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Merit Scholarships: Pivotal Shift in Aid

More states - and now the US - are giving students financial aid on the basis of grades, after decades of focusing on need.

First there were scholarships for straight-A students, the kids with crisply ironed shirts and long attention spans. Then came college grants for poor and disadvantaged students. Now, B students have something to cheer about on graduation day.

Following the lead of Georgia, a growing number of states are offering college scholarships to all high school graduates with B averages. The idea of rewarding good grades is also a key component of President Clinton's education budget, and appears likely to pass with the support of the Republican-led Congress.

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But this quiet trend of rewarding good grades is drawing its share of controversy. Critics say merit programs will just help those students who would have attended college anyway. Supporters respond that they help a large pool of middle-class kids who are too poor to pay tuitions out of pocket and too rich to qualify for federal aid.

The debate points up a fundamental conflict in American education: rewarding excellence versus helping the most needy.

"If you had asked me 10 years ago, I would have said that need-based aid was the big trend," says David Breneman, dean of the education school at the University of Virginia in Charlottesville and a supporter of need-based aid. "But now, need has lost a bit of its panache."

The civil rights era of the mid-1960s and early '70s was a heyday for need-based college aid, and federal programs grew exponentially. Last year, state and federal governments and private institutions gave out a total of $50 billion in college aid - nearly $35 billion of it earmarked for poor students.

The merits of merit

But in recent years, this need-based aid has come under increasing attack. Conservatives and moderates argue that students should get aid the old-fashioned way - by earning it.

This viewpoint now may be gaining more widespread acceptance. A recent study indicates that merit scholarships may have a positive impact on student performance.

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In the first academic study of its kind, researchers at Georgia State University tracked the recipients of Georgia's HOPE scholarships, which provide public-college tuition to students who maintain a 3.0 grade-point average. The study found that HOPE students tended to get better grades, take more classes, and were more likely to complete college than a matched sample of students who didn't receive aid.

"Basically, it comes down to rewarding behavior," says Daniel Bugler, a researcher at Georgia State University and co-author of the study. "Somehow, just being named as scholars, with all the prestige and press coverage, students are more likely to think of themselves as college material and stick it out."

Even before seeing the results, some states had taken steps to follow Georgia's lead and create HOPE programs of their own. Florida created a college-tuition program for B students last year; Virginia passed a similar program this year. Five other states have considered HOPE-like programs this year.

There's no sign yet that state merit scholarships have taken tuition money away from need-based programs. Many of the new scholarships rely on state lottery proceeds or other sources of revenue.

But some critics worry that higher education may once again be becoming a bastion of the privileged few - especially once the idea becomes ingrained at the federal level, as now appears likely given the White House-congressional budget deal.

An education gap?

"In the world of limited government resources, I'm concerned that merit-based aid will be a substitute for need-based aid, rather than a supplement," says Jamie Merisotis, director of the Institute for Higher Education Policy, a Washington think tank. Historically, affluent students tend to perform better in school than poor students, and the danger of a strict merit-based system is that it could widen the gap between the educational haves and have-nots.

Some critics also note that having an abundance of merit scholarships has the potential to create a conflict of interest for colleges during grading periods. Professors may feel pressured by the administration to give higher grades to borderline students, critics say, just to keep state and federal aid dollars rolling in.

Initial results from Georgia, however, indicate that grade inflation may not be a significant problem. With only 55 percent of the HOPE recipients still maintaining a B average after two years, there's a pretty big dropout rate, notes Dr. Bugler. "There are so many students who drop below the required 3.0 average that I suspect grade inflation is not the problem that it could be."

Merit scholarships could also have an inflationary impact on college tuitions, some say. "When you give a broad-based subsidy to a lot of students, nobody's going to let the families hold onto it," says Dr. Breneman.

From an economic standpoint, "you get more enrollment per dollar with need than with merit. Without [need-based financial aid], some kids wouldn't be there" at college, he says. As for middle-class students, merit scholarships "might influence where they go," whether prestigious Duke University or a school that is a bit less expensive.

"But basically these are kids who are likely to go to college anyway," Breneman says.

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