Legislators Push For Scholarship Caps

By CityTownInfo.com Staff

March 3, 2009

In an effort to control escalating costs, legislators in Arkansas and West Virginia are proposing scholarship caps for colleges.

The Chronicle of Higher Education reports that in Arkansas, a bill was approved in the House and sent to the governor's desk yesterday which stipulates that public colleges and universities may spend no more than 30 percent of their general tuition and fee revenue on scholarships. The cap will be lowered to 20 percent by the 2012-13 fiscal year.

The move is necessary, said State Rep. Bill Abernathy, because increased scholarships lead to increased tuition costs. "You almost have the reverse Robin Hood scenario," he told the Associated Press. "You're taking from the poor and giving it to the rich in some cases."

This is not the first time the Legislature has imposed a scholarship cap: In 2005, they passed a law which set a 30 percent cap on scholarships, but it didn't include penalties for schools that exceeded the amount. The current bill would reduce state funding to colleges who go over the state cap.

One exemption to the bill, reports The Log Cabin Democrat, concerns students who qualify for a maximum Pell grant. Sen. Gilbert Baker, who introduced the bill, noted that institutional scholarships awarded to those students will not affect the school's percentage.

Tom Courtway, interim president at the University of Central Arkansas, noted that it is still too early to determine how the bill will affect the school. UCA currently spends 26 percent of its revenue on scholarships.

Courtway remarked that UCA could comply with a 20 percent cap, but anything lower would be unmanageable. "I know back in the fall, the higher education coordinating board adopted a proposal for the general assembly to take that cap down to 15 percent, which we certainly cannot endorse," he told The Log Cabin Democrat. "That change would mean fairly serious consequences not only for UCA, but also for other institutions around the state."

Meanwhile in West Virginia, Gov. Joe Manchin proposed a $4,500 cap for the merit-based Promise scholarships in an effort to keep escalating costs down. The Charleston Daily Mail reports that the program cost the state $42 million this year.

About 9,000 students now receive the scholarships, which are awarded to high school graduates with at least a 3.0 grade point average, an overall score of 22 on the ACT and scores of at least 20 on each of the four subsections of the test. Students also must accumulate 30 credit hours each year and maintain at least a B average.

In the past, the program was criticized by University of Charleston President Ed Welch, who claimed that the scholarship largely pays tuitions for students who can afford college, and does little to entice students to remain in West Virginia.

According to the Associated Press, New Jersey and Nevada have already taken steps to cut back on similar merit-based state scholarships, and Michigan is considering similar reductions.

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