New Mexico Mercury

Classes begin this week at the University of New Mexico and other state colleges and universities. The tuition for some students will be covered by the New Mexico Legislative Lottery Scholarship. Each level of education these students attain will mean higher incomes and lower levels of unemployment. High school graduates earn more than high school dropouts, those with an associate’s degree or a trade proficiency certificate earn more than those with a high school diploma, and those with a college education will earn more than those without. These students will also pass this educational legacy on to their children, who are likely to do better in school than children whose parents did not finish high school or go to college.

The lottery scholarship has made it possible for tens of thousands of New Mexico youth to attend college, but the trust fund that supports the scholarship is fast running out of money.  Unless the Legislature finds more money for the trust fund, limits the number of students who can receive the scholarship, or lowers the amount of the award, the fund will be nearly depleted by the end of fiscal year 2014.

Since 1997, the Lottery Scholarship Trust Fund, which covers tuition for New Mexicans attending in-state colleges, has been supported by the sale of lottery tickets. Three factors have converged to threaten the viability of the fund: the number of students receiving the scholarship has grown substantially, having doubled between 2000 and 2010; deep cuts in state funding to our universities have led to increases in tuition; and the sale of lottery tickets has leveled off. The amount of money being put into the fund has remained about the same over the years, but the amount taken out of the fund has increased dramatically.

States can award financial aid on the basis of academic merit or financial need. The lottery scholarship is merit-based. There are three criteria for receiving the lottery scholarship:  the student must graduate from a New Mexico high school; begin college immediately following high school graduation; and maintain a grade point average of 2.5. The scholarship does not distinguish between New Mexico students who would be unable to attend college without it and those who would. 

In fact, the vast majority of New Mexico’s financial aid—a little more than 70 percent—is awarded on the basis of merit, leaving less than 30 percent awarded on the basis on student financial need.  Nationally, that formula is reversed, with most states basing the bulk of their financial assistance on student need. It wasn’t always this way. In 2000-2001, New Mexico gave about the same amount of aid on the basis of merit ($21 million) and financial need ($19 million). By 2010-2011, about $65 million in financial aid was merit-based and only $26 million was need-based. This means that over ten years, need-based financial aid increased by little less than 50 percent while merit-based financial aid about tripled.

Education is the best way to break the destructive cycle of intergenerational poverty. New Mexico, with one of the highest poverty rates in the nation, needs to address college affordability for its low-income families as part of an effort to decrease poverty, grow a better workforce, and improve the economy. Shifting the state’s financial aid model from an emphasis on merit criteria to an emphasis on financial need would accomplish two important goals. First, it would benefit those students who need the most support and assistance to attend college. Second, by limiting the eligibility of the lottery scholarship, it would slow the draw on the trust fund, preserving it for the students who need it the most.   

For more on this topic, see the report Going Broke: Tuition, Financial Need and the New Mexico Lottery Scholarship Fund.