LITTLE ROCK — An Arkansas lottery commissioner said he’s worried about Arkansas colleges’ policy of issuing a student’s “excess scholarship money” back to the student to be spent on whatever he chooses.
Commissioner John C. “Smokey” Campbell III of Hot Springs said he thought lottery-financed scholarships were to cover only tuition, fees and books at the higher education institutions. He said he believes the scholarships should cover only those costs.
If a student receives other scholarships, the lottery scholarship could be used “to buy a cheeseburger at Sonic,” he said Thursday. “I just don’t think John Q. Public understands what is happening with the dollars.”
State officials said there are no restrictions on students’ use of lottery-financed scholarship funds after schools credit the students’ accounts for tuition and fees, room and board, and mealplan payments.
But students who receive only the lottery scholarship won’t have much, if any, left after paying such bills, they said.
And students who receive lottery scholarships plus other scholarships are restricted by state law to a total only up to their schools’ estimated cost of “attending,” which includes food and personal expenses, they said.
So far, 29,119 students have been offered lottery scholarships, said Tara Smith, financial-aid coordinator for the state Department of Higher Education.
She said 4,603 other applicants have met the qualifications to receive the scholarships, but they have not been offered scholarships because of an expected lack of funding. She said she expects the 4,603 figure to increase once the department gets complete transcripts for other applicants.
The department has thus far identified 6,713 applicants who didn’t meet the eligibility criteria, Smith said.
But Lt. Gov. Bill Halter, who helped persuade voters to adopt lottery-authorizing Amendment 87 in November 2008, said he made it clear to people who asked that he intended for students to be able to receive lottery scholarships, in addition to other scholarships, up to the cost of “attendance” at school.
He would oppose any move to limit lottery scholarships to tuition, fees and books, he said.
“The students and families who would suffer the most are low-income and middle-income families,” Halter said. “The very low income student may not have sufficient financing to go to school after a lottery scholarship and Pell grant.”
The lottery-financed scholarships are $5,000 for qualifying students at the state’s four-year colleges and $2,500 for qualifying students at the two-year colleges.
Under state law, a higher education institution is prohibited from awarding state financial aid in a student-aid package in excess of the recognized cost of attendance at the institution where a student enrolls.
“State aid” includes scholarships and grants awarded to a student from public funds, including the lottery-financed Academic Challenge Scholarship.
A “student-aid package” includes federal scholarships or grants awarded to a student, excluding a Pell grant; state aid; and scholarships, grants, tuition waivers or housing waivers awarded to a student from a higher-education institution or private source.
The “cost of attendance” includes tuition and fees; an allowance for books, supplies, transportation and miscellaneous personal expenses; an allowance for room and board; and any fees required to receive a student loan, according to the state Higher Education Coordinating Board scholarship-stacking policy.
It also includes an allowance for dependent day care during class time, study time,fieldwork, internships and commuting time for students with dependents; “reasonable” costs associated with study abroad programs approved for credit by a student’s institution; an allowance for expenses such as special services, personal assistance, transportation, equipment and supplies for disabled students; and an allowance for reasonable costs associated with employing students through a cooperative-education work program.
Tuition and fees for a student enrolling in 15 hours per semester at the four-year institutions range from $4,600 to $6,694 a year, and those for a student taking a similar number of hours at the two-year colleges range from $1,061 to $2,760, said Smith.
Each institution develops a cost-of-attendance figure for each of their student types under guidelines from the U.S. Department of Education, said Jim Purcell, director of the state Department of Higher Education.
For example, the cost of attendance for a student under age 24 dependent on his parents is $13,595 at Pulaski Technical College, and the cost for a similar student living on campus at the University of Arkansas at Fayetteville is $19,498, Smith said.
“Once tuition, fees, dorm rent and meal plans are subtracted from their scholarship, students can receive a check which can be applied for other living expenses and school supplies,” Purcell said.
The excess is paid to the student in what some call a “change check,” also called a “refund check.”
Campbell, whom Senate President Pro Tempore Bob Johnson of Bigelow appointed to the lottery commission in May, said he recently learned about this “change check” practice in higher education and believes it would disturb most Arkansans.
For example, if a community-college student receives a $2,500 lottery scholarship and a privately financed scholarship of $2,000 and the cost of tuition for the two semesters is $3,000, the student receives a check for $1,500 with no restrictions for educational spending, according to Campbell.
“While I realize there are many students who have a hard time affording noncollege costs such as transportation and living expenses, I also know that - while there were millions more in lottery scholarship dollars than expected - there were a number of deserving students who were left with no scholarship assistance,” he said in a recent letter he handed to a reporter for the Democrat-Gazette. “It is only common sense to me that we do not allow the unrestricted disbursement of public money that constitutionally can go only for scholarships.”
Campbell said it’s reasonable to assume that scholarship donors to colleges and universities are not aware their gift dollars are being disbursed as cash overages.
“I speak out in the belief that it is imperative to call attention to this widespread higher-education practice, making sure that the Arkansas Legislature and our other elected officials understand what is happening to lottery scholarship dollars as well as other scholarship funds,” he said.
Smith said some private scholarship donors have guidelines for the use of their scholarships and may limit the use of their scholarships to cover only tuition and fees.
While this practice surprised Campbell and some others, Smith said it’s common for students receiving scholarships to receive such a check.
She said she believes it will happen more often with the distribution of lottery-financed scholarships.
For the first time, the state will release lottery scholarship funds to the higher-education institutions within the next two weeks after the verification of students’ enrollment, she said.
A student generally would have to have multiple scholarships at the same time to accumulate enough scholarship money to be eligible for a refund check. This is called “stacking” scholarships.
There are no restrictions on the use of the refund or change checks and no reports are required to document how they’re used, she said, but “the intent” is to help students pay for their educational costs.
As for whether students will use their lottery scholarships to pay for things such as beer, Purcell said, “The drinking age is 21 and most of ours kids are under 21.”
But the state law governing the lottery has provisions that have the effect of making sure lottery scholarship money awarded to a student beyond the cost of “attendance” goes back to the state for use by other students in the form of additional scholarships.
In this year’s legislative session, the Legislature enacted legislation limiting scholarship funding up to the cost of attendance for any student receiving state financial aid and specified that when a student “reaches the cost-of-attendance threshold, lottery funds are subtracted first, therefore freeing up those excess funds to other students,” he said.
If a student-aid package exceeds the cost of attendance, a higher-education institution must reduce the Academic Challenge Scholarship first under a stacking policy adopted by the state’s Higher Education Coordinating Board in July.
In cases where the only state financial aid funds to be cut are Department of Higher Education programs, under the policy the school may reduce any loan-program awards second, any Higher Education Opportunities Grant program awards third, any Governor’s Scholar Program awards fourth, and awards through other department programs fifth.
State Sen. Mary Anne Salmon, D-North Little Rock, who has worked on lottery legislation, said there’s “not much” more money available under the lottery-financed scholarships for anything except tuition, fees and books. If students receive other scholarships, they only can receive up to the cost of going to school, she said.
Front Section, Pages 1 on 09/26/2010