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States, colleges increasing merit-based financial aid

WASHINGTON—Parents, take heart: College tuitions are soaring, but fewer families are paying the sticker price.

A multibillion-dollar surge in financial aid based on merit—rather than only on financial need—is the big reason. Fourteen states now offer residents merit-based grants to help middle-class families meet college costs. Hundreds of colleges and universities woo top scholars and gifted musicians with tuition breaks regardless of family income.

"It defies the principles of lots of vice presidents for finance, but it makes sense to the parents," said Kevin Coveney, the admission dean at Washington College in Chestertown, Md., where any high school National Honor Society member is guaranteed a $10,000 tuition break.

The effect of all the new aid is to drive down the number of students who are footing full college costs themselves. It's 37 percent now, down from 45 percent in 2000, according to the National Association of Student Financial Aid Administrators. At private four-year colleges, the number drops to just 17 percent. The aid's abundance makes tuition increases for many students as theoretical as list price increases for new cars.

Georgia's HOPE scholars—high school grads with B averages in college prep courses—get free tuition at state schools plus $300. Florida's Bright Futures scholars get three-quarters tuition breaks plus $300 at state schools if they earn B averages and SAT scores of 970 or better. B-plus students with 1270 SAT scores get free tuition. Students at in-state private colleges in Georgia and Florida get equivalent breaks.

Michigan asks only that its students pass a state exam to score a $2,500 grant for a state school or $1,000 for an out-of-state one.

The programs are huge. Georgia has spent $2.3 billion on 800,000 students since its pioneering program began in 1993. Florida's merit grants now help 120,000 college kids; Michigan's, 49,000.

Mississippi, South Carolina, Missouri and Kentucky also offer merit aid in newer programs or smaller sums. Individual state schools also are weighing additional merit aid, including North Carolina's most prestigious public school, the University of North Carolina at Chapel Hill, where trustees would fund new grants for top scholars from sales of UNC apparel.

So popular are the state initiatives, many funded with lottery revenues or tobacco-settlement proceeds, that legislators find they're difficult to cut, especially given that tuition increases averaged 10.5 percent at public universities last year. That's about four times the overall inflation rate.

The biggest fans are "mainly middle-class families," according to Jamie Merisotis, the president of the Institute for Higher Education Policy in Washington, which promotes access to college. "It's due both to rising tuitions and the belief that if low-income people are getting a benefit, there should be something for other groups based on merit."

To be sure, most of the more than $75 billion in annual aid for higher education remains need-based. But the growth is in merit aid. States now spend a quarter of their scholarship money on merit awards, up from 10 percent a decade ago, according to financial aid organizations. Merit aid's share of private college scholarships is 36 percent, compared with 27 percent in the early ྖs.

"We've found hundreds of new awards in the past year," said Baird Johnson, the vice president for production and marketing at FastWeb, an Internet database scoured by seekers of merit-based aid. FastWeb's directory grew 20 percent this year, according to Johnson.

For high school seniors, the hunt for merit-based help means a new round of applications in the spring after they've won college admission. "It takes as much legwork as applying to college, with all the applications and essays and recommendations," said Barbara Weintraub, a college counselor at James Hubert Blake High School in Washington's Maryland suburbs. Hunting for merit aid can be especially frustrating, she added, because "while there's a lot out there, it tends to be in $500 and $1,000 pieces that don't go very far."

Suzanne Adjogah, 17, an academically outstanding senior at nearby Montgomery Blair High School, is undeterred. She's already scored a $30,000 scholarship from the University of Pittsburgh. Now she's trying to piece together a combination of need-based aid, merit grants and loans that would make New York University in New York City, her first choice, equally affordable.

She doubts she'll succeed, however, and when asked her parents' preferences, Adjogah said: "They want me to go where I'd be happy. They also want me to go to where it's free."

Luring exceptional students is the main reason that nine out of 10 colleges and universities say they offer at least some merit-based aid.

DePauw University in Greencastle, Ind., for example, offers talented applicants instant gratification by telling visitors to its Web site how much merit aid they'll get—up to $15,000 a year—based on their grade-point averages, class ranks and test scores.

It works for DePauw, explained Madeleine Eagon, the school's vice president for admission and financial aid, in part because "many families now approach choosing a college as a commodity purchase." They assume schools' offerings are similar in quality but are highly sensitive to price.

Blake counselor Weintraub's students sometimes "start out set on Duke or NYU, but when it comes down to $40,000 versus $13,000 a year, many of my students stay close to home," she said.

Often, that comes down to the University of Maryland in College Park or Washington College on Maryland's Eastern Shore, where half the student body consists of former National Honor Society members enjoying the school's $10,000 tuition break. It's renewed each year for students with B averages or better.

Washington tapped Theresa Donohue, 20, a junior pre-med, via a congratulatory note when she made the National Honor Society as a high school junior in Laurel, Md. Donohue, who'd been weighing several private liberal-arts colleges and the University of Maryland, drove to Chesterfield with her parents during spring break.

"I was sold on sight," Donohue said, but the $10,000 grant, which cut the bill to $13,000, sealed the deal.

"It put a private college in the same range as a state school," said her mother, Maribeth, a special ed teacher.

The influx of National Honor Society students helped Washington rise a tier in U.S. News & World Report's influential college rankings. It also spawned a proliferation of student activities, Coveney said, because National Honor Society alums seem to be into them.

Georgia's HOPE Scholarships, the most studied, upped average test scores and high school GPAs for freshmen at the University of Georgia, the Georgia Institute of Technology and Georgia State University, according to Dr. Gary Henry, a policy studies professor at Georgia State. They're also keeping more exceptional Georgia students at in-state schools, according to Henry, and may even be leading parents to push their kids harder.

"I think parents are so focused on HOPE that it's changing the nature of their conversations with their kids over dinner," Henry said.

Because merit-based aid grants go only to strong students, whom statistics show tend to be white students from affluent schools, some critics deplore them as regressive.

"The first priority of a financial-aid system must be to make sure that we do not allocate access to college in a way that perpetuates racial and class inequality of opportunity," Donald Heller of Pennsylvania State University in State College, Pa., wrote in a study for Harvard University's Civil Rights Project, a campaign to assure class and racial justice in public policy.

It's not that simple, contended Kenneth Redd, the director of research and policy analysis for the National Association of Student Financial Aid Administrators in Washington. "Middle-income families are often caught in a college-cost and financial-aid squeeze" too, Redd said. "They are too rich to qualify for federal grants and too poor to pay full college prices."

Some new merit-based grant programs offer free rides to exceptional minority and low-income students. Among them are the Jack Kent Cooke Foundation, which aids community college grads heading for four-year colleges, and the Gates Millennium Scholars Program, which helps minority students who are interested in science, math, education and library science.

Another new all-expense-paid program, the Daniels Fund, puts its money on high-performing needy students with average test scores who hail from Colorado, New Mexico, Wyoming and Utah.

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(c) 2005, Knight Ridder/Tribune Information Services.

PHOTOS (from KRT Photo Service, 202-383-6099): MERITAID

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