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Over the last 25 years, more than two dozen states have adopted programs that give college aid to students based on their academic performance in high school. In the last 10 years, the money allocated to these merit aid programs has increased by almost to about $2.5 billion a year. States with these scholarships, mostly in the south, say the are to reward student effort and keep talented students in the state. But evidence shows that these programs not only don’t meet the goals, they seem to have other negative consequences as well.

These programs have long been criticized for disproportionately benefiting high-income students. And they do. For example, looked at the distribution of Georgia’s large merit aid program, the HOPE Scholarship. The newspaper found that students who lived in a zip code where the median income was more than $50,000 were twice as likely to receive a scholarship and three times more likely to receive the top scholarship. Not only that, but since the HOPE scholarship is which is disproportionately played by low-income and African American families, it represents a large transfer of wealth in the wrong direction.  In Louisiana, of the Tuition Opportunity Program for Students (TOPS) goes to students from families making over $100,000 a year.  found that the students in the lowest income category received no net-benefit from the program and the benefit to families rose with incomes.  

In Louisiana, 39 percent of the Tuition Opportunity Program for Students (TOPS) goes to students from families making over $100,000 a year.

The other common argument against these programs is that the well prepared, mostly upper-income students who benefit would have gone to college anyway. the idea that low-income students are the ones who have the biggest enrollment increases when offered financial aid. So the upper-income scholarship recipients might be more likely to choose an in-state college but they are no more likely to go to college then they were before the scholarship.

These criticisms have been made for a long time, and they haven’t stopped states like Florida from making the programs even more regressive by increasing the GPA and SAT requirements. But now there are some new arguments against these programs that might make more of an impression on Southern policymakers.

First, it turns out students, tempted to attend college in-state with scholarships, are not more likely to stay in the state and contribute to the economy after graduation. A found that “nearly all of the spending on these programs is transferred to individuals who do not alter educational or migration behavior”. The idea that these scholarships help poor, rural states retain their best and brightest and thus grow their economies is just not true.

The legislators who want to keep their best and brightest in state also tend to be the ones who want to grow the number of STEM graduates. It turns out, however, that merit aid undermines this goal too. Students who benefit from these scholarships tend to stay away from more-demanding majors because they must maintain a high GPA to remain eligible for the funds. of the HOPE Scholarship found that students majoring in science, engineering, and computing were 21 to 51 percent more likely to lose their HOPE Scholarship than similarly qualified students in other majors. A found that states with strong merit-aid programs saw a decline in the number of STEM graduates of between 7 and 9 percent.

If you’re a state that wants to spend a lot of money on upper-income students and decrease the number of STEM graduates, then go ahead and keep your merit aid program.  But in states with limited financial aid and higher education budgets, policymakers should consider more effective ways to allocate their billions in funding. “