
Need
Award totals for Fall 2004 only
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Gross Amount of Merit Aid and Need Aid
Award totals for Fall 2004 only
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Merit Aid for Low Income Students Surpasses
State Need Aid
Projected award totals for a full program
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Implications

• Overall, the Tennessee lottery scholarship
  program is reflective of merit aids negative
  social consequences.
• Perhaps these consequences can be mitigated by
  the Tennessee model.
• Targeting merit aid to under-represented
  students may ensure larger gross amounts of state
  financial aid to students with demonstrated need.