Making State Merit Scholarship Programs More Equitable and Less Vulnerable

Abstract

Since the 1993 arrival of Georgia’s Helping Outstanding Pupils Educationally (HOPE) Program, merit scholarships have become popular tools for states seeking to maximize human capital within their borders. However, research has concluded both that the bulk of merit scholarships goes to students with the least financial need and the popularity of these programs has led to a de-emphasis on need-based scholarship funding in some states. These trends are even more worrisome when these programs are funded by lottery revenue, as is the case with HOPE. Lotteries are inherently regressive because the people who play (and pay related taxes) tend to be poor and less educated. Therefore, when lottery revenue is distributed in the form of scholarships to higher-income recipients, this regressivity is exacerbated. This article presents two policy proposals for reducing socioeconomic and racial disparities in state merit scholarship awarding while also alleviating the fiscal pressures that tend to beset lottery-funded programs. The first proposal is to implement a need-based scholarship program with an early engagement component. The second proposal is to award merit scholarships using a “merit-aware” index.