The Hechinger Report is a national nonprofit newsroom that reports on one topic: education. Sign up for our weekly newsletters to get stories like this delivered directly to your inbox.

merit-based aid
Courtaijaha Brooks-James didn’t qualify for Tennessee’s merit-based scholarship and now faces thousands of dollars in debt on her road to a college degree. Credit: Meredith Kolodner

NASHVILLE, Tenn. — When Paul Kline was applying to college last fall, he found himself in an enviable position: He didn’t have to worry about financial aid. The 17-year-old could count on support from a generous, wealthy grandmother and knew his tuition would be covered.

Nonetheless, he earned several scholarships for the University of Tennessee at Knoxville (UTK) — worth more than $18,000 per year. On top of that, he received $3,500 from HOPE, Tennessee’s merit-based scholarship.

Even as 19 states reduced the total amount of financial they awarded between 2008 and 2013, according to the National Association of State Student Grant and Aid Programs, Kline is among hundreds of thousands of U.S. students from well-off families awarded public dollars in the form of merit-based state scholarships — all based on grades and test scores, not on whether or not they need the money.

Twelve states plus Washington D.C. now spend more on merit-based aid than need-based aid, and many others have increased funding for scholarships based on academic achievement instead of need. Some states have cut financial aid for everybody, leaving hundreds of thousands of eligible low-income students without help simply because the states’ money ran out.

Related: Poorer families are bearing the brunt of college price hikes

“I always knew that if all else failed, if I wanted to go to college really bad and I still had to pay $60,000 out of pocket, I could,” said Kline, a lanky Nashville native with dark blond hair. “I know that for me the HOPE scholarship was almost negligible because of all the other merit-based stuff I got from UTK.”

In 2011, residents of Oconee, one of Georgia’s wealthiest counties, where median income was $76,298, got twice as much per capita in HOPE dollars as students from Randolph County, where median income was $26,863.

Hunters Lane High School in Nashville, where Kline graduated in May, provides a microcosm of how the system works — and who benefits.

Who does merit aid help?

Studies have shown that merit-based programs disproportionately benefit middle- and upper-income students and have little impact on college graduation rates. And that’s one reason that researchers, academics and advocates who try to help low-income students get to and through college believe such programs are unfair.

merit-based aid

In addition, students who receive merit aid aren’t necessarily always top of the class. About 20 percent of students who are awarded merit-based aid have less than a B average, and a similar number have less-than-stellar SAT scores, according to a report by the National Center for Education Statistics.

“It’s a huge waste of billions of dollars nationally,” said Donald Heller, dean of the Michigan State University College of Education, whose research focuses on college access. “If the goal in the state is to increase the number of people getting college degrees, it doesn’t do any good to subsidize students who are going to go to college anyways.”

At Hunters Lane, only 33 students, or 13 percent of the senior class, qualified for the merit-based HOPE scholarship last year. The 1,600-student school, where 79 percent are eligible for free or reduced-price lunch, follows the same pattern as other Nashville high schools: The higher the percentage of low-income students, the lower the percentage who qualify for HOPE (see graph).

Courtaijaha Brooks-James graduated from Hunters Lane alongside Kline this spring, and was among the low-income students who didn’t make the HOPE cut. Last fall, she worked at the Hardee’s near her family’s home after school from 2 p.m. to 10 p.m., and sometimes later. Since the school day started at 7 a.m., she did homework on weekends, during work breaks and sometimes during class.

“I did so good. Everybody was proud of me,” said the fiercely independent young woman with an easy smile, who will turn 18 in August. “I got mostly A’s and B’s.”

Her recent good grades weren’t enough, though. Brooks-James’s standardized test scores fell just below the cutoff for the HOPE scholarship, which could have provided $16,000 toward the cost of her degree. She also needed a 3.0 grade-point average for all four years in high school to qualify, but her spotty performance when she was younger brought her average down.

