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Policy Analysis | March 8, 2011

Changes to HOPE Scholarships

Jonathan Watts Hull

When Georgia created the HOPE scholarship Program (Helping Outstanding Pupils Educationally) in 1993, the goal was to curtail the flow of the state's best and brightest high school graduates to out-of-state colleges, and to provide the means for every academically outstanding high school graduation an opportunity to pursue higher education. The lottery-funded program provides a full scholarship to cover tuition, approved fees and up to $300 of books a year for students who graduate high school with a B grade average or higher. To remain eligible, students need to maintain a B average in college.

The program has been highly successful in encouraging Georgia high school students to remain in state and is largely credited with increasing the standards and quality of the state's top-tier universities. HOPE is also credited with improved performance for students at Georgia's colleges. At least a dozen other states have followed Georgia's lead, creating similar merit scholarships for students who remain in state for college.

Because the HOPE Scholarship Program is funded by a state-sponsored lottery, it operates at no cost to the state treasury and has in fact built up a large cash reserve, as lottery proceeds have exceeded scholarship awards. Lottery proceeds have leveled off in recent years, however, and college costs as well as college participation rates have climbed, resulting in a fiscal crunch for the program. According to the Georgia Student Finance Commission, the program has awarded 263,603 scholarships valued at $649.3 million dollars for the current fiscal year. Given current trends, the program now gives out more money than it takes in, and is projecting a $244 million shortfall for this fiscal year, and $314 million for next year.

Fixing this is a priority for Gerogia governor Nathan Deal and the Georgia General Assembly. A number of proposals have been investigated, including:

  • raising the grade requirements for eligibility to a 3.2 GPA (from 3.0)
  • awarding flat grants of a set amount each year regardless of institution
  • instituting some form of means test or other income eligibility standard
  • capping the number of awards made each year
  • reducing the award to less than full tuition, and
  • converting HOPE to a forgivable loan for students who maintain eligible grades.

This week, the Georgia House approved legislation this week to reduce the scholarship award to 90 percent of tuition for all but the very highest achieving students. Those graduating with a 3.7 GPA and at least 1200 on the SAT will continue to receive full tuition awards under the legislation so long as they maintain a 3.3 GPA in college. Approximately 200,000 current students would see their HOPE scholarships cut under the plan. The legislation also severs the direct link between tuition increases approved by the Board of Regents and the HOPE scholarship awards. The legislation also prohibits the application of remedial or development course hours toward the required minimum hours for HOPE eligibility. Finally, the legislation also establishes criteria for rigorous course taking expectations for students graduating after 2015. The bill has now moved to the Senate.

Georgia is not alone in this struggle, it should be noted. In Arkansas, which only just recently implemented a lottery-funded merit scholarship program, a legislative committee this week voted to recommend a 10 percent reduction in award amounts for the coming year, a proposal that would require the approval of the full legislature. In Florida, the Bright Futures Scholarship is reporting the loss of $100 million in federal funds that could signal cuts to the program. Only last year the state made changes to the program that increased the eligibility standards and reduced the amount of funding most would receive.