Inside Higher Ed has an excellent and detailed analysis of the politics of financial aid and how the tension between need-based aid and merit-based aid is coming to a head in Tennessee.

According to state data for the 2005-06 academic year, Tennessee spends two and a half times as much on merit-based financial aid as it does on need-based financial aid. In Florida the ratio is higher, at three to one. And in Georgia the ratio is much worse for need-based aid.




Merit-based aid comes largely in the form of programs like Georgia's Hope Scholarship, funded by state lottery. These types of merit-based programs promise students scholarships to public institutions in their state if they meet certain academic criteria in high school.

The problem is that family prosperity breeds academic merit. Statistically, middle and upper class students do better in high school than students from poor families because the more well off students have a better family suppose system. Poor students often divide their time in much of high school between their studies and a job while students who comes from higher income homes more often avoid that dilemma. The result is that a disproportionate amount of merit-based aid go to students with comparatively smaller financial needs. And in a state like Tennessee, where more than two out of every three aid dollars is awarded based on merit, competition for need-based aid becomes tighter.

I remember the political blood bath in Tennessee over whether or not to have a state lottery. Social conservatives lost and the state lottery has become wildly successful - so successful now that it has more money than it can spend on merit-based scholarships.

Tennessee is now looking at ways to funnel some lottery funds (or at least interest generated by those funds) into need-based aid. And the issue is developing some political heat in the state...