Aid to Low-Income Students Puts State's Budget to the Test

Indiana aid low income studentsIndiana's 21st Century Scholars program has become a victim of its own success. It promises full college tuition for low-income middle schoolstudents who pledge to stay out of trouble, maintain a cumulative 2.0 GPA and graduate from high school.

And it works, academically: Participants are more likely to both graduate high school and attend college. But, economically, it's presenting a problem for cash-strapped Indiana, just as similar programs are testing budgets in other states.The program's goals are to:
  • Reduce the high school dropout rate.
  • Prepare students for the workforce.
  • Decrease use of drugs and alcohol among middle and high school students.
  • Boost individuals' economic productivity.
And it's been wildly successful, insofar as more students are applying, qualifying and succeeding in the program. But that's costing the state millions of dollars it doesn't have.

The Indiana Commission of Higher Education found that 21st Century Scholars were more likely than other students and their low income peers to both graduate high school and attend college. The scholars were typically first-generation college students and from single-parent households. But last year 13,000 students received the grant, costing the state $45 million and requiring $17 million to be redirected to cover the cost.

According to the Center for Budget and Policy Priorities, Indiana faces a projected $270 million budget gap and is one of 44 states facing this problem. Other states, like Texas, are slashing financial aid programs to balance the budget. Indiana doesn't have the luxury of cutting this program because the aid already has been pledged.

If proposed legislation passes, Indiana could creatively cut the cost of the 21st Century Scholars program by making it harder for students to qualify.

The new rules could raise the eligible grade point average from 2.0 to 2.5 and require students to prove their low-income status at graduation.

The Legislative Services Agency estimates that the state could save $2.8 million a year by raising the academic standards. The savings could jump to an estimated $9 million with stricter requirements on proof of need.

The new qualifications are expected to be finalized by the end of this fiscal year.
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