By Richard Ekman

An attractive feature of American life is that it usually rewards effort. If you are born in a small town without good public schools, family money, or social connections, and if you do well in school, you can be admitted to a high-quality college. If you attend a little-known college or university, you can still obtain a good job and rise in the company’s management. Not every life is a pluck-and-luck Horatio Alger story, but there are so many instances of Americans overcoming humble origins or adversity that the possibility of upward mobility over one’s lifetime should be within the reasonable imagination of every American. Ours is not a society in which a grade of “C” in the seventh grade relegates your educational and professional progress permanently to a lower tier. America offers second chances.
     But effort and talent are not the full story. Your likelihood of admission to a selective institution is greater if you are affluent, white, from a family of previous college-goers, and/or the child of an alumnus. It’s also more likely that graduates of highly selective institutions will be heavily represented in the student bodies of leading graduate schools and in professional leadership circles.
     It should surprise no one that those with advantages early in life are well represented in selective colleges and universities. American parents have great faith in the power of higher education and they will make choices for their children to gain every advantage, utilizing the best K-12 schools they can, even if it means living in a community with high property taxes or sending children to private schools. And these children and their parents will aspire to the best colleges, which are often (but not always) highly selective and comparatively expensive.
     But this pattern disturbs our sense of fairness. We are troubled when we learn that a college or university uses its finite resources for financial aid to favor students who already have advantages. And we are disappointed when the public fails to celebrate the powerful pattern accumulated from success stories of students of modest origins who attend less well-known colleges, graduate in impressive numbers, and subsequently do well in life.
     The public policy questions are clear and long-standing. To what extent should government intervene either to assist individuals in their own “pursuit of happiness” or to ensure that society enjoys an adequate pool of talent? Is it enough to maintain a democratic political system and a porous economic system? Should college attendance be a right of all Americans or a privilege limited to a select group? If a right for all, who is responsible to ensure that there are enough spaces for those who wish to attend college; and who should ensure adequate funding to enroll students of modest financial background?
     The debates about these questions often tangle strands of argument that are better kept separated. There are 41 states that provide “merit” scholarship aid to college students, and a look at the oldest of these—Georgia’s HOPE program—is instructive. Begun in 1993, it was intended to help the most talented high school students in Georgia, to attract them to Georgia institutions of higher education, to prevent “brain drain,” and to nurture the future leaders of Georgia. The program began with eligibility limited to high school graduates with A averages and it offered a much more generous stipend if the student chose to enroll at a Georgia state university rather than a private college. The ground rules were soon changed to make B students eligible, and recently a reform has been under discussion to make the stipend if used at a private college closer in amount to the stipend if used at a state college. Unsurprisingly, the program has become very popular among Georgia voters.

     Today, more than half of all high school graduates in Georgia qualify for HOPE scholarships. The money given to college-goers by the state has increased enormously, including the amount awarded to students from low-income backgrounds. The unstated assumption is that if you are an A or B student, the state believes that you have the potential to be a future leader and no financial impediment should stop you from realizing your aspirations.
     The HOPE program is funded by a state-run lottery, and some people therefore see the cost of the program as having nothing to do with the tax burden on Georgia taxpayers. But the lottery could be used to meet the costs of other things the state wants to do—in higher education and outside it—so it is fair to raise the question of the potentially high cost of this program to the state government. Efforts to rein in the program, whose costs now exceed lottery proceeds—by reducing the stipend or by raising the academic eligibility requirements—are politically unpopular. And the program no longer focuses on training future leaders of Georgia or preventing “brain drain.” HOPE is now largely a middle-class entitlement program. Like college students in general, more than half the HOPE students who are enrolled in college fail to maintain
the B average needed to retain the scholarship.
     Especially interesting is what is happening at private colleges and universities in comparison with state universities. The privates, especially the less well-known privates, are enrolling large numbers of students of modest economic backgrounds, and using much more private scholarship money than tax dollars to aid them. Nationwide, two-thirds of all financial aid awarded by private institutions is need-based. The graduation rates among private college students are better than the graduation rates at state universities—whether you compare students with the strongest grades and SAT scores or students with the weakest (that is, weakest within the college-admissible group). In Georgia, 36 percent of students who enroll in state universities graduate in four years, compared with 54 percent at private colleges.
     Whether state government should intervene is not the only public policy question. States should also want to know whether their programs provide the biggest “bang for the buck.” Is the HOPE program the best investment in human capital development for the state of Georgia, given the pressures on its budget and the track records of past HOPE students? When a state’s goal is to support students who are likely to become leaders of the state—those with the highest high school academic records, for example—it should probably do so irrespective of students’ financial need. But if Georgia also wants to support students of more modest academic distinction—B students, for example—it should consider doing so only if they are truly needy. The state should act in this way not because access to college is a right for everyone or because low-income students are a targeted category that needs to be represented in the campus population. Rather, the strongest argument in Georgia for the use of public funds to assist low-income, B students is that, because they lacked advantages early in life, their Bs are probably not representative of their potential—which is to perform as well as A students who have had the benefits of an affluent upbringing.
     Moreover, the state of Georgia should acknowledge in the way it uses the HOPE money that lesser known private colleges and universities are 50 percent more likely to provide an environment in which students—both A and B students, both affluent and nonaffluent—will graduate on time. With a 36 versus 54 percent difference in graduation rates, a HOPE dollar spent on a student at a private college produces the same result as $1.50 spent at a state university in Georgia. How can cash-strapped states ignore this obvious difference in productivity?
     Although it is predictable that students from affluent backgrounds are heavily represented in selective colleges, it is nonetheless surprising that public policy so often encourages this pattern. By focusing state funding on the most talented and needy students, states can both prepare future leaders and preserve American higher education’s role as the vehicle for a chance for success in life. By recognizing in the state’s policies for its student aid programs the demonstrated effectiveness of private colleges—especially for students from low-income and other disadvantaged backgrounds—states will both save money and derive greater benefit from the public dollars that are expended. Forty other states award merit aid to students, 13 through programs that are similar to Georgia’s. As the oldest of the states’ merit-based programs recalibrates its operation, the others could learn a lot from Georgia’s pioneer experience.