In contrast, Kline’s supportive family offered access to tutors if needed, and he didn’t have to juggle a job while going to school. He is keenly aware of the inequity.

“I know that for a lot of people at my school, it would have benefited them a lot more to have gotten more money from the HOPE scholarship than me,” he said.

Low-income students left behind

merit-based aid
Recent Hunters Lane High School graduates Paul Kline, Dianna Thomas, Courtaijaha Brooks-James and Virginia Cruz will assume dramatically different debt burdens when they go to college in the fall. Credit: Lee Gray

States that devote significant funding to merit-based scholarships are often aiming to keep bright students in state, hoping to stem a brain drain. Yet last year, at least 10 states that offer need-based programs ran out of money before everyone who was eligible got grants, while the merit-based scholarships in most of those states were fully funded. As a result, hundreds of thousands of eligible low-income students were denied state tuition assistance, according to a review of state grant programs by The Hechinger Report.

Related: A ‘promising’ way to help low-income students to and through college

In many other states, budget cuts have reduced the pot of money available, even as the number of eligible students applying has risen. In some states, applying for a scholarship later than January means getting turned away. The early deadline gives an advantage to students who get guidance from savvy parents or counselors.

“People ask, how come there’s more inequality in higher education? Well, it’s because of policies like these, that transfer of wealth is happening.”

Several states only give money to the very lowest-income students — for example, in Tennessee, need-based grants are only awarded to new students with no expected family contributions this year. Other states prioritize funding for students who are already enrolled in college and receiving the scholarship.

In Florida, almost half of the eligible low-income students — 90,000 — were turned away last year. (The state handed out $134 million in need-based aid to about 92,000 students.) In Kentucky, more than 100,000 students were denied grants from the state’s need-based programs in 2013-14. (About 51,000 students received one of the need-based grants, for a total bill of $92.2 million, according to state records.)

Some 120,000 eligible students who applied for Tennessee State Aid were denied last year after funding dried up and the state legislature’s allocation of $61.4 million fell far short of demand. While 32,606 students received aid, fewer than one-third of the students who received the $1,000 grants were newly enrolling college freshmen — the rest of the grants went to continuing students trying to finish their degrees, according to data provided by state officials.

Meanwhile, Tennessee spent three times more money on non-need-based aid than need-based scholarships last year. As a result, some educators question the state’s funding priorities.

“Are we okay giving money to kids who are already going to go to college, or do we really want to make college change the trajectory of a kid who wouldn’t have had that in his life?” asked Tom Ward, president and CEO of Oasis, a nonprofit youth advocacy group that helped advise Brooks-James on every aspect of her application, from essays to financial aid. Ward worked as a teacher and principal in Nashville’s public schools for more than 30 years.

Tennessee officials said that they were monitoring the spending balance between the need- and merit-based aid programs.

“It’s something we’re evaluating on a year-to-year basis, and we’ll continue to do so,” said David Smith, press secretary for Gov. Bill Haslam.

About a third of students who get Tennessee’s lottery-funded scholarships have family incomes above $96,000, more than twice the state’s median income. Tuition at a four-year public college in Tennessee amounts to five percent of an upper-income family’s income, but 45 percent of a lowest-income family’s, according to a report compiled by the Tennessee Higher Education Commission.

Still, the HOPE scholarship awarded $149.5 million in 2013 to families with an average income of about $85,000 while an even more selective merit scholarship gave more than $30 million to families with average incomes of $102,000.

A third lottery-funded scholarship, aimed at low-income, high-achieving students, awarded $88 million to families with an average income of just over $20,000, according to data provided by Emily House, lottery scholarship and student financial aid research director at the Tennessee Higher Education Commission.

Yet another program, Tennessee’s Promise scholarship, which launched in 2014 and pays tuition for any recent high school graduate who wants to attend community college, has been greeted with praise by champions of improved college access.

