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Published in Print: September 20, 2000, as Calif. College-Aid Expansion Mixes Merit With Need

Calif. College-Aid Expansion Mixes Merit With Need

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Under what is being billed in California as the most significant expansion of access to higher education since the GI Bill, high school students in the state with solid grades and financial need will receive full tuition to state colleges and almost $10,000 a year to attend private institutions in the state.

Bolstered by an economic boom that has left the trend-setting Golden State flush with a $12 billion budget surplus, state leaders have created a system that parts company with other aid programs nationally that have tended to benefit middle-class students rather than their poorer classmates. A bipartisan coalition of legislators assembled a student-aid package that at once establishes new merit-based scholarships while significantly increasing need- based college assistance.

The new law also creates the most generous student- aid system in the country, providing financial aid for more than 101,000 students next year at an estimated additional cost of $1 billion annually, according to state officials.

At a Sept. 11 bill-signing ceremony at California State University-Los Angeles, Gov. Gray Davis said the legislation would make college accessible to all students who want an opportunity to continue their educations. The governor had aggressively pushed for a $118 million merit-grant component of the student-aid package.

"Nothing personifies the values of merit and accountability more than the two landmark bills I am signing today," the Democratic governor said. "These bills say to California students, if you do your part by studying hard, we'll do our part to help you afford college."

Beginning next year, high school seniors who come from families of four earning $64,000 or less and earn B grades—defined as a 3.0 grade point average—will receive free tuition to any public college or university in California. Students attending a private college will receive $9,700 for tuition.

Another provision of the law would affect even average students from families of modest means. Students with C grades, or a 2.0 grade point average, who come from families earning less than $34,000 annually will be awarded $1,500 each year for college living costs and books.

To reward the state's highest-achieving students, regardless of their families' incomes, $118 million a year will be spent on merit scholarships of $1,000 to students with the highest English and mathematics scores on the state's standards-based exams. Students with top scores on math and science Advanced Placement exams will get awards worth $2,500; those attending schools without AP classes will be able to take an alternative test of comparative rigor to qualify.

Ninth, 10th, and 11th graders are eligible, and scholarship money will be deposited in a trust account until the recipient attends college.

Bucking a Trend

As a college education becomes more of a necessity in today's information economy, students and families have struggled to keep pace with tuition costs that have increased roughly 50 percent during the past decade and will continue to rise at a rate greater than inflation in the coming decade, according to higher education analysts.

A recent survey by the Higher Education Research Institute at the University of California, Los Angeles, which has tracked attitudes of college freshmen since 1966, found that nearly 70 percent of women and 57 percent of men said they worried they would not have enough money to finish college. A record number of all freshmen, 24 percent, reported they would probably work full time while attending college.

Even while a college education has become more important for finding employment, the trend recently in student-aid programs has favored merit-based programs, which reward high grades, class rank, and achievement on standardized tests.

"This is not surprising, with the attention the accountability movement has received," said Travis Reindl, a policy analyst with the Washington-based American Association of State Colleges and Universities, which represents more than 400 public institutions. "It is more about earning it and not about financial need."

But in part because of the high correlation between family incomes and student achievement, such merit-based programs more often benefit middle-class families than poor ones. Now, "California really is going in a different direction," Mr. Reindl said. "They are saying need still matters."

In contrast, one of the most high-profile student-aid programs, the Georgia HOPE scholarships, which began in 1993 and are funded by the state lottery, provide awards regardless of economic need. Under that program, high school graduates with B averages receive full tuition and fees at any state public college or university. Eligible students attending private colleges or universities receive $3,000 per year.

Some states have struggled to maintain consistent funding streams for their programs. In New Mexico, for example, the state began financing a merit-based program from lottery revenues that state officials were forced to adjust after revenues were not as strong as expected. In Louisiana, a scholarship program based on merit was so popular that the state was short about $30 million and had to dig for supplemental appropriations. "My concern is many states have set parameters with some very optimistic world views," Mr. Reindl said. "Once you create these programs they are wildly popular, and you just can't go back and say, 'Sorry folks, we just don't have the money.' "

Arthur M. Hauptman, a consultant in Arlington, Va., who specializes in higher education finance issues, said that while the expansion of the California student-aid program is significant, other challenges, such as increasing available seats in colleges and reining in rising tuition, must be addressed if its potential benefits are to be realized.

"What California did is better than what they have done in the past, and better than what most states are doing," said Mr. Hauptman, the author of The College Aid Quandary, a book published in 1996 that explores issues of access, quality, and the federal role in aid programs. "But without the changes in other policies, this will probably not have the effect people think."

Michael S. McPherson, the president of Macalester College in St. Paul, Minn., called the California law "impressive," but expressed some reservations about the plan. "Schools calculate grade point averages in varied ways," said Mr. McPherson, who along with Morton Owen Schapiro, the president of Williams College in Williamstown, Mass., wrote The Student Aid Game: Meeting Need and Rewarding Talent in American Higher Education, a book published in 1998 that examines the implications of national student-aid trends. "A grade of B is not an especially demanding threshold. You worry about the incentive for kids to take a less demanding curriculum," he said.

Both of this year's major-party presidential candidates have weighed in with their own plans for making college more accessible. Vice President Al Gore, the Democratic nominee, wants to make up to $10,000 in tuition expenses tax- deductible, and to offer a credit for low-income students whose parents don't make enough to take the proposed tax deduction. Mr. Gore would also create new savings accounts similar to 401(k) plans so parents could set aside money for college costs while deferring taxes on the money.

Texas Gov. George W. Bush, the Republican candidate, would establish a $1.5 billion "College Challenge" grant program to cover one-third of states' costs for establishing merit- scholarship programs that would reward students for taking an advanced curriculum in high school. Mr. Bush would also increase funding for the federal Pell Grant program, which aids students from poor families.

Political Compromise

When Gov. Davis began pushing merit-based scholarship aid in California, more liberal-leaning legislators agreed to go along only if the state's existing Cal Grants program, which offers need-based aid, was enhanced. What resulted was a bipartisan compromise that pleased legislators on both sides of the aisle. Here was legislation, addressing both accountability and access issues, that provided relief for the middle class and helped students from poor families.

"The success was a result of the greatest bipartisan support I've seen in my admittedly short political career," said state Sen. Deborah Ortiz, who represents Sacramento and sponsored the Cal Grant expansion bill. "This program goes directly to not only the very poor, but also working families that are feeling the burden of paying for more than one child in college.

"We are finally promising the parents and young people of California that we believe they deserve to share in the economic bounty of California," Ms. Ortiz said. "I hope that other states will follow."

State Sen. Chuck Poochigian, a Republican who represents Fresno, said that while members of his party usually do not like to be associated with entitlement programs, this legislation was an easy sell.

"This is just the kind of thing we should be supporting," he said. "It rewards and encourages academic achievement. The message is to any student who works hard and sets goals they will not be denied a chance to pursue an education based on their ability to pay. We are saying education is an extremely important priority."

At Belmont High School, a 5,000-student school in Los Angeles where almost 90 percent of the students are poor and many are recent immigrants, word of the financial-aid law was welcome, according to Assistant Principal Lewis McCammon. Although one of the most significant problems at the school is the considerable number of high-achieving but undocumented immigrants who are not eligible for financial aid, he said, other students could certainly use the new scholarships.

"The financial thing is a big burden for our kids," Mr. McCammon said. "There are students who may not have gone to college but now will."

Vol. 20, Issue 3, Pages 1,25

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