Indiana’s promised scholarships caught in budget bind

Indiana's 21st Century Scholars program started two decades ago with a straightforward proposition to low-income middle schoolers: Don't use drugs, stay out of criminal trouble and get acceptable grades in return for a full scholarship to college.

The combination of the program's growing popularity and the state's recession-driven budget bind, however, has state officials looking to tighten up both the academic and financial requirements that students must meet to receive the scholarships.

Nearly 13,000 students received the 21st Century scholarships last school year — up 44 percent from 2006. Though the 21st Century and other college aid funds were spared budget cuts that hit most state agencies in the past year, the state financial aid agency had to shift $17 million from other funds to cover its $45 million cost.

As lawmakers work to craft a new two-year budget, Gov. Mitch Daniels has proposed no cuts for the nearly $250 million program. But the increase in scholarships, combined with a 39-percent jump in overall applications for financial aid, is prompting lawmakers to look for ways to stretch the available money.

"We think it's a great program," said state Senate Appropriations Committee Chairman Luke Kenley, R-Noblesville. "We'd like to keep it alive and see it get a significant amount of money to cover everybody."

Kenley's committee last week endorsed a bill that would increase the required high school grade-point average from 2.0 to 2.5 for a student to receive the scholarship.

A bill pending in the Indiana House would change the income eligibility requirements.

Currently, students can sign up for the 21st Century Scholar program in middle school if they are eligible for free or reduced-price school lunch programs. They can receive the scholarship regardless of family income when they start college.

Lawmakers want to change those requirements so that, starting in 2012, students would have show they still meet the income guidelines at the end of high school in order to get the scholarship.

Such a change concerns Philip Seabrook, the founding director of the program that was started under then-Gov. Evan Bayh in 1990.

Seabrook said the income rule changes would tell parents they needed to stay poor.

"You risk the possibility that your child won't be able to go to college because you've now gone out and tried to improve your status in life," he said. "I think that's a terrible message to send to families."

An Indiana Commission for Higher Education review of the 21st Century program found that 79 percent of its students graduated high school in 2006 — compared with 59 percent of low-income students as a whole — and that the program's students were nearly three times more likely to go to college than their low-income peers.

Kara Chiamis, 21, is attending IUPUI on a 21st Century scholarship. The Middletown, Ind., resident said she was already thinking about college when she signed up in sixth grade, but she thinks the chance to get the scholarship inspires others to aspire to a college education.

"I know a lot of them wouldn't have," she said. "I know a lot of them who were homeless before they came in to college or had that single parent who never went to college, so they really didn't think about doing that."

Chiamis said she was concerned about the proposed financial eligibility changes. She noted that her father was unemployed for three years when she joined the program in middle school but was back working when she graduated high school, only to later have to switch to a lower-paying job.

"If the money situation changes, then some students are going to have to stay closer to home," she said. "They're going to have to go to the community colleges and not be able to go to the big universities that might have the opportunity to give them the degree they want to get."

Teresa Lubbers, the state's higher education commissioner, said the state was "totally committed" to the 21st Century program and that the changes were aimed at strengthening it.

"Everything that we're doing is to try to build sustainability into the program and greater success," she said.

How much savings the state would see from the eligibility changes are unclear.

The nonpartisan Legislative Services Agency estimated that about 1,100 fewer students could qualify each year under the higher GPA standard, cutting the program's cost by $2.8 million a year.

The state's student assistance commission says researchers found that about 20 percent of those who signed up for the program as middle school students no longer met the low-income requirement as high school seniors. The tighter financial rules could save $9 million, but students affected could overlap with those not meeting the tougher GPA rule.

Kenley, the Senate committee chairman, said a higher GPA standard would help students eventually succeed in college.

"The predictor of success is related to how much success you had at the earlier grade level, so we just think that's a step that gives a better return on investment overall," he said.

Lubbers said Indiana has done better than most states in not cutting college financial aid programs but that such programs couldn't be immune to changes.

"You have more people applying with higher need levels and you don't have more money," she said. "It doesn't take a rocket scientist to figure out you've got a problem."