But some have also noted that the federal Pell grant, which provides tuition assistance to low-income students, already covers tuition for community college for low-income students. The Promise program may fill an important financial gap for lower-achieving middle-income students, they say, but that money won’t go to the poor.

“Are we okay giving money to kids who are already going to go to college, or do we really want to make college change the trajectory of a kid who wouldn’t have had that in his life?”

Gov. Haslam’s administration counters that even if the funding from Promise won’t directly go to low-income families, students are still eligible for the mentoring program that is an important part of Promise, along with a three-week summer bridge program that provides tutoring.

“You get people’s attention by telling them something is free,” said Mike Krause, executive director both of Promise and of the state’s college-completion efforts. “I would stridently disagree that Promise doesn’t affect the poor.”

Krause pointed to a big jump in the number of Tennesseans filling out federal financial aid forms and said he believes Promise will increase the number of both lower- and middle-income Tennesseans going to college.

Tennessee has made a public priority of increasing the number of college graduates in the state, but has also been under pressure to keep taxes low, which has pushed down spending on higher education. Like other states, Tennessee funds its merit-based scholarships using proceeds from the state lottery. But this practice too has been criticized as moving dollars from low-income communities into wealthier ones, as a disproportionate amount of lottery money comes from the poor.

State lottery links

Georgia eliminated all of its need-based tuition aid in 2012, even as public four-year tuition rose by more than 66 percent between 2007-08 and 2013-14, according to a report by the Center on Budget and Policy Priorities, a nonpartisan research and policy institute. The vast majority of Georgia’s aid program, also known as HOPE, comes from lottery proceeds.

The state doesn’t keep data on the family income of recipients, but a recent study by the Georgia Budget & Policy Institute showed that poorer counties spend more on lottery tickets and get less from HOPE.

“It’s a huge waste of billions of dollars nationally.”

For example, in 2011, residents of Oconee, one of Georgia’s wealthiest counties, where median income was $76,298, got twice as much per capita in HOPE dollars as Randolph County, where median income was $26,863. Oconee residents spent on average about $257 per year on the lottery, while the poorer Randolph residents spent about $895, according to the report.

In the early 1990s, families making more than $100,000 a year couldn’t get HOPE scholarships, but that income ceiling was eliminated in 1995.

Georgia state officials defend the decision to keep HOPE a solely merit-based program. “Gov. [Nathan] Deal believes HOPE scholarship should be awarded on the basis of merit because it helps keep Georgia’s best and brightest students in the state,” said Jen Talaber, a spokesperson for Deal, in an email. “In turn, graduates of Georgia schools are more likely to begin their careers here, which is good for the state’s economy as a whole.”

“Under current revenues, a need-based scholarship would exclude many middle-income families that would struggle to pay for college,” Talaber continued. “Our system allows every student a chance at the most generous state-based scholarship in the nation.”

Related: Can a small, rural college that eliminated merit aid survive – and thrive?

Some scholars disagree that systems like Georgia’s offer students an equal chance at an affordable college degree. They note that while the number of Americans with college degrees has risen in the past few decades, the college completion rate for low-income students has remained stubbornly low — in 2013, only 9 percent of low-income students who began college at age 18 had graduated by age 24.

“People ask, how come there’s more inequality in higher education?” said Sara Goldrick-Rab, professor of educational policy studies and sociology at the University of Wisconsin–Madison. “Well, it’s because of policies like these that transfer of wealth is happening.”

310,000 eligible low-income students were denied state tuition aid in Florida, Tennessee and Kentucky last year.

Florida also uses lottery proceeds to fund its merit-based program, and spends twice as much on those scholarships as on need-based ones. About 30 percent of the state’s merit-based scholarship, known as Bright Futures, went to students with family incomes of $100,000 or higher in 2011, according to the Florida College Access Network, an organization that seeks to increase the percentage of Americans getting college degrees.

