NEWS:  S.C. disproportionately funds merit-based scholarships, bucking national trend

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By Lindsay Street, Statehouse correspondent  |  Part 2 of 2  |  South Carolina’s policymakers will have a chance to examine how it uses public dollars for students’ tuition when the legislature reconvenes next year.

South Carolina’s public colleges have some of the most expensive tuition and fees in the nation, as outlined in part one of this series.  At the same time,  the publicly-funded scholarships that aid in-state students in attaining a higher education largely go toward students earning high grades instead of students who have a demonstrated financial need, according to a national education policy analyst.

And that can make higher education — from a two-year technical degree and beyond — unattainable for many South Carolinians at the lower end of the socio-economic scale.

“Merit-based financial aid is an inefficient use of state funds and resources because the students most likely to get the aid are the students most likely to attend college anyway,” said Tom Harnisch, director of state relations and policy analysis with American Association of State Colleges and Universities.

“State-grant aid has much more impact on low-income students than students from wealthier backgrounds. It has greater bang for the buck when you look at the outcome of students.”

Rewarding more students with the highest grades while barely growing financial-need scholarships was a trend notable among Southern states in the last few decades, according to Harnisch. But now, many of the merit-focused states are now turning toward need-based scholarships, Harnisch said. And South Carolina may be one of them.


S.C. Sen. John Matthews is leading the charge in trying to bring more dollars to the state’s students who need it most. A bill by the Orangeburg Democrat that called for increasing need-based aid stalled in committee in the 2016 session, but Matthews said this week that he plans on pushing the measure in January when the legislature reconvenes.

“For those of us that represent working families, we’ve got to put forth a greater effort to change our funding based toward need-based scholarships,” Mathews said. “In the long run, we will get a better return on our investment.”

Bucking the trend

Most other states give three-quarters of scholarships based on lower income. Not so in South Carolina or much of the South. In fact, the Palmetto State provides roughly three-quarters of its scholarships based on merit. In other words, awarding of publicly-funded scholarships is based on student performance, not on their ability to pay for school.

South Carolina doled out $300 million in merit-based aid and $65 million in need-based scholarships this year.

According to National Association of State Student Grant and Aid Programs’ (NASSGAP) 2015 Survey Report, only Georgia, Florida and Tennessee put more money toward merit-based scholarships than South Carolina. And the state is in the bottom 20 states as far as funding need-based scholarships.

Eight states — Illinois, Indiana, New Jersey, New York, North Carolina, Pennsylvania, Texas and Washington —  put more money into need-based scholarships than South Carolina allocates toward merit-based scholarships. Half of all states do not have any merit-based scholarships while Mississippi, West Virginia and Georgia only offer merit-based scholarships. Only California, New Hampshire and Wyoming don’t offer any scholarship funds by the state, according to the data from NASSGAP.

‘Reverse Robin Hood’

South Carolina offers three merit-based scholarships: LIFE, HOPE and Palmetto Fellows. The funding to these scholarships cannot be reduced by law. LIFE is funded through the legislature. HOPE and Palmetto Fellows are funded by S.C. Education Lottery.

“Some of the merit-based programs (nationwide) are funded by lotteries and lotteries are disproportionately funded by low-income people, so it becomes a reverse Robin Hood,” Harnisch told Statehouse Report.  “Low-income people buy lottery tickets and the lottery money is used to help higher-income students go to college.”

A recent Post and Courier article uncovered that most lottery purchases in the state come from the counties with the lowest per capita income.

Though some middle-class families will have a financial need, many would still attend college without the state funds, Harnisch said.

Merit-based scholarships also tend to reward students from wealthier backgrounds, since those students likely got better grades in secondary school and continue that trend into higher education.

“There are substantial gaps based on enrollment in college and college completion based on income as well as race, and some of the growing populations in the country — especially Latinos — are much farther behind than white students,” Harnisch said. “It’s imperative that we close those equity gaps in order for the states and the country to be a global economic leader.”

Another down side to merit scholarships, according to advocates, is how easily they are lost due to a tough class or semester.

According to numbers from the S.C. Commission on Higher Education (CHE), one-third or more of LIFE recipients will lose the award after their first year. Six in 10 LIFE recipients at technical colleges will lose the scholarship, and four in 10 recipients at four-year colleges will lose the scholarship. Recently, College of Charleston President Glenn McConnell penned an op-ed to loosen academic stringency to help students keep their LIFE scholarship.

Looking forward

Recently, the presidents of South Carolina’s four-year public colleges convened and discussed the role of scholarships in their institutions. A major focus of the meeting was the state’s new 10-point grading scale, which makes more students eligible for the merit-based scholarships — potentially costing the state $88 million over the next four years, according to Jeff Schilz,  interim president and executive director of the CHE.

There’s talk about raising the grade-point-average needed for obtaining state funds for the merit-based scholarships. But there’s also talk about looking at how the entire higher education system operates in South Carolina, including a look at how students pay for college and who receives public assistance, Schilz said.

But the college presidents can’t enact any changes. Change must come from the legislature, according to officials and observers.


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