BusinessTN

The first group of freshman who received HOPE scholarships are set to graduate in May, which has many in the Tennessee business community wondering—will the scholarship impact the state's workforce as promised, and if so, how? Yet, while it's certainly a valid question, it's one that's still difficult to answer and will remain so for the next several years.

"It will be a while before we could begin to say anything about lottery scholarships because the numbers will have to be large enough to where we have enough data to create a pattern," says Bill Fox, director of UT's Center for Business and Economic Research.

But assessing the value of the HOPE Scholarship—a program intended to keep more of the best and the brightest students in Tennessee—leads to a debate regarding whether merit-based aid or need-based aid has a greater impact on the state's workforce. Research conducted on the lottery scholarship up to this point is helpful in drawing conclusions related to that particular issue.

The data isn't new—in fact, it has received quite a bit of media attention over the past few years due, in part, to the high-profile nature of the Tennessee Lottery and its purported benefits. According to Tennessee Higher Education Commission research, the ACT scores of those entering college (primarily at UT institutions) have risen since before the scholarship's enactment, college enrollment numbers at state and private institutions have increased, and fewer students are attending college in other states (with the exception of Georgia and Alabama).

"We can't say for certain that the lottery is the only factor at play with regard to these increases, but the data appear to show that it's one of them," says Erin O'Hara, research director for lottery scholarship analysis at THEC.

So, based on the available data, are the "best and the brightest" staying in Tennessee for college? Gov. Phil Bredesen believes the increase in ACT scores, coupled with the rise in admissions, indicates that they are. But will they stick around after graduation? Although research is not yet available to answer that question, Bredesen believes they will.

"Where you go to college tends to be a place where you get out of college and you get a job," Bredesen says. "Often, if somebody goes to college in Washington State, they'll be in Washington, not Tennessee, for much of their careers."

Yet, studies regarding merit-based scholarships in other states reveal that there's little evidence that students stay in state after graduation. In a 2003 New England's Journal of Higher Education article, Donald E. Heller, who edited a Harvard Civil Rights Project study that analyzed the impact of four merit-aid programs on college access, explains that the most academically talented students are most likely to attend graduate school or be recruited in regional, if not national, labor markets after attaining their bachelor's degree. Perhaps even more relevant to workforce development, however, is that Tennessee lottery research data up to this point reveals that many students who lose their scholarships after failing to maintain the required GPA remain in school—a fact that suggests that the awards are being given to students who would have attended college regardless of financial assistance. The Harvard study, which included analysis of Georgia's HOPE Scholarship program (the model for Tennessee's program), also concluded that in all four states, merit-aid programs did not increase college access for students who were otherwise unlikely to attend college. What, then, does that say about whether such merit-based aid will actually increase educational attainment, and in turn lead to a more educated workforce? Heller concludes the following: "Subsidizing existing college behavior can do little to develop a skilled workforce."

O'Hara says the bottom line is that while merit-based aid is beneficial, merit-based aid coupled with aggressive need-based aid is likely to have more of an impact on Tennessee's workforce. "Generally, our thinking is that a focus on need-based aid will allow us to push educational attainment higher, and thus increase the pool of eligible job applicants," she says. "We want to push beyond the students who are already going to college."

These are some of the issues that the General Assembly will wrestle with this year—as close to 60 bills related to the HOPE Scholarship were introduced last session. They were culled into Omnibus bills in both the House (which passed) and the Senate, and whether such bills will be addressed individually or in Omnibus form remains to be seen. New HOPE Scholarship-related legislation is likely as well. Bredesen thinks there are ways to make the money go farther, while also graduating more students. Perhaps one way to do that, he says, is to have certain portions of the scholarship vary according to the ability of the parents to contribute, similar to the manner in which private institutions handle financial aid.

"Suppose you kept the HOPE Scholarship intact as a straight scholarship regardless of need but at a higher level, maybe for students with a 3.5 [the current high school requirement is a 3.0] or something, and then say, but someone with a 2.7 can do college level work, so let's go down a little further, and the reason we're able to pay for going down further is to make it contingent in some way on the parent's ability to pay," he says. Yet, as Bredesen points out, because the HOPE Scholarship exists as a product of a constitutional amendment, legal opinions will be necessary to determine just how far proposed changes can go. It's clear, though, that changes are on the horizon. And while they will likely involve scholarship eligibility and retention-related issues, rather than increasing need-based aid components, as long as they serve the purpose of getting more Tennesseans to college, Tennessee's workforce will certainly benefit.