According to state officials, Florida no longer tracks Bright Future recipients’ income levels. But an analysis by Florida’s universities found that after the state tightened Bright Future eligibility requirements in 2013, raising the minimum standardized test scores needed to qualify, nearly half of Latino students and 62 percent of black students who had qualified in 2012 no longer did so.

In Kentucky, the lottery-funded financial aid program that doesn’t consider financial need provided $23.9 million to families making more than $100,000 in 2013, according to state data compiled by the Kentucky Center for Economic Policy, a nonprofit policy group.

That same year, the state diverted about $23 million in lottery funds that could have gone to need-based grants to fill a budget gap, according to data from Kentucky’s Office of the State Budget Director, even though by law all but $3 million must go to state scholarships. In 2013, two-thirds of eligible students in Kentucky were denied funds from the state’s need-based programs, the Kentucky Council on Postsecondary Education reported.

The lack of financial support may have affected students’ ability to complete their degrees. Kentucky’s college graduation rate for low-income students fell from 46 percent in 2009 to 37 percent in 2013, according to the most recent accountability report by the Kentucky Council on Postsecondary Education.

Six different schools

Unlike in Kline’s family, neither of Brooks-James’s parents have a college degree. Her mom got pregnant at 17 and dropped out of high school. Brooks-James said her dad fathered his first child at age 13 and didn’t finish high school either; by the time she was born, he had three other children and was doing time in prison.

Her mom eventually got her G.E.D. and found work as a home health aide in Clarksville, Tennessee, where the two of them moved when Brooks-James was four years old and already showing academic promise. In elementary school, she performed well, but her mom pulled her out of the local school at the end of fourth grade after their apartment was broken into.

After that, schooling became far more complicated: Brooks-James attended six different schools from fourth to 12th grade.

Still, Brooks-James was accepted into several four-year colleges and was planning on going to one of the state’s cheapest — East Tennessee State University. Her family’s near-poverty income qualified her for the maximum federal aid of $5,775, but the $6,775 in government grants for which she’s eligible would only have made a small dent in the estimated $23,000 annual cost of attendance.

In late May, Brooks-James found out her mom was pregnant, and she decided that leaving Nashville was neither practical nor financially feasible. She looked into attending Austin Peay State University in Clarksville and living at home, but that would still have cost her about $13,250 a year. Financial aid would barely have covered half of her expenses. Instead, she’ll attend Volunteer State Community College, just 20 minutes from home. It’s cheap enough that her federal aid will more than cover the estimated $5,000 cost of tuition, books and supplies. Brooks-James will also keep her fast-food restaurant job and help take care of her new sibling. She is still determined to become a social worker and plans to transfer to a four-year college, but faces stiff odds. While about 45 percent of female students graduate within six years at East Tennessee State, and 40 percent from Austin Peay, only 17 percent — and only three percent of African Americans — graduate in three years from Volunteer State.

In the end, Brooks-James won’t have the scholarship she had hoped for, but her mentors at Oasis will still give her their full backing and support as she begins college — even though they had hoped she would choose East Tennessee.

“It does matter where she goes,” said Lee Gray, Oasis’s college connection manager. “Everything after that decision looks different.”

This story was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Read more about higher education.

Reproduction of this story is not permitted.

The Hechinger Report provides in-depth, fact-based, unbiased reporting on education that is free to all readers. But that doesn't mean it's free to produce. Our work keeps educators and the public informed about pressing issues at schools and on campuses throughout the country. We tell the whole story, even when the details are inconvenient. Help us keep doing that.

Join us today.

Letters to the Editor

At The Hechinger Report, we publish thoughtful letters from readers that contribute to the ongoing discussion about the education topics we cover. Please read our guidelines for more information. We will not consider letters that do not contain a full name and valid email address. You may submit news tips or ideas here without a full name, but not letters.

By submitting your name, you grant us permission to publish it with your letter. We will never publish your email address. You must fill out all fields to submit a letter.

Your email address will not be published. Required fields are